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AGENCY:

Office of Personnel Management.

ACTION:

Interim rule.

SUMMARY:

The Office of Personnel Management (OPM) is issuing an interim rule to revise the table of reduction factors for early commencing dates of survivor annuities for spouses of separated employees who die before the date on which they would be eligible for unreduced deferred annuities, and to revise the annuity factor for spouses of deceased employees who die in service when those spouses elect to receive the basic employee death benefit in 36 installments under the Federal Employees' Retirement System (FERS) Act of 1986. These rules are necessary to conform the tables to the previously published economic assumptions adopted by the Board of Actuaries.

DATES:

This interim rule is effective October 1, 2004. We must receive your comments by January 3, 2005.

ADDRESSES:

You may submit comments, identified by RIN number 3206-AK57, by any of the following methods:

• Federal eRulemaking Portal: http://www.regulations.gov. Follow the instructions for submitting comments.
• E-mail: combox@opm.gov. Include RIN number 3206-AK57 in the subject line of the message.
• Mail: Mary Ellen Wilson, Chief, Retirement Group, Office of Personnel Management, 1900 E Street NW., Washington, DC 20415-3200.

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FOR FURTHER INFORMATION CONTACT:

Patrick Jennings, (202) 606-0299.

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SUPPLEMENTARY INFORMATION:

On September 24, 2003, OPM published a notice in the Federal Register at 68 FR 55296 to revise the normal cost percentage under the Federal Employees' Retirement System (FERS) Act of 1986, Public Law 99-335, 100 Stat. 514, based on changed economic assumptions and demographic factors adopted by the Board of Actuaries of the Civil Service Retirement System. Those changed economic assumptions (principally the change in expected investment return from 6.75 percent to 6.25 percent) require corresponding changes in factors used to produce actuarially equivalent benefits when required by the FERS Act.

Section 843.309 of title 5, Code of Federal Regulations, regulates the payment of the basic employee death benefit. Under 5 U.S.C. 8442(b), the basic employee death benefit may be paid as a lump sum or as an equivalent benefit in 36 installments. These rules amend 5 CFR 843.309(b)(2) to conform the factor used to convert the lump sum to 36-installment payments with the revised economic assumptions.

Section 843.311 of title 5, Code of Federal Regulations, regulates the benefits for the survivors of separated employees under 5 U.S.C. 8442(c). This section provides a choice of benefits for eligible current and former spouses. If the current or former spouse is the person entitled to the unexpended balance under the order of precedence under 5 U.S.C. 8424, he or she may elect to receive the unexpended balance instead of an annuity. Alternatively, an eligible current or former spouse may elect to receive an annuity commencing on the day after the employee's death or on the deceased separated employee's 62nd birthday. If the annuity commences on the deceased separated employee's 62nd birthday, it equals 50 percent of the annuity that the separated employee would have received when he or she attained age 62. If the current or former spouse elects the earlier commencing date, the annuity is reduced using the factors in Appendix A to subpart C of part 843 to make the annuity actuarially equivalent to the annuity that he or she would have received if it commenced on the retiree's 62nd birthday. These rules amend that appendix to conform with the revised economic assumptions.

We are removing the table of normal cost percentages in Appendix A to subpart D of part 841 because it has no regulatory effect. Updated normal cost rates are published by OPM through a notice in the Federal Register. The table in Appendix A merely provides information about the historic rates that have already been published through Federal Register notices and is no longer required in the regulation.

We are removing the table of the National Average Wage Index in Appendix B to subpart C of part 843, and we are amending 5 CFR 842.504 and 843.308 to delete references to Appendix B. Since the Social Security Administration publishes a notice of the National Average Wage Index annually in the Federal Register, we are removing this information from the regulations. The National Average Wage Index is used in 5 CFR 842.504, to determine supplementary benefits payable to a retiree, and in 5 CFR 843.308, to determine supplementary benefits payable on the death of a retiree. Since Appendix B is removed, we are amending sections 842.504 and 843.308 to refer to the National Average Wage Index.

Waiver of General Notice of Proposed Rulemaking

Under section 553(b)(3)(B) and (d)(3) of title 5, United States Code, I find that good reason exists for waiving the general notice of proposed rulemaking and for making these amendments effective in less than 30 days. The amendments made by this rule are required by changes in economic assumptions that have already been published. Providing a comment period on the result of mathematical computations resulting from the changed economic assumptions is unnecessary, and to the extent that it would delay benefit payments is contrary to the public interest.

Executive Order 12866, Regulatory Review

This rule has been reviewed by the Office of Management and Budget in accordance with Executive Order 12866.

Regulatory Flexibility Act

I certify that this regulation will not have a significant economic impact on a substantial number of small entities because the regulation will only affect retirement payments to retired Start Printed Page 69806employees, spouses, and former spouses.

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List of Subjects in 5 CFR Parts 841, 842 and 843

• Administrative practice and procedure
• Air traffic controllers
• Alimony
• Claims
• Disability benefits
• Firefighters
• Government employees
• Income taxes
• Intergovernmental relations
• Law enforcement officers
• Pensions
• Retirement

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For the reasons stated in the preamble, the Office of Personnel Management amends 5 CFR parts 841, 842 and 843 as follows:

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PART 841—FEDERAL EMPLOYEES RETIREMENT SYSTEM—GENERAL ADMINISTRATION

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1. The authority citation for part 841 continues to read as follows:

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Authority: 5 U.S.C. 8461; Sec. 841.108 also issued under 5 U.S.C. 552a; subpart D also issued under 5 U.S.C. 8423; Sec. 841.504 also issued under 5 U.S.C. 8422; Sec. 841.507 also issued under section 505 of Pub. L. 99-335; subpart J also issued under 5 U.S.C. 8469; Sec. 841.506 also issued under 5 U.S.C. 7701(b)(2); Sec. 841.508 also issued under section 505 of Pub. L. 99-335; Sec. 841.604 also issued under Title II, Pub. L. 106-265, 114 Stat. 780.

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Subpart D—Government Costs

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2. Remove Appendix A to subpart D of part 841.

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PART 842—FEDERAL EMPLOYEES RETIREMENT SYSTEM—BASIC ANNUITY

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3. The authority citation for part 842 is revised to read as follows:

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Authority: 5 U.S.C. 8461(g); Secs. 842.104 and 842.106 also issued under 5 U.S.C. 8461(n); Sec. 842.104 also issued under sections 3 and 7(c) of Pub. L. 105-274, 112 Stat. 2419; Sec. 842.105 also issued under 5 U.S.C. 8402(c)(1) and 7701(b)(2); Sec. 842.106 also issued under section 102(e) of Pub. L. 104-8, 109 Stat. 102, as amended by section 153 of Pub. L. 104-134, 110 Stat. 1321-102; Sec. 842.107 also issued under sections 11202(f), 11232(e), and 11246(b) of Pub. L. 105-33, 111 Stat. 251, and section 7(b) of Pub. L. 105-274, 112 Stat. 2419; Sec. 842.108 also issued under section 7(e) of Pub. L. 105-274, 112 Stat. 2419; Sec. 842.213 also issued under 5 U.S.C. 8414(b)(1)(B) and section 1313(b)(5) of Pub. L. 107-296, 116 Stat. 2135; Secs. 842.604 and 842.611 also issued under 5 U.S.C. 8417; Sec. 842.607 also issued under 5 U.S.C. 8416 and 8417; Sec. 842.614 also issued under 5 U.S.C. 8419; Sec. 842.615 also issued under 5 U.S.C. 8418; Sec. 842.703 also issued under section 7001(a)(4) of Pub. L. 101-508, 104 Stat. 1388; Sec. 842.707 also issued under section 6001 of Pub. L. 100-203, 101 Stat. 1300; Sec. 842.708 also issued under section 4005 of Pub. L. 101-239, 103 Stat. 2106 and section 7001 of Pub. L. 101-508, 104 Stat. 1388; subpart H also issued under 5 U.S.C. 1104; Sec. 842.810 also issued under section 636 of Appendix C to Pub. L. 106-554 at 114 Stat. 2763A-164.

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Subpart E—Annuity Supplement

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4. In § 842.504, revise paragraph (b)(2)(iv)(A) and paragraph (b)(2)(iv)(B)(2) to read as follows:

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PART 843—FEDERAL EMPLOYEES RETIREMENT SYSTEM—DEATH BENEFITS AND EMPLOYEE REFUNDS

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5. The authority citation for part 843 continues to read as follows:

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Authority: 5 U.S.C. 8461; §§ 843.205, 843.208, and 843.209 also issued under 5 U.S.C. 8424; § 843.309 also issued under 5 U.S.C. 8442; § 843.406 also issued under 5 U.S.C. 8441.

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Subpart C—Current and Former Spouse Benefits

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6. In §843.308, revise paragraph (b)(2)(iii)(B) to read as follows:§843.308 Supplementary benefits on death of a retiree.

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(b) * * *

(2) * * *

(iii) * * *

(B) For each year after age 21 for which the retiree did not work under FERS, the retiree's wages are deemed to equal the National Average Wage Index (as determined by the Commissioner of the Social Security Administration) corresponding to that year, multiplied by the retiree's basic pay for his or her first full year of employment under FERS, divided by the National Average Wage Index corresponding to the retiree's first full year of employment under FERS.

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7. In §843.309, revise paragraph (b)(2) to read as follows:

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8. Revise Appendix A to subpart C of part 843 to read as follows:

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Appendix A to Subpart C of Part 843—Present Value Conversion Factors for Earlier Commencing Date of Annuities of Current and Former Spouses of Deceased Separated Employees

With at least 10, but less than 20 years of creditable service—

With at least 20, but less than 30 years of creditable service—

With at least 30 years of creditable service—

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9. Remove Appendix B to subpart C of part 843.

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