[Federal Register: September 24, 2003 (Volume 68, Number 185)]
[Notices]
[Page 55296-55297]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr24se03-27]
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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,
2004.
Agency appeals of the normal cost percentages must be filed no
later than March 24, 2004.
ADDRESSES: Send or deliver agency appeals of the normal cost
percentages
[[Page 55297]]
to the Board of Actuaries, care of Nancy H. Kichak, Deputy Associate
Director, Center for Workforce Planning and Policy Analysis, Office of
Personnel Management, Room 4307, 1900 E Street NW., Washington, DC
20415.
Send requests for actuarial assumptions and data to the Actuaries
Group, Office of Personnel Management, Room 4307, 1900 E Street NW.,
Washington, DC 20415.
FOR FURTHER INFORMATION CONTACT: Patrick Jennings, (202) 606-0299.
SUPPLEMENTARY INFORMATION: The FERS Act of 1986, Pub. L. 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.
Recently, the Board of Actuaries of the Civil Service Retirement
System approved a revised set of economic assumptions for use in the
dynamic actuarial valuations of FERS. These assumptions were adopted
after the Board reviewed statistical data prepared by the OPM actuaries
and considered trends that may affect future experience under the
System.
Based on its analysis, the Board concluded that it would be
appropriate to assume a rate of investment return of 6.25 percent, a
reduction of .50 percent from the current rate of 6.75 percent. The
Board reduced the anticipated inflation rate from 3.75 percent to 3.25
percent, and reduced the projected rate of General Schedule salary
increases from 4.25 percent to 4.00 percent. These salary increases are
in addition to assumed in-grade increases that reflect past experience.
The new assumptions anticipate that over the long term the annual
rate of investment return will exceed inflation by 3 percent and
General Schedule salary increases will exceed inflation by .75 percent
a year, as compared to 3 percent and .50 percent, respectively, under
the previous assumptions. In addition, due to a considerable decline in
the rate of early retirements, the Board reduced its demographic
assumption of the anticipated rate of early retirements.
The normal cost calculations depend on both the economic and
demographic 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 new economic
assumptions and the change in the demographic assumption concerning the
rate of early retirements, OPM has determined the normal cost
percentage for each category of employees under Sec. 841.403 of Title
5, Code of Federal Regulations. The Governmentwide normal cost
percentages, including the employee contributions, are as follows:
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Percent
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Members....................................................... 17.7
Congressional employees....................................... 17.9
Law enforcement officers, members of the Supreme Court Police, 25.1
firefighters, nuclear materials couriers and employees under
section 302 of the Central Intelligence Agency Act of 1964
for Certain Employees........................................
Air traffic controllers....................................... 24.4
Military reserve technicians.................................. 14.7
Employees under section 303 of the Central Intelligence Agency 17.2
Act of 1964 for Certain Employees (when serving abroad)......
All other employees........................................... 12.0
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Under Sec. 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, 2004.
The time limit and address for filing agency appeals under Sec.
Sec. 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.
Kay Coles James,
Director.
[FR Doc. 03-24048 Filed 9-23-03; 8:45 am]
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