Office of Personnel Management.
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.
The revised normal cost percentages are effective at the beginning of the first pay period commencing on or after October 1, 2011. Agency appeals of the normal cost percentages must be filed no later than December 5, 2011.
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, Actuary, Office of Start Printed Page 32243Planning and Policy Analysis, Office of Personnel Management, Room 4307, 1900 E Street NW., Washington, DC 20415.Start Further Info
FOR FURTHER INFORMATION CONTACT:
Kristine Prentice or Roxann Johnson, (202) 606-0299.End Further Info End Preamble Start Supplemental 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 small fraction 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). Subpart D of part 841 of title 5, Code of Federal Regulations, regulates how normal costs are determined.
In its meeting on June 11, 2010, the Board of Actuaries of the Civil Service Retirement System (the Board) recommended changes to the economic assumptions used in the dynamic actuarial valuations of FERS. The Board reviewed statistical data prepared by the OPM actuaries and considered trends that may affect future experience under the System. OPM has adopted the Board's recommendations.
Based on its analysis, the Board concluded that it would be appropriate to assume a rate of investment return of 5.75 percent, reduced from the existing rate of 6.25 percent. In addition, the Board determined that the assumed inflation rate should be reduced from 3.50 percent to 3.00 percent and that the projected rate of General Schedule salary increases should be reduced from 4.25 percent to 3.75 percent. These salary increases are in addition to assumed within-grade increases that reflect past experience. Each of these assumptions is 0.50 percent lower than the economic assumptions previously in place. The Board's recommendation adjusts the nominal rates to balance long-term expectations with recent experience and better aligns the assumptions with those used by the federal retirement programs administered by the U.S. Department of Defense and the Social Security Administration. The economic assumptions anticipate that, over the long term, the annual rate of investment return will exceed inflation by 2.75 percent and General Schedule salary increases will exceed long-term inflation by 0.75 percent a year, with no difference from the current assumptions. In 2008, the Board adopted changes in the mortality assumptions established in 2006 as well as changes in all the demographic assumptions listed as factors under section 841.404(a) of title 5, Code of Federal Regulations. These assumptions remain unchanged.
The normal cost calculations depend on economic, demographic, and mortality assumptions. 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 current demographic assumptions, and the changed 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. The Governmentwide normal cost percentages, including the employee contributions, are as follows:
Law enforcement officers, members of the Supreme Court Police, 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—27.6%;
Air traffic controllers—27.3%;
Military reserve technicians—15.7%;
Employees under section 303 of the Central Intelligence Agency Retirement Act of 1964 for Certain Employees (when serving abroad)—18.0%; and
All other employees—12.7%.
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, 2011.
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.Start Signature
U.S. Office of Personnel Management.
[FR Doc. 2011-13709 Filed 6-2-11; 8:45 am]
BILLING CODE 6325-38-P