82 FR 49277 - Federal Employees' Retirement System; Government Costs
OFFICE OF PERSONNEL MANAGEMENT Federal Register Volume 82, Issue 205 (October 25, 2017)
Federal Register Volume 82, Issue 205 (October 25, 2017)
| Page Range | 49277-49282 | |
| FR Document | 2017-23141 |
[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] ======================================================================== Rules and Regulations Federal Register ________________________________________________________________________ This section of the FEDERAL REGISTER contains regulatory documents having general applicability and legal effect, most of which are keyed to and codified in the Code of Federal Regulations, which is published under 50 titles pursuant to 44 U.S.C. 1510. The Code of Federal Regulations is sold by the Superintendent of Documents. ======================================================================== 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
![49278 Federal Register / Vol. 82, No. 205 / Wednesday, October 25, 2017 / Rules and Regulations
OPM must include Capitol Police in the OPM’s final rule requires that the based on the economic assumptions
Congressional employee normal cost actuarial analysis submitted with the determined by the Board for the most
percentage calculation under 5 U.S.C. request for reconsideration must recent valuation of FERS. Therefore,
8423(a)(1)(B). Therefore, OPM’s final demonstrate a difference in the nothing in the regulations would
rule amends 5 CFR 841.403(b) to reflect supplemental liability of at least 2 prevent the Board from using general
all Congressional employees including percent of the present value of future salary growth and wage assumptions
members of the Capitol Police in benefits calculated in OPM’s specific to U.S. Postal Service
determining the FERS, FERS–RAE and computation of the supplemental employees when, in the Board’s
FERS–FRAE normal cost percentages for liability. judgment, doing so would be
the ‘‘Congressional Employees’’ Additionally, OPM’s final rule refines appropriate.
category. the definitions of present value factor OPM disagrees with the U.S. Postal
OPM’s final rule amends 5 CFR and actuarial present value under 5 CFR Service OGC’s assertion that 5 U.S.C.
841.403 to include U.S. Postal Service parts 831, 839, 842, and 847 to ensure 8401(27)(A), 8423(b)(1), and
employees as a separate category for that these definitions are uniform and 8348(h)(1)(A) require OPM to establish
which OPM will derive normal cost appropriate. OPM’s final rule clarifies, regulations that direct the Board to
percentages. OPM has determined a under 5 CFR 831.303, 831.603, select general salary growth economic
Government-wide normal cost 831.2202, 839.102, 842.602, 842.702, assumptions specific to the U.S. Postal
percentage for each category of and 847.103, that the present value Service for use in determining the
employee, and U.S. Postal Service factors are computed by using a normal costs and supplemental
employees have been included in the composite of sex-distinct factors based liabilities. The provisions under 5
category of either ‘‘all other employees’’ upon mortality assumptions for U.S.C. 8401(23), 8401(27)(B)(iv), and
or ‘‘law enforcement officer’’ under 5 annuitant populations. The factors 8348(h)(1)(A) require OPM to determine
CFR 841.403(c) and (g). Because of the reflect an increase in benefit payments the normal costs and supplemental
separate U.S. Postal Service funding at an assumed rate of cost-of living liabilities by applying ‘‘generally
provisions established under 5 U.S.C. adjustment, where appropriate. OPM accepted actuarial principles,’’ and 5
8423(b), and as a result of removed 5 CFR 847.602, which U.S.C. 8347(f) and 8423(a)(5) require the
recommendations from the Board, provided a separate description of Board to ‘‘furnish its advice and opinion
OPM’s final rule amends its regulations present value factors for purposes of on matters referred to it by the Office’’
to provide for the use of U.S. Postal subpart F of part 847 in order to include and to make recommendations that ‘‘in
Service-specific assumptions regarding a definition of ‘‘present value factor’’ for the Board’s judgment are necessary to
demographic factors in the calculation all of part 847, and OPM added 5 CFR protect the public interest and maintain
of the U.S. Postal Service supplemental 842.616 to describe when the present the System on a sound financial basis.’’
liability and in the determination of the value factors will be published. OPM’s The selection of economic assumptions
normal cost percentage for U.S. Postal final rule clarifies under 5 CFR 842.602 used to determine the normal costs or
Service employees who do not fall and 842.702 that separate present value the supplemental liability is inherently
under the category of ‘‘law enforcement factors apply to FERS annuities that actuarial in nature. OPM finds that
officer.’’ OPM’s final rule amends receive cost-of-living adjustments before requiring the use of general salary
regulations at 5 CFR 841.414, which the retiree attains age 62 versus growth economic assumptions specific
will provide specific guidance on the annuities that do not receive cost-of- to the U.S. Postal Service for use in
calculation of the supplemental living adjustments before age 62. determining the normal costs and
liability; and OPM’s final rule adds supplemental liabilities would
Comments
employees of the U.S. Postal Service, unnecessarily limit the Board’s
who are not ‘‘law enforcement officers’’ OPM received comments on its discretion in making these
under 5 CFR 841.403(c), as a separate proposed rule from the U.S. Postal determinations. As a result, OPM
category for which OPM will derive Service Office of Inspector General declines to adopt the U.S. Postal Service
normal cost percentages under 5 CFR (OIG) and the U.S. Postal Service OGC’s recommendation to require the
841.403. OPM’s final rule removes General Counsel’s Office (OGC). The Board to select U.S. Postal Service-
references to the term ‘‘Government- U.S. Postal Service OIG indicated that it specific economic assumptions for use
wide normal cost percentage’’ from 5 ‘‘support[ed] the Proposed Rule as far as in determining the normal costs and the
CFR part 841 in order to conform with it goes,’’ and the U.S. Postal Service supplemental liability. To the extent the
the normal cost percentages established OGC indicated that OPM’s proposed U.S. Postal Service would like to submit
for various categories of employees as changes were a ‘‘welcomed step,’’ but for the Board’s consideration any
provided under this part, and to clarify both organizations recommended that information regarding the actuarial
that an agency may appeal a published the rule require not only the use of U.S. merits of selecting U.S. Postal Service-
normal cost percentage even if the Postal Service-specific demographic specific economic assumptions for use
normal cost percentage applies to a factors but also the use of U.S. Postal in determining the normal cost and the
category of employee that exists Service-specific economic factors supplement liability, it may do so in
predominately or exclusively within a related to general salary growth accordance with the requirements of
single agency. assumptions in determining the normal Board meeting notices.
OPM’s final rule also adds 5 CFR costs and the supplemental liability. The U.S. Postal Service OGC also
841.415 through 841.417 to the OPM has determined that this change requested that OPM make clear in its
regulations. These sections establish the is unnecessary. Currently, the final rule that, in instances where OPM
regulations under 5 CFR 841.405
nlaroche on DSK9F9SC42PROD with RULES
procedures and requirements for filing a has computed a separate normal cost
request for reconsideration of a provide that the normal cost percentages percentage, an agency’s right to appeal
supplemental liability determination will be based on the economic and submit the evidence necessary to
filed by the Secretary of the Treasury or assumptions determined by the Board, support the appeal should be related to
the Postmaster General. Under 5 CFR and OPM’s final rule amends 5 CFR OPM’s determination of that normal
841.417, and consistent with 841.414 to provide that each cost percentage rather than any
recommendations from the Board, supplemental liability will be computed Government-wide normal cost
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![49282 Federal Register / Vol. 82, No. 205 / Wednesday, October 25, 2017 / Rules and Regulations
annuity that starts at the rate of $1 a and to add the definition of ‘‘present Management and Budget (OMB) under
month and is payable in monthly value factor’’ in alphabetical order as Executive Order 12866.
installments for the annuitant’s lifetime follows:
Authority
based on mortality rates for annuitants
paid from the Civil Service Retirement § 847.103 Definitions. The Multi-Family Housing program
and Disability Fund; and increases each * * * * * (MFH) is administered, subject to
year at an assumed rate of cost-of-living (b) * * * appropriations, by the U.S. Department
adjustment. Assumed rates of interest, Actuarial present value means the of Agriculture (USDA) as authorized
mortality, and cost-of-living adjustments amount of monthly annuity at time of under Sections 514, 515, 516 and 521 of
used in computing the present value are retirement multiplied by the applicable the Housing Act of 1949, as amended
those used by the Board of Actuaries of present value factor. (42 U.S.C. 1484, 1485, 1486, and 1490).
the Civil Service Retirement System for * * *
Present value factor has the same Environmental Impact Statement
valuation of the Federal Employees’
Retirement System based on dynamic meaning in this part as defined in This document has been reviewed in
assumptions. The present value factors § 842.602. accordance with 7 CFR part 1970,
are unisex factors obtained as a * * * * * ‘‘Environmental Program.’’ RHS has
composite of sex-distinct present value determined that this action does not
factors. Separate present value factors Subpart F—Additional Employee Costs constitute a major Federal action
apply for FERS annuities that receive Under the Retroactive Provisions significantly affecting the quality of the
cost-of-living adjustments before the environment. In accordance with the
§ 847.602 [Removed and Reserved] National Environmental Policy Act of
retiree attains age 62, versus FERS
annuities that do not receive cost-of- ■ 28. Remove and reserve § 847.602. 1969, Public Law 91–190, an
living adjustments before the retiree [FR Doc. 2017–23141 Filed 10–24–17; 8:45 am] Environmental Impact Statement is not
attains age 62. BILLING CODE 6325–38–P
required.
* * * * * Regulatory Flexibility Act
■ 24. Add § 842.616 to subpart F to read This final rule has been reviewed
as follows: DEPARTMENT OF AGRICULTURE with regard to the requirements of the
§ 842.616 Publication of present value Rural Housing Service Regulatory Flexibility Act (5 U.S.C.
factors. 601–612). The undersigned has
7 CFR Part 3560 determined and certified by signature
When OPM publishes in the Federal
on this document that this rule will not
Register notice of normal cost RIN 0575–AC98 have a significant economic impact on
percentages under § 841.407, it will also
a substantial number of small entities
publish updated present value factors. Multi-Family Housing Program since this rulemaking action does not
Requirements To Reduce Financial involve a new or expanded program nor
Subpart G—Alternative Forms of Reporting Requirements
Annuities does it require any more action on the
AGENCY: Rural Housing Service, USDA. part of a small business than required of
■ 25. Amend § 842.702 by revising the a large entity.
ACTION: Final rule.
definition of ‘‘present value factor’’ to
Executive Order 13132, Federalism
read as follows: SUMMARY: The Rural Housing Service
(RHS) is revising its existing regulations The policies contained in this rule do
§ 842.702 Definitions. not have any substantial direct effect on
regarding financial reporting. This
* * * * * action is necessary to align RHS States, on the relationship between the
Present value factor has the same requirements with those of the United National Government and the States, or
meaning in this subpart as defined in States Department of Housing and on the distribution of power and
§ 842.602. Urban Development (HUD) utilizing a responsibilities among the various
* * * * * risk-based threshold reporting which levels of Government. This rule does not
will reduce the burden on the borrower impose substantial direct compliance
PART 847—ELECTIONS OF to produce multiple financial reports; costs on State and local Governments;
RETIREMENT COVERAGE BY focus on high-risk properties; and, therefore, consultation with the States is
CURRENT AND FORMER EMPLOYEES reduce the financial cost of reporting on not required.
OF NONAPPROPRIATED FUND properties.
INSTRUMENTALITIES Executive Order 12988, Civil Justice
DATES: This rule is effective November Reform
■ 26. The authority citation for part 847 24, 2017. This rule has been reviewed under
continues to read as follows: FOR FURTHER INFORMATION CONTACT: Executive Order 12988. In accordance
Authority: 5 U.S.C. 8332(b)(17) and Janet Stouder, Deputy Director, Multi- with this rule: (1) Unless otherwise
8411(b)(6) and sections 1131 and 1132 of Family Housing Portfolio Management specifically provided, all State and local
Pub. L. 107–107, December 28, 2001, 115 Stat Division, Rural Housing Service, Room laws that are in conflict with this rule
1242; 5 U.S.C. 8347(a) and 8461(g) and 1237S—STOP 0782, 1400 Independence will be preempted; (2) no retroactive
section 1043(b) of Pub. L. 104–106, Div. A, Avenue SW., Washington, DC 20250– effect will be given to this rule except
Title X, Feb. 10, 1996, 110 Stat. 434. Subpart 0782, Telephone: (202) 720–9728. as specifically prescribed in the rule;
nlaroche on DSK9F9SC42PROD with RULES
B also issued under 5 U.S.C. 8347(q) and
SUPPLEMENTARY INFORMATION: and (3) administrative proceedings of
8461(n).
the National Appeals Division of the
Executive Order 12866, Classification Department of Agriculture (7 CFR part
Subpart A—General Provisions
This final rule has been determined to 11) must be exhausted before bringing
■ 27. Amend § 847.103(b) to revise the be non-significant and, therefore was suit in court that challenges action taken
definition of ‘‘actuarial present value’’ not reviewed by the Office of under this rule.
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Document Created: 2017-10-25 01:17:29
Document Modified: 2017-10-25 01:17:29
| Category | Regulatory Information | |
| Collection | Federal Register | |
| sudoc Class | AE 2.7: GS 4.107: AE 2.106: | |
| Publisher | Office of the Federal Register, National Archives and Records Administration | |
| Section | Rules and Regulations | |
| Action | Final rule. | |
| Dates | This rule is effective October 25, 2017. | |
| Contact | Roxann Johnson, (202) 606-0299 or [email protected] | |
| FR Citation | 82 FR 49277 | |
| RIN Number | 3206-AN22 | |
| CFR Citation | 5
CFR
831 5 CFR 839 5 CFR 841 5 CFR 842 5 CFR 847 | |
| CFR Associated | Firefighters; Government Employees; Income Taxes; Intergovernmental Relations; Law Enforcement Officers; Pensions; Reporting and Recordkeeping Requirements; Retirement; Administrative Practice and Procedure; Claims; Employment Taxes; Social Security; Air Traffic Controllers; Disability Benefits and Alimony |
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