[Code of Federal Regulations]
[Title 5, Volume 2]
[Revised as of January 1, 2007]
From the U.S. Government Printing Office via GPO Access
[CITE: 5CFR831.105]

[Page 83-84]
 
                    TITLE 5--ADMINISTRATIVE PERSONNEL
 
          CHAPTER I--OFFICE OF PERSONNEL MANAGEMENT (CONTINUED)
 
PART 831_RETIREMENT--Table of Contents
 
             Subpart A_Administration and General Provisions
 
Sec. 831.105  Computation of interest.

    (a) The computation of interest is on the basis of 30 days to the 
month. Interest is computed for the actual calendar time involved in 
each case, but whenever applicable the rule of average applies.
    (b) Interest is allowed on current deductions and deposits at the 
rate of 4 percent per year to December 31, 1947, and 3 percent per year 
thereafter, compounded annually, to December 31, 1956. After December 
31, 1956, except as provided below, interest is allowed at the rate of 3 
percent per year, compounded annually, to date of final separation or 
transfer to a position that is not covered by the retirement system. 
After December 31, 1956, interest is not allowed:
    (1) When an employee has one year or less of covered service,
    (2) For any fractional part of a month in the total service, or
    (3) For more than five years' civilian service.
    (c) Interest at the rate of 3 percent per year through December 31, 
1984, and, thereafter, at the yearly rate determined by the Secretary of 
Treasury, compounded annually, is allowed on voluntary contributions 
during periods of employment and, after the employee or Member has 
completed at least 5 years' civilian service, during periods of 
separation until the beginning date of annuity or death, whichever is 
earlier. For refund purposes, however, interest on voluntary 
contributions terminates on the date of the employee's or Member's final 
separation or on the date of the employee's or Member's last transfer to 
a position in which he or she is not subject to subchapter III of 
chapter 83 of title 5, United States Code
    (d) For noncontributory service performed before October 1, 1982, 
and for redeposits of refunds paid on an application received by either 
the individual's employing agency or OPM before October 1, 1982, 
interest at the rate of 4 percent per year to December 31, 1947, and at 
the rate of 3 percent per year thereafter, compounded annually, is 
charged. Interest is charged on the outstanding balance of a deposit 
from the midpoint of each service period for which deposit is involved; 
interest is charged on the outstanding balance of a refund from the date 
the refund was paid. Interest is charged to the date of deposit or 
commencing date of annuity, whichever is earlier, except that interest 
is not charged for any period of separation from the service which began 
before October 1, 1956.
    (e) For noncontributory service performed on or after October 1, 
1982, and for redeposits of refunds paid on an application received by 
the individual's employing agency or OPM on or after October 1, 1982, 
interest is charged at the rate of 3 percent per year through December 
31, 1984, and, thereafter, at the yearly rate determined by the 
Secretary of Treasury, compounded annually. Interest is charged on the 
outstanding balance of a deposit from the midpoint of each service 
period for which deposit is involved; interest is charged on the 
outstanding balance of a refund from the date the refund was paid. 
Interest is charged to the date of deposit.
    (f) No interest is charged on a deposit for military service if that 
deposit is made before October 1, 1984, or within 2 years of the date 
that an individual first becomes an employee or Member under the civil 
service retirement system, whichever is later. When interest

[[Page 84]]

is charged on a deposit for military service, it is charged on the 
outstanding balance at the rate of 3 percent per year, compounded 
annually, from October 1, 1984, or 2 years from the date the individual 
first becomes an employee or Member, whichever is later, through 
December 31, 1984, and thereafter at the yearly rate determined by the 
Secretary of the Treasury.
    (g) For calendar year 1985 and for each subsequent calendar year, 
OPM will publish a notice in the Federal Register to notify the public 
of the interest rate that will be in effect during that calendar year.
    (h) Interest under Sec. Sec. 831.631, 831.632, 831.682, and 831.684 
is compounded annually and accrued monthly.
    (1) The initial interest on each monthly difference between the 
reduced annuity rate and the annuity rate actually paid equals the 
amount of the monthly difference times the difference between (i) 1.06 
raised to the power whose numerator is the number of months between the 
date when the monthly difference in annuity rates occurred and the date 
when the initial interest is computed and whose denominator is 12; and 
(ii) 1.
    (2) The total initial interest due is the sum of all of the initial 
interest on each monthly difference computed in accordance with 
paragraph (h)(1) of this section.
    (3) Additional interest on any uncollected balance will be 
compounded annually and accrued monthly. The additional interest due 
each month equals the remaining balance due times the difference between 
(i) 1.06 raised to the 1/12th power; and (ii) 1.
    (i)(1) When an individual's civilian service involves several 
deposit and/or redeposit periods, OPM will normally use the following 
order of precedence in applying each installment payment against the 
full amount due:
    (i) Redeposits of refunds paid on applications received by the 
individual's employing agency or OPM on or after October 1, 1982;
    (ii) Redeposits of refunds paid on applications received by the 
individual's employing agency or OPM before October 1, 1982;
    (iii) Deposits for noncontributory civilian service performed on or 
after October 1, 1982; and
    (iv) Deposits for noncontributory service performed before October 
1, 1982.
    (2) If an individual specifically requests a different order of 
precedence, that request will be honored.
    (j) Interest under Sec. 831.662 is compounded annually and accrued 
monthly.
    (1) The initial interest on each monthly difference between the 
reduced annuity rate and the annuity rate actually paid equals the 
amount of the monthly difference times the difference between--
    (i) The sum of one plus the interest rate set under Sec. 831.105(g) 
raised to the power whose numerator is the number of months between the 
date when the monthly difference in annuity rates occurred and the date 
when the initial interest is computed and whose denominator is 12; and
    (ii) 1.
    (2) The total initial interest due is the sum of all of the initial 
interest on each monthly difference computed in accordance with 
paragraph (j)(1) of this section.

[33 FR 12498, Sept. 4, 1968, as amended at 47 FR 43637, Oct. 1, 1982; 48 
FR 38783, Aug. 26, 1983; 51 FR 31931, Sept. 8, 1986; 52 FR 32287, Aug. 
27, 1987; 55 FR 9099, Mar. 12, 1990; 58 FR 52880, Oct. 13, 1993]