Federal Employees' Retirement System; Normal Cost Percentages, 22915-22916 [2019-10292]

Agencies

• Office of Personnel Management

[Federal Register Volume 84, Number 97 (Monday, May 20, 2019)]
[Notices]
[Pages 22915-22916]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2019-10292]


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OFFICE OF PERSONNEL MANAGEMENT


Federal Employees' Retirement System; Normal Cost Percentages

AGENCY: Office of Personnel Management.

ACTION: Notice.

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SUMMARY: The Office of Personnel Management (OPM) is providing notice 
of revised normal cost percentages for employees covered by the Federal 
Employees' Retirement System (FERS) Act of 1986.

DATES: The revised normal cost percentages are effective at the 
beginning of the first pay period commencing on or after October 1, 
2019. Agency appeals of the normal cost percentages must be filed no 
later than November 19, 2019.

ADDRESSES: Send or deliver agency appeals of the normal cost 
percentages and requests for actuarial assumptions and data to the 
Board of Actuaries, care of Gregory Kissel, Senior Actuary, Office of 
Healthcare and Insurance, Office of Personnel Management, Room 4316, 
1900 E Street NW, Washington, DC 20415.

FOR FURTHER INFORMATION CONTACT: Karla Yeakle, (202) 606-0299.

SUPPLEMENTARY INFORMATION: The FERS Act of 1986, Public Law 99-335, 
created a new retirement system intended to cover most Federal 
employees hired after 1983. Most Federal employees hired before 1984 
are under the older Civil Service Retirement System (CSRS). Section 
8423 of title 5, United States Code, as added by the FERS Act of 1986, 
provides for the payment of the Government's share of the cost of the 
retirement system under FERS. Employees' contributions are established 
by law and constitute only a portion of the cost of funding the 
retirement system; employing agencies are required to pay the remaining 
costs. The amount of funding required, known as ``normal cost,'' is the 
entry age normal cost of the provisions of FERS that relate to the 
Civil Service Retirement and Disability Fund (Fund). The normal cost 
must be computed by OPM in accordance with generally accepted actuarial 
practices and standards (using dynamic assumptions). The normal cost 
calculations depend on economic and demographic assumptions. Subpart D 
of part 841 of title 5, Code of Federal Regulations, regulates how 
normal costs are determined.
    In its meeting on June 1, 2017, the Board of Actuaries of the Civil 
Service Retirement System (the Board) recommended revisions to the long 
term economic assumptions and recommended changes to the demographic 
assumptions used in the actuarial valuations of CSRS and FERS. The 
economic assumptions have decreased from the previous long term 
economic assumptions. The demographic assumptions include assumed rates 
of mortality, employee withdrawal, retirement, and merit and longevity 
pay increases. The revised demographic assumptions are generally based 
on the recent ten-year or twenty-year experience under the retirement 
systems, modified to reflect expected future experience where 
applicable. OPM has adopted the Board's recommendations.
    On October 25, 2017, OPM published revised regulations related to 
the calculation of the FERS normal cost percentages. These regulations 
clarified the employee categories OPM uses to compute the FERS normal 
cost percentages and added a category of normal cost percentage for 
employees of the U.S. Postal Service. Because these revised regulations 
had not been published when the Board met on June 1, 2017, the 
recommended demographic assumptions reflect expected government-wide 
experience rather than separate postal-specific and non-postal specific 
experience. For non-postal employees, the normal cost percentage will 
reflect the economic assumptions and government-wide demographic 
assumptions determined by the Board at its June 1, 2017, meeting. The 
normal cost percentages for employees of the Postal Service will also 
reflect the economic assumptions determined by the Board at its June 1, 
2017, meeting but will use demographic assumptions that are based on 
assumptions specific to the expected experience of postal employees.
    With regard to the economic assumptions described under section 
841.402 of title 5, Code of Federal Regulations, used in the actuarial 
valuations of FERS, the Board concluded that it would be appropriate to 
assume a rate of investment return of 4.50 percent, a reduction of 0.75 
percent from the existing rate of 5.25 percent. In addition, the Board 
determined that the assumed inflation rate should be reduced 0.50 
percent from 3.00 percent to 2.50 percent, that the assumed rate of 
FERS annuitant Cost of Living Adjustments should remain at 80 percent 
of the assumed rate of inflation, and that the projected rate of 
General Schedule salary increases should be reduced 0.50 percent from 
3.25 percent to 2.75 percent. These salary increases are in addition to 
assumed within-grade increases. These assumptions are intended to 
reflect the long term expected future experience of the Systems.
    The demographic assumptions are determined separately for each of a 
number of special groups, in cases where separate experience data is 
available. Based on the demographic and economic assumptions described 
above, OPM has determined the normal cost percentage for each category 
of employees under section 841.403 of title 5, Code of Federal 
Regulations.
    Section 5001 of Public Law 112-96, The Middle Class Tax Relief and 
Jobs Creation Act of 2012, established provisions for FERS Revised 
Annuity Employees (FERS-RAE). The law permanently increases the 
retirement contributions by 2.30 percent of pay for these employees. 
Subsequently, Section 401 of Public Law 113-67, the Bipartisan Budget 
Act of 2013, created another class of FERS coverage, FERS-Further 
Revised Annuity Employee (FERS-FRAE). Employees subject to

[[Page 22916]]

FERS-FRAE must pay an increase of 1.30 percent of pay above the 
retirement contribution percentage set for FERS-RAE. Separate normal 
cost percentages apply for employees covered under FERS-RAE and for 
employees covered under FERS-FRAE.
    The normal cost percentages for each category of employee, 
including the employee contributions, are as follows:

 Normal Cost Percentages for FERS, FERS-Revised Annuity Employee (RAE), and FERS-Further Revised Annuity (FRAE)
                                                     Groups
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                                                                                     FERS-RAE        FERS-FRAE
                              Group                                 FERS Normal     normal cost     normal cost
                                                                  cost (percent)     (percent)       (percent)
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Members.........................................................            23.5            17.3            17.5
Congressional employees, including members of the Capitol Police            25.2            19.4            19.6
Law enforcement officers, members of the Supreme Court Police,              34.7            35.2            35.4
 firefighters, nuclear materials couriers, customs and border
 protection officers, and employees under section 302 of the
 Central Intelligence Agency Retirement Act of 1964 for certain
 employees......................................................
Air traffic controllers.........................................            34.5            35.0            35.1
Military reserve technicians....................................            19.5            19.9            20.2
Employees under section 303 of the Central Intelligence Agency              23.8            24.4            24.6
 Retirement Act of 1964 for certain employees (when serving
 abroad)........................................................
Other employees of the United States Postal Service.............            15.5            15.9            16.1
All other regular FERS employees................................            16.8            17.3            17.5
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    Under section 841.408 of title 5, Code of Federal Regulations, 
these normal cost percentages are effective at the beginning of the 
first pay period commencing on or after October 1, 2019.
    The time limit and address for filing agency appeals under sections 
841.409 through 841.412 of title 5, Code of Federal Regulations, are 
stated in the DATES and ADDRESSES sections of this notice.

    Office of Personnel Management.
Alexys Stanley,
Regulatory Affairs Analyst.
[FR Doc. 2019-10292 Filed 5-17-19; 8:45 am]
 BILLING CODE 6325-38-P