[Federal Register Volume 76, Number 107 (Friday, June 3, 2011)]
[Pages 32242-32243]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2011-13709]



Federal Employees' Retirement System; Normal Cost Percentages

AGENCY: Office of Personnel Management.

ACTION: Notice.


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, 
2011. Agency appeals of the normal cost percentages must be filed no 
later than December 5, 2011.

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, Actuary, Office of

[[Page 32243]]

Planning and Policy Analysis, Office of Personnel Management, Room 
4307, 1900 E Street NW., Washington, DC 20415.

FOR FURTHER INFORMATION CONTACT: Kristine Prentice or Roxann Johnson, 
(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 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 
    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:
    Congressional employees--18.0%;
    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.

U.S. Office of Personnel Management.
John Berry,
[FR Doc. 2011-13709 Filed 6-2-11; 8:45 am]