82 FR 49277 - Federal Employees' Retirement System; Government Costs

OFFICE OF PERSONNEL MANAGEMENT

Federal Register Volume 82, Issue 205 (October 25, 2017)

The Office of Personnel Management amends this rule to clarify the manner OPM uses for determining a supplemental liability under the Federal Employees' Retirement System (FERS), and to clarify the process by which the U.S. Postal Service (USPS) and the U.S. Department of the Treasury (Treasury) may request reconsideration of OPM's valuation of the supplemental liability. The rule also clarifies the employee categories OPM uses to compute the FERS normal cost percentages. The rule also amends the definitions of actuary, present value factor, and actuarial present value to ensure these definitions are uniform and appropriate.

[Federal Register Volume 82, Number 205 (Wednesday, October 25, 2017)]
[Rules and Regulations]
[Pages 49277-49282]
From the Federal Register Online  [www.thefederalregister.org]
[FR Doc No: 2017-23141]



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Rules and Regulations
                                                Federal Register
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Federal Register / Vol. 82, No. 205 / Wednesday, October 25, 2017 / 
Rules and Regulations

[[Page 49277]]



OFFICE OF PERSONNEL MANAGEMENT

5 CFR Parts 831, 839, 841, 842, and 847

RIN 3206-AN22


Federal Employees' Retirement System; Government Costs

AGENCY: Office of Personnel Management.

ACTION: Final rule.

-----------------------------------------------------------------------

SUMMARY: The Office of Personnel Management amends this rule to clarify 
the manner OPM uses for determining a supplemental liability under the 
Federal Employees' Retirement System (FERS), and to clarify the process 
by which the U.S. Postal Service (USPS) and the U.S. Department of the 
Treasury (Treasury) may request reconsideration of OPM's valuation of 
the supplemental liability. The rule also clarifies the employee 
categories OPM uses to compute the FERS normal cost percentages. The 
rule also amends the definitions of actuary, present value factor, and 
actuarial present value to ensure these definitions are uniform and 
appropriate.

DATES: This rule is effective October 25, 2017.

FOR FURTHER INFORMATION CONTACT: Roxann Johnson, (202) 606-0299 or 
[email protected].

SUPPLEMENTARY INFORMATION: OPM's determination of the FERS normal cost 
percentage necessary to fund the Civil Service Retirement and 
Disability Fund (CSRDF) is subject to appeal by agencies with at least 
1,000 employees in the general category of employees or 500 employees 
in any of the special categories of employees. The Secretary of the 
Treasury or the Postmaster General may request the Board of Actuaries 
of the Civil Service Retirement System (the Board) to reconsider the 
amount determined to be payable with respect to any supplemental 
liability in accordance with 5 U.S.C. 8423(c) and 5 CFR 841.409. The 
regulations at 5 CFR 841.401 through 5 CFR 841.411 establish the time 
limits and requirements for an agency appeal of OPM's determination of 
a normal cost percentage. OPM has added regulations under 5 CFR part 
841 to clarify the process by which the Secretary of the Treasury and 
the Postmaster General may file a request for the Board to reconsider 
an amount determined to be payable to the CSRDF with respect to a 
supplemental liability.
    OPM's final rule amends its definition of ``actuary'' provided 
under 5 CFR 841.402. The prior definition was limited to ``an associate 
or fellow in the Society of Actuaries and one who is enrolled under 
section 3042 of Public Law 93-406, the Employee Retirement Income 
Security Act of 1974'' (ERISA). Because this definition no longer 
reflected professional standards generally required of an actuary for 
this subpart, and was overly narrow because it worked to exclude 
knowledgeable and experienced actuaries who may not be enrolled under 
ERISA but who are well qualified to issue statements of opinion with 
regard to the CSRDF, OPM has amended the definition of ``actuary'' to 
include those who meet the qualification standards to issue a statement 
of actuarial opinion in regard to defined benefit retirement plans in 
the United States.
    OPM's final rule amends its regulations under 5 CFR 841.403 to make 
clear that it determines separate normal cost percentages for employees 
covered under Federal Employees Retirement System (FERS), FERS Revised 
Annuity Employees (FERS-RAE), and FERS Further Revised Annuity 
Employees (FERS-FRAE) in compliance with section 5001 of the ``Middle 
Class Tax Relief and Job Creation Act of 2012,'' Public Law 112-96, 126 
Stat. 199 (Feb. 22, 2012), and section 401 of the ``Bipartisan Budget 
Act of 2013,'' Public Law 113-67, 127 Stat. 1165 (Dec. 26, 2013). This 
legislation defined FERS-RAE and FERS-FRAE employees for whom increased 
retirement deductions apply, which results in increased outlays from 
the CSRDF in refund and lump-sum payments of employee contributions. 
For that reason, the normal cost percentages for FERS-RAE and FERS-FRAE 
employees are expected to exceed the normal cost percentages for other 
FERS employees. The legislation also reduced the benefit accrual rates 
for Members and Congressional employees (other than Capitol Police) 
subject to FERS-RAE and FERS-FRAE, resulting in lower associated normal 
cost percentages. To ensure regulations reflect current statutory 
language, OPM has amended 5 CFR 841.403 to clearly establish separate 
normal cost percentages for FERS, FERS-RAE and FERS-FRAE employees 
within each employee category listed under 5 CFR 841.403.
    OPM's final rule amends 5 CFR 841.403 to make clear that it will 
include members of the Capitol Police as ``Congressional Employees'' 
for purposes of deriving separate normal cost percentages for this 
employee group. OPM includes members of the Capitol Police with 
Congressional employees when deriving the normal cost percentages for 
this employee group because, in part, 5 U.S.C. 2107(4) defines ``a 
member or employee of the Capitol Police'' as ``a Congressional 
employee.'' The Middle Class Tax Relief and Job Creation Act of 2014 
eliminated for FERS-RAE and FERS-FRAE employees the higher annuity 
accrual rates for Congressional employees provided under 5 U.S.C. 
8415(c) (see 5 U.S.C. 8415(d)) but did not eliminate the higher annuity 
accrual rates under 5 U.S.C. 8415(e) for members of the Capitol Police 
subject to FERS-RAE and FERS-FRAE. The annuity benefits of members of 
the Capitol Police are more closely comparable to another of the 
special employee groups--law enforcement officers, whose annuities are 
computed under 5 U.S.C. 8415(e)--for the purpose of determining their 
FERS normal cost percentage. However, because a member of the Capitol 
Police is not within the FERS definition of ``law enforcement officer'' 
under 5 U.S.C. 8401(17), members of the Capitol Police are not included 
in the special category of ``law enforcement officers'' under 5 U.S.C. 
8423(a)(1)(B) and, therefore, are not subject to the normal cost 
percentage applicable to that group. The only special category listed 
in 5 U.S.C. 8423(a)(1)(B) that does apply to members of the Capitol 
Police is ``Congressional employees.'' Thus, despite the fact that the 
other Congressional employees subject to FERS-RAE and FERS-FRAE do not 
receive enhanced annuity accrual rates,

[[Page 49278]]

OPM must include Capitol Police in the Congressional employee normal 
cost percentage calculation under 5 U.S.C. 8423(a)(1)(B). Therefore, 
OPM's final rule amends 5 CFR 841.403(b) to reflect all Congressional 
employees including members of the Capitol Police in determining the 
FERS, FERS-RAE and FERS-FRAE normal cost percentages for the 
``Congressional Employees'' category.
    OPM's final rule amends 5 CFR 841.403 to include U.S. Postal 
Service employees as a separate category for which OPM will derive 
normal cost percentages. OPM has determined a Government-wide normal 
cost percentage for each category of employee, and U.S. Postal Service 
employees have been included in the category of either ``all other 
employees'' or ``law enforcement officer'' under 5 CFR 841.403(c) and 
(g). Because of the separate U.S. Postal Service funding provisions 
established under 5 U.S.C. 8423(b), and as a result of recommendations 
from the Board, OPM's final rule amends its regulations to provide for 
the use of U.S. Postal Service-specific assumptions regarding 
demographic factors in the calculation of the U.S. Postal Service 
supplemental liability and in the determination of the normal cost 
percentage for U.S. Postal Service employees who do not fall under the 
category of ``law enforcement officer.'' OPM's final rule amends 
regulations at 5 CFR 841.414, which will provide specific guidance on 
the calculation of the supplemental liability; and OPM's final rule 
adds employees of the U.S. Postal Service, who are not ``law 
enforcement officers'' under 5 CFR 841.403(c), as a separate category 
for which OPM will derive normal cost percentages under 5 CFR 841.403. 
OPM's final rule removes references to the term ``Government-wide 
normal cost percentage'' from 5 CFR part 841 in order to conform with 
the normal cost percentages established for various categories of 
employees as provided under this part, and to clarify that an agency 
may appeal a published normal cost percentage even if the normal cost 
percentage applies to a category of employee that exists predominately 
or exclusively within a single agency.
    OPM's final rule also adds 5 CFR 841.415 through 841.417 to the 
regulations. These sections establish the procedures and requirements 
for filing a request for reconsideration of a supplemental liability 
determination filed by the Secretary of the Treasury or the Postmaster 
General. Under 5 CFR 841.417, and consistent with recommendations from 
the Board, OPM's final rule requires that the actuarial analysis 
submitted with the request for reconsideration must demonstrate a 
difference in the supplemental liability of at least 2 percent of the 
present value of future benefits calculated in OPM's computation of the 
supplemental liability.
    Additionally, OPM's final rule refines the definitions of present 
value factor and actuarial present value under 5 CFR parts 831, 839, 
842, and 847 to ensure that these definitions are uniform and 
appropriate. OPM's final rule clarifies, under 5 CFR 831.303, 831.603, 
831.2202, 839.102, 842.602, 842.702, and 847.103, that the present 
value factors are computed by using a composite of sex-distinct factors 
based upon mortality assumptions for annuitant populations. The factors 
reflect an increase in benefit payments at an assumed rate of cost-of 
living adjustment, where appropriate. OPM removed 5 CFR 847.602, which 
provided a separate description of present value factors for purposes 
of subpart F of part 847 in order to include a definition of ``present 
value factor'' for all of part 847, and OPM added 5 CFR 842.616 to 
describe when the present value factors will be published. OPM's final 
rule clarifies under 5 CFR 842.602 and 842.702 that separate present 
value factors apply to FERS annuities that receive cost-of-living 
adjustments before the retiree attains age 62 versus annuities that do 
not receive cost-of-living adjustments before age 62.

Comments

    OPM received comments on its proposed rule from the U.S. Postal 
Service Office of Inspector General (OIG) and the U.S. Postal Service 
General Counsel's Office (OGC). The U.S. Postal Service OIG indicated 
that it ``support[ed] the Proposed Rule as far as it goes,'' and the 
U.S. Postal Service OGC indicated that OPM's proposed changes were a 
``welcomed step,'' but both organizations recommended that the rule 
require not only the use of U.S. Postal Service-specific demographic 
factors but also the use of U.S. Postal Service-specific economic 
factors related to general salary growth assumptions in determining the 
normal costs and the supplemental liability.
    OPM has determined that this change is unnecessary. Currently, the 
regulations under 5 CFR 841.405 provide that the normal cost 
percentages will be based on the economic assumptions determined by the 
Board, and OPM's final rule amends 5 CFR 841.414 to provide that each 
supplemental liability will be computed based on the economic 
assumptions determined by the Board for the most recent valuation of 
FERS. Therefore, nothing in the regulations would prevent the Board 
from using general salary growth and wage assumptions specific to U.S. 
Postal Service employees when, in the Board's judgment, doing so would 
be appropriate.
    OPM disagrees with the U.S. Postal Service OGC's assertion that 5 
U.S.C. 8401(27)(A), 8423(b)(1), and 8348(h)(1)(A) require OPM to 
establish regulations that direct the Board to select general salary 
growth economic assumptions specific to the U.S. Postal Service for use 
in determining the normal costs and supplemental liabilities. The 
provisions under 5 U.S.C. 8401(23), 8401(27)(B)(iv), and 8348(h)(1)(A) 
require OPM to determine the normal costs and supplemental liabilities 
by applying ``generally accepted actuarial principles,'' and 5 U.S.C. 
8347(f) and 8423(a)(5) require the Board to ``furnish its advice and 
opinion on matters referred to it by the Office'' and to make 
recommendations that ``in the Board's judgment are necessary to protect 
the public interest and maintain the System on a sound financial 
basis.'' The selection of economic assumptions used to determine the 
normal costs or the supplemental liability is inherently actuarial in 
nature. OPM finds that requiring the use of general salary growth 
economic assumptions specific to the U.S. Postal Service for use in 
determining the normal costs and supplemental liabilities would 
unnecessarily limit the Board's discretion in making these 
determinations. As a result, OPM declines to adopt the U.S. Postal 
Service OGC's recommendation to require the Board to select U.S. Postal 
Service-specific economic assumptions for use in determining the normal 
costs and the supplemental liability. To the extent the U.S. Postal 
Service would like to submit for the Board's consideration any 
information regarding the actuarial merits of selecting U.S. Postal 
Service-specific economic assumptions for use in determining the normal 
cost and the supplement liability, it may do so in accordance with the 
requirements of Board meeting notices.
    The U.S. Postal Service OGC also requested that OPM make clear in 
its final rule that, in instances where OPM has computed a separate 
normal cost percentage, an agency's right to appeal and submit the 
evidence necessary to support the appeal should be related to OPM's 
determination of that normal cost percentage rather than any 
Government-wide normal cost

[[Page 49279]]

percentage. OPM agrees, and has adopted the Postal Service OGC's 
recommendation by amending 5 CFR 841.406, 841.409, 841.410, 841.411, 
and 841.412, to make clear the requirements for appealing a normal cost 
percentage apply for each category where OPM computes a normal cost 
percentage as specified under 5 CFR 841.403.
    Finally, the U.S. Postal Service OGC requested that OPM not impose 
the 2 percent threshold requirement necessary for the Board to sustain 
a request for reconsideration of its supplemental liability 
determinations. The amended regulations under 5 CFR 841.147 provide 
that the Board cannot sustain a request for reconsideration unless the 
difference in the supplemental liability amount is at least 2 percent 
of the present value of future benefits calculated in OPM's computation 
of the supplemental liability. OPM included this threshold requirement 
as a result of a recommendation from the Board advising OPM that any 
threshold be set as a difference in present value of future benefits. 
OPM's actuaries tested the effect of what might be considered 
substantive changes in the demographic assumptions and produced results 
within a range of 0 percent to a decrease of 5.9 percent. Therefore, 
OPM has determined that the 2 percent threshold provided is a 
reasonable basis for sustaining a request for reconsideration, and 
therefore, OPM declines to adopt the U.S. Postal Service OGC's 
recommendation to eliminate this threshold.

Executive Order 12866, Regulatory Review

    This rule has been reviewed by the Office of Management and Budget 
in accordance with Executive Order (E.O.) 12866, as amended by E.O. 
13258 and E.O. 13422.

Regulatory Flexibility Act

    I certify that this regulation will not have a significant economic 
impact on a substantial number of small entities.

Executive Orders 12866 and 13563

    Executive Orders (E.O.s) 12866 and 13563 direct agencies to assess 
all costs and benefits of available regulatory alternatives and, if 
regulation is necessary, to select regulatory approaches that maximize 
net benefits (including potential economic, environmental, public 
health and safety effects, distributive impacts, and equity). E.O. 
13563 emphasizes the importance of quantifying both costs and benefits, 
of reducing costs, of harmonizing rules, and of promoting flexibility. 
This is not a significant regulatory action and, therefore, was not 
subject to review under section 6(b) of E.O. 12866, Regulatory Planning 
and Review, dated September 30, 1993. This rule is not a major rule 
under 5 U.S.C. 804.

List of Subjects

5 CFR Part 831

    Firefighters, Government employees, Income taxes, Intergovernmental 
relations, Law enforcement officers, Pensions, Reporting and 
recordkeeping requirements, Retirement.

5 CFR Part 839

    Administrative practice and procedure, Claims, Employment taxes, 
Government employees, Pensions, Reporting and recordkeeping 
requirements, Retirement, Social Security.

5 CFR Part 841

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

5 CFR Part 842

    Air traffic controllers, Alimony, Firefighters, Law enforcement 
officers, Pensions, Retirement.

5 CFR Part 847

    Administrative practice and procedure, Disability benefits, 
Government employees, Pensions, Reporting and recordkeeping 
requirements, Retirement.

U.S. Office of Personnel Management.
Kathleen M. McGettigan,
Acting Director.

    For the reasons stated in the preamble, the Office of Personnel 
Management amends 5 CFR parts 831, 839, 841, 842, and 847 as set forth 
below:

PART 831--RETIREMENT

0
1. The authority citation for part 831 continues to read as follows:

    Authority: 5 U.S.C. 8347; Sec. 831.102 also issued under 5 
U.S.C. 8334; Sec. 831.106 also issued under 5 U.S.C. 552a; Sec. 
831.108 also issued under 5 U.S.C. 8336(d)(2); Sec. 831.114 also 
issued under 5 U.S.C. 8336(d)(2), and Sec. 1313(b)(5) of Pub. L. 
107-296, 116 Stat. 2135; Sec. 831.201(b)(1) also issued under 5 
U.S.C. 8347(g); Sec. 831.201(b)(6) also issued under 5 U.S.C. 
7701(b)(2); Sec. 831.201(g) also issued under Secs. 11202(f), 
11232(e), and 11246(b) of Pub. L. 105-33, 111 Stat. 251; Sec. 
831.201(g) also issued under Sec. 7(b) and (e) of Pub. L. 105-274, 
112 Stat. 2419; Sec. 831.201(i) also issued under Secs. 3 and 7(c) 
of Pub. L. 105-274, 112 Stat. 2419; Sec. 831.204 also issued under 
Sec. 102(e) of Pub. L. 104-8, 109 Stat. 102, as amended by Sec. 153 
of Pub. L. 104-134, 110 Stat. 1321; Sec. 831.205 also issued under 
Sec. 2207 of Pub. L. 106-265, 114 Stat. 784; Sec. 831.206 also 
issued under Sec. 1622(b) of Pub. L. 104-106, 110 Stat. 515; Sec. 
831.301 also issued under Sec. 2203 of Pub. L. 106-265, 114 Stat. 
780; Sec. 831.303 also issued under 5 U.S.C. 8334(d)(2) and Sec. 
2203 of Pub. L. 106-235, 114 Stat. 780; Sec. 831.502 also issued 
under 5 U.S.C. 8337, and Sec. 1(3), E.O. 11228, 3 CFR 1965-1965 
Comp. p. 317; Sec. 831.663 also issued under 5 U.S.C. 8339(j) and 
(k)(2); Secs. 831.663 and 831.664 also issued under Sec. 11004(c)(2) 
of Pub. L. 103-66, 107 Stat. 412; Sec. 831.682 also issued under 
Sec. 201(d) of Pub. L. 99-251, 100 Stat. 23; Sec. 831.912 also 
issued under Sec. 636 of Appendix C to Pub. L. 106-554, 114 Stat. 
2763A-164; Subpart P also issued under Sec. 535(d) of Title V of 
Division E of Pub. L. 110-161, 121 Stat. 2042; Subpart V also issued 
under 5 U.S.C. 8343a and Sec. 6001 of Pub. L. 100-203, 101 Stat. 
1330-275; Sec. 831.2203 also issued under Sec. 7001(a)(4) of Pub. L. 
101-508, 104 Stat. 1388-328.

Subpart A--Administration and General Provisions

0
2. Add Sec.  831.117 to subpart A to read as follows:


Sec.  831.117   Computation of the supplemental liability.

    (a) OPM will compute each supplemental liability of the Fund using 
demographic factors specific to the populations for which the 
supplemental liability applies.
    (b) The supplemental liability will be computed based on the 
economic assumptions used by the Board of Actuaries of the Civil 
Service Retirement System for the most recent valuation of the System.
    (c) Each supplemental liability shall be rounded to the nearest one 
hundred million dollars.

Subpart C--Credit for Service

0
3. Amend Sec.  831.303 by revising paragraphs (c)(3) and (d)(3) to read 
as follows:


Sec.  831.303   Civilian service.

* * * * *
    (c) * * *
    (3) For the purpose of paragraph (b)(2) of this section, the term 
``present value factor'' has the same meaning as defined in Sec.  
831.603 and ``time of retirement'' has the same meaning as defined in 
Sec.  831.2202.
    (d) * * *
    (3) For the purpose of paragraph (d)(2) of this section, the term 
``present value

[[Page 49280]]

factor'' has the same meaning as defined in Sec.  831.603 and ``time of 
retirement'' has the same meaning as defined in Sec.  831.2202.

Subpart F--Survivor Annuities

0
4. Amend Sec.  831.603 by revising the definition of ``present value 
factor'' to read as follows:


Sec.  831.603   Definitions.

* * * * *
    Present value factor means the amount of money (earning interest at 
an assumed rate) required at the time of annuity commencement to fund 
an annuity that starts at the rate of $1 a month and is payable in 
monthly installments for the annuitant's lifetime based on mortality 
rates for annuitants paid from the Civil Service Retirement and 
Disability Fund; and increases each year at an assumed rate of cost of 
living adjustment. Assumed rates of interest, mortality, and cost-of-
living adjustments used in computing the present value are those used 
by the Board of Actuaries of the Civil Service Retirement System for 
valuation of the System based on dynamic assumptions. The present value 
factors are unisex factors obtained as a composite of sex-distinct 
present value factors.
* * * * *

Subpart V--Alternative Forms of Annuities

0
5. Amend Sec.  831.2202 by revising the definition of ``present value 
factor'' to read as follows:


Sec.  831.2202   Definitions.

* * * * *
    Present value factor has the same meaning in this subpart as 
defined in Sec.  831.603.
* * * * *

PART 839--CORRECTION OF RETIREMENT COVERAGE ERRORS UNDER THE 
FEDERAL ERRONEOUS RETIREMENT COVERAGE CORRECTIONS ACT

0
6. The authority citation for part 839 continues to read as follows:

    Authority:  Title II, Pub. L. 106-265, 114 Stat. 770.

Subpart A--General Provisions

0
7. Amend Sec.  839.102 by revising the definition of ``present value 
factor'' to read as follows:


Sec.  839.102   Definitions.

* * * * *
    Present value factor has the same meaning in this subpart as 
defined in Sec.  831.603.
* * * * *

PART 841--FEDERAL EMPLOYEES RETIREMENT SYSTEM--GENERAL 
ADMINSTRATION

0
8. The authority citation for part 841 continues to read as follows:

    Authority: 5 U.S.C. 8461; Sec. 841.108 also issued under 5 
U.S.C. 552a; Secs. 841.110 and 841.111 also issued under 5 U.S.C. 
8470(a); 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.

Subpart D--Government Costs

0
9. Amend Sec.  841.401 by revising paragraphs (b)(3) and (4) and adding 
paragraph (b)(5) to read as follows:


Sec.  841.401   Purpose and scope.

* * * * *
    (b) * * *
    (3) Agency appeals of rate determinations;
    (4) Methodology for determining the amount due from each agency; 
and
    (5) Requests for reconsideration of the supplemental liability.

0
10. Amend Sec.  841.402 by revising the definition of ``actuary'' to 
read as follows:


Sec.  841.402   Definitions.

* * * * *
    Actuary means a professional who meets the qualification standards 
to issue a statement of actuarial opinion in regard to defined benefit 
retirement plans in the United States.
* * * * *

0
11. Amend Sec.  841.403 by revising the introductory text, paragraph 
(b), paragraph (g), and adding paragraph (h) to read as follows:


Sec.  841.403   Categories of employees for computation of normal cost 
percentages.

    Separate normal cost percentages for FERS, FERS-RAE and FERS-FRAE 
will be determined for each of the following groups of employees:
* * * * *
    (b) Congressional employees, including members of the Capitol 
Police;
* * * * *
    (g) Other employees of the United States Postal Service;
    (h) All other employees.

0
12. Revise Sec.  841.406(a) to read as follows:


Sec.  841.406  Determination of normal cost percentages.

    (a) OPM will determine the normal cost percentages for each 
category of employees. These normal cost percentages will be used by 
all agencies that have not been granted a single agency rate under 
Sec.  841.412.
* * * * *

0
13. Revise Sec.  841.407(b)(1) to read as follows:


Sec.  841.407   Notice of normal cost percentage determinations.

* * * * *
    (b) * * *
    (1) The normal cost percentages and any single agency rates for 
each category of employees;
* * * * *

0
14. Revise Sec.  841.409 to read as follows:


Sec.  841.409   Agency right to appeal normal cost percentage.

    (a) An agency with at least 1,000 employees in the general category 
of employees or 500 employees in any of the special categories may 
appeal to the Board the normal cost percentage for that category as 
applied to that agency.
    (b) No appeal will be considered by the Board unless the agency 
files, no later than 6 months after the date of publication of the 
notice of normal cost percentages under Sec.  841.407, a petition for 
appeal that meets all the requirements of Sec.  841.410.

0
15. Amend Sec.  841.410 by revising the section heading and revising 
the introductory text of paragraph (c) and revising paragraph (c)(3) to 
read as follows:


Sec.  841.410   Contents of petition for appeal of normal cost 
percentage.

* * * * *
    (c) The actuarial report must contain a detailed actuarial analysis 
of the normal cost of FERS benefits as applied to the employees of that 
agency in the category of employees for which the agency is appealing. 
The actuarial report must--
* * * * *
    (3) Specifically address and consider each of the demographic 
factors listed in Sec.  841.404. The appealing agency is responsible 
for developing data relating to the first nine demographic factors as 
they relate to the category of agency employees for which the appeal is 
being filed. OPM's demographic factors (available from OPM) will be 
presumed to be sufficient and reliable for factors 10 through 13 unless 
the appealing

[[Page 49281]]

agency is able to demonstrate, through sufficient and reliable data 
relating to its employees or former employees, the use of alternative 
factors is appropriate. The fourteenth factor, administrative expenses, 
will be supplied by OPM.
* * * * *

0
16. Amend Sec.  841.411 by revising the section heading and revising 
paragraph (a), (b), and (d)(3) and (4) to read as follows:


Sec.  841.411   Appeals procedure for normal cost percentage.

    (a) The normal cost percentages as published under Sec.  841.407 
are presumed to apply to all agencies. Any agency appealing application 
of a published normal cost percentage to any category of employees in 
its workforce must demonstrate to the satisfaction of the Board that 
the normal cost percentage for that category of employees in that 
agency is sufficiently different from the published normal cost 
percentage.
    (b) While an agency has an appeal pending, the published normal 
cost percentage continues to apply to that agency.
* * * * *
    (d) * * *
    (3) When all relevant factors are considered together, there is a 
demonstrated difference between the published normal cost percentage 
being appealed and the normal cost percentage for the group at issue; 
and
    (4) The difference is at least 10 percent of the published normal 
cost percentage being appealed.

0
17. Revise Sec.  841.412(c) to read as follows:


Sec.  841.412   Rates determined by appeal.

* * * * *
    (c) A single agency rate may be higher or lower than the published 
normal cost percentage and will remain in force for not less than 3 
years.
* * * * *

0
 18. Add Sec.  841.414 to subpart D to read as follows:


Sec.  841.414   Computation of the supplemental liability.

    (a) OPM will compute each supplemental liability of the Civil 
Service Retirement and Disability Fund using demographic factors 
consistent with those used for the computation of the normal cost 
percentages under Sec.  841.403.
    (b) The supplemental liability will be computed based on the 
economic assumptions determined by the Board for the most recent 
valuation of the Federal Employees Retirement System.
    (c) Each supplemental liability will be rounded to the nearest one 
hundred million dollars.

0
19. Add Sec.  841.415 to subpart D to read as follows:


Sec.  841.415   Right to request reconsideration of the supplemental 
liability.

    (a) The Secretary of the Treasury or the Postmaster General may 
request the Board to reconsider a determination of the amount payable 
with respect to any supplemental liability.
    (b) No request for reconsideration will be considered by the Board 
unless the Secretary of the Treasury or the Postmaster General files, 
no later than 6 months after the date of receipt of the first notice of 
the amount payable with respect to the supplemental liability, a 
request for reconsideration that meets all the requirements of Sec.  
841.416.

0
20. Add Sec.  841.416 to subpart D to read as follows:


Sec.  841.416  Contents of a request for reconsideration of the 
supplemental liability.

    (a) To request reconsideration of the amount payable with respect 
to the supplemental liability, the Secretary of the Treasury or the 
Postmaster General must file with OPM--
    (1) A signed letter of appeal summarizing the basis of the request; 
and
    (2) An actuarial report that contains a detailed actuarial analysis 
of the request.
    (b) The actuarial report must--
    (1) Be signed by an actuary;
    (2) Specifically present any data and development of assumptions 
related to the request for reconsideration;
    (3) Use each of the demographic factors listed in Sec.  841.404; 
and
    (4) Use the economic assumptions under Sec.  841.414(b). When a 
request is based in whole or in part on a pattern of merit salary 
increases, the report may include an analysis of the economic 
assumptions concerning salary and wage growth to take into account the 
combined effect of merit and general wage and salary growth.

0
21. Add Sec.  841.417 to subpart D to read as follows:


Sec.  841.417   Reconsideration of the supplemental liability.

    (a) The Board cannot sustain a request for reconsideration unless 
the Board finds that--
    (1) The data used in the actuarial report required by Sec.  841.416 
are sufficient and reliable;
    (2) The assumptions used in the actuarial report required by Sec.  
841.416 are justified; and
    (3) The difference in the supplemental liability amount is at least 
2 percent of the present value of future benefits calculated in OPM's 
computation of the supplemental liability.
    (b) If the Board sustains a request for reconsideration of the 
supplemental liability, OPM will recompute the supplemental liability 
according to the economic and demographic assumptions recommended by 
the Board.

PART 842--FEDERAL EMPLOYEES RETIREMENT SYSTEM--BASIC ANNUITY

0
 22. The authority citation for part 842 continues to read as follows:

    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 Secs. 
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 Sec. 102(e) of Pub. L. 104-8, 109 Stat. 102, as amended 
by Sec. 153 of Pub. L. 104-134, 110 Stat. 1321-102; Sec. 842.107 
also issued under Secs. 11202(f), 11232(e), and 11246(b) of Pub. L. 
105-33, 111 Stat. 251, and Sec. 7(b) of Pub. L. 105-274, 112 Stat. 
2419; Sec. 842.108 also issued under Sec. 7(e) of Pub. L. 105-274, 
112 Stat. 2419; Sec. 842.109 also issued under Sec. 1622(b) of 
Public Law 104-106, 110 Stat. 515; Sec. 842.208 also issued under 
Sec. 535(d) of Title V of Division E of Pub. L. 110-161, 121 Stat. 
2042; Sec. 842.213 also issued under 5 U.S.C. 8414(b)(1)(B) and Sec. 
1313(b)(5) of Pub. L. 107-296, 116 Stat. 2135; Secs. 842.304 and 
842.305 also issued under Sec. 321(f) of Pub. L. 107-228, 116 Stat. 
1383, 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 Sec. 7001(a)(4) of Pub. 
L. 101-508, 104 Stat. 1388; Sec. 842.707 also issued under Sec. 6001 
of Pub. L. 100-203, 101 Stat. 1300; Sec. 842.708 also issued under 
Sec. 4005 of Pub. L. 101-239, 103 Stat. 2106 and Sec. 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 Sec. 636 of Appendix C to Pub. 
L. 106-554 at 114 Stat. 2763A-164; Sec. 842.811 also issued under 
Sec. 226(c)(2) of Public Law 108-176, 117 Stat. 2529; Subpart J also 
issued under Sec. 535(d) of Title V of Division E of Pub. L. 110-
161, 121 Stat. 2042.

Subpart F--Survivor Elections

0
23. Amend Sec.  842.602 by revising the definition of ``present value 
factor'' to read as follows:


Sec.  842.602  Definitions.

* * * * *
    Present value factor means the amount of money (earning interest at 
an assumed rate) required at the time of annuity commencement to fund 
an

[[Page 49282]]

annuity that starts at the rate of $1 a month and is payable in monthly 
installments for the annuitant's lifetime based on mortality rates for 
annuitants paid from the Civil Service Retirement and Disability Fund; 
and increases each year at an assumed rate of cost-of-living 
adjustment. Assumed rates of interest, mortality, and cost-of-living 
adjustments used in computing the present value are those used by the 
Board of Actuaries of the Civil Service Retirement System for valuation 
of the Federal Employees' Retirement System based on dynamic 
assumptions. The present value factors are unisex factors obtained as a 
composite of sex-distinct present value factors. Separate present value 
factors apply for FERS annuities that receive cost-of-living 
adjustments before the retiree attains age 62, versus FERS annuities 
that do not receive cost-of-living adjustments before the retiree 
attains age 62.
* * * * *

0
24. Add Sec.  842.616 to subpart F to read as follows:


Sec.  842.616   Publication of present value factors.

    When OPM publishes in the Federal Register notice of normal cost 
percentages under Sec.  841.407, it will also publish updated present 
value factors.

Subpart G--Alternative Forms of Annuities

0
25. Amend Sec.  842.702 by revising the definition of ``present value 
factor'' to read as follows:


Sec.  842.702  Definitions.

* * * * *
    Present value factor has the same meaning in this subpart as 
defined in Sec.  842.602.
* * * * *

PART 847--ELECTIONS OF RETIREMENT COVERAGE BY CURRENT AND FORMER 
EMPLOYEES OF NONAPPROPRIATED FUND INSTRUMENTALITIES

0
26. The authority citation for part 847 continues to read as follows:

    Authority:  5 U.S.C. 8332(b)(17) and 8411(b)(6) and sections 
1131 and 1132 of Pub. L. 107-107, December 28, 2001, 115 Stat 1242; 
5 U.S.C. 8347(a) and 8461(g) and section 1043(b) of Pub. L. 104-106, 
Div. A, Title X, Feb. 10, 1996, 110 Stat. 434. Subpart B also issued 
under 5 U.S.C. 8347(q) and 8461(n).

Subpart A--General Provisions

0
27. Amend Sec.  847.103(b) to revise the definition of ``actuarial 
present value'' and to add the definition of ``present value factor'' 
in alphabetical order as follows:


Sec.  847.103  Definitions.

* * * * *
    (b) * * *
    Actuarial present value means the amount of monthly annuity at time 
of retirement multiplied by the applicable present value factor.
    * * *
    Present value factor has the same meaning in this part as defined 
in Sec.  842.602.
* * * * *

Subpart F--Additional Employee Costs Under the Retroactive 
Provisions


Sec.  847.602  [Removed and Reserved]

0
28. Remove and reserve Sec.  847.602.

[FR Doc. 2017-23141 Filed 10-24-17; 8:45 am]
 BILLING CODE 6325-38-P