[Federal Register Volume 61, Number 155 (Friday, August 9, 1996)]
[Rules and Regulations]
[Pages 41714-41728]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-20333]
[[Page 41713]]
_______________________________________________________________________
Part V
Office of Personnel Management
_______________________________________________________________________
5 CFR Part 831, et al.
Election of Retirement Coverage by Current and Former Nonappropriated
Fund Employees; Interim Final Rule
Federal Register / Vol. 61, No. 155 / Friday, August 9, 1996 / Rules
and Regulations
[[Page 41714]]
OFFICE OF PERSONNEL MANAGEMENT
5 CFR Parts 831, 837, 841, 842, 843, 844, and 847
RIN 3206-AH57
Elections of Retirement Coverage by Current and Former
Nonappropriated Fund Employees
AGENCY: Office of Personnel Management.
ACTION: Interim rule with request for comments.
-----------------------------------------------------------------------
SUMMARY: The Office of Personnel Management (OPM) is issuing interim
regulations to implement the civilian-retirement provisions of the
National Defense Authorization Act for Fiscal Year 1996 and to
consolidate existing regulations concerning employees affected by these
provisions. That statute provides certain employees with an opportunity
to elect to continue vested retirement coverage after a qualifying
employment move between a civil service position and a nonappropriated
fund instrumentality (NAFI), and vice versa, and under limited
circumstances to receive credit for past NAFI service under the Civil
Service Retirement System or the Federal Employees Retirement System.
These regulations establish election procedures and the methodology for
computing the employee costs as required by the statute.
DATES: Interim rules effective August 10, 1996; comments must be
received on or before October 8, 1996.
ADDRESSES: Send comments to John E. Landers, Chief, Retirement Policy
Division; Retirement and Insurance Service; Office of Personnel
Management; P.O. Box 57; Washington, DC 20044; or deliver to OPM, Room
4351, 1900 E Street, NW., Washington DC.
FOR FURTHER INFORMATION CONTACT:
Cynthia Reinhold, (202) 606-0299.
SUPPLEMENTARY INFORMATION:
1. Overview
Section 1043 of the National Defense Authorization Act for Fiscal
Year 1996, Public Law 104-106 approved February 10, 1996, amends the
existing provisions of law under which certain employees who are vested
in the Civil Service Retirement System (CSRS), the Federal Employees
Retirement System (FERS), or a retirement plan established for
employees of nonappropriated fund instrumentalities (NAFI) described in
section 2105(c) of title 5, United States Code, may elect to continue
coverage in a vested retirement system upon a move between appropriated
and nonappropriated fund employment. Additionally, section 1043
provides a 1-year period for certain employees who would have been
eligible to elect to continue vested retirement benefits had the new
requirements been in effect at the time of the change in employment, to
retroactively elect to continue the retirement coverage they had before
a qualifying employment move that occurred after December 31, 1965, and
before the effective date of implementing regulations. During the
retroactive election period, certain employees now covered by a NAFI
retirement system who have prior service under CSRS or FERS may elect
to return to CSRS or FERS coverage or to receive credit under the NAFI
retirement system for FERS service. [Note: The following sentence and
Sec. 847.415 may be amended depending on the response to our inquiry to
the IRS.] NAFI employees who elect to return retroactively to CSRS
coverage will receive full CSRS coverage for the retroactive period and
will be prospectively covered by the CSRS Offset provisions, which are
applicable to CSRS employees who are mandatorily covered by Social
Security, because the Social Security coverage in effect during their
NAFI service will continue. Certain employees who have been
continuously covered by FERS and have prior service with a NAFI may be
eligible to elect to return to coverage under the NAFI retirement
system, or to receive credit under FERS for the NAFI service.
2. Qualifying Moves
The Portability of Benefits for Nonappropriated Fund Employees Act
of 1990 (sections 8347(q) and 8461(n) of title 5, United States Code),
Public Law 100-508 provided that certain NAFI employees within the
Department of Defense (DoD) and the U.S. Coast Guard may elect to
continue vested coverage under a retirement system for NAFI employees
upon a move to a DoD or Coast Guard appropriated fund position.
Likewise, certain DoD or Coast Guard appropriated fund employees could
elect to continue vested retirement coverage under CSRS or FERS upon a
move to a DoD or Coast Guard NAFI position.
The right to make an election under the 1990 Portability Act is
linked to conditions surrounding the employment move. Only those
employees whose move between civil service and NAFI employment, or vice
versa, met certain criteria set out in the law were granted the
opportunity to elect to continue retirement coverage; the law did not
make NAFI service creditable under CSRS or FERS.
Section 1043 of Public Law 104-106 expands the opportunities for
employees to elect to continue retirement coverage upon a change in
employment status. Except in limited circumstances explained below, the
changes made by section 1043 have not made service with a NAFI
creditable for CSRS or FERS purposes.
3. Qualifying Moves for Prospective Elections
An employment move triggers an opportunity to elect to continue
retirement coverage under the provisions of the 1996 Act if it meets
all of the following four criteria:
The employee must not have had a prior opportunity to
elect to continue the same retirement coverage under the 1990
Portability provisions, and
The employee must have been vested in a retirement plan
prior to the change in employment, and
The employee must have moved from a NAFI within the DoD or
the Coast Guard to any civil service position, or have moved from a
civil service position to a NAFI within the DoD or the Coast Guard, and
The break in employment qualifying for retirement coverage
was not more than 1 year.
These provisions apply to any move occurring on or after August 10,
1996. A move is considered to have been made at the time the individual
enters into the new position, not at the time of separation from the
prior position. For example, an individual may have separated from an
appropriated fund position subject to FERS on December 31, 1995. The
same individual received an appointment with a NAFI subject to the NAFI
retirement plan on September 29, 1996. Assuming all other criteria are
met, the individual has completed a qualifying employment move and is
eligible to elect to continue FERS coverage instead of accepting NAFI
plan coverage.
4. Qualifying Moves for Retroactive Elections
For certain employees who moved from a civil service position
subject to CSRS or FERS to a position in a NAFI covered by a NAFI
retirement system, and vice versa, at any time after December 31, 1965,
and before August 10, 1996, section 1043 of Public Law 104-106 provides
a limited opportunity to elect to continue retirement coverage
retroactive to the date of the qualifying employment move. To be
eligible to retroactively elect retirement coverage,
[[Page 41715]]
the move to or from civil service and NAFI employment must meet the new
definition of ``qualifying move'' in section 847.402 of these
regulations. However, the law specifically excludes three classes of
individuals from making a retroactive election.
Previous Retirement Coverage Election Opportunity
Employees who had an opportunity to elect to continue retirement
coverage under the provisions of the 1990 Portability Act before
February 10, 1996, or who elected to continue retirement coverage
before August 10, 1996, are not eligible to elect retirement coverage
based on an earlier qualifying move.
Employees with a qualifying move occurring after February 10, 1996,
(the date Public Law 104-106 was enacted) and before August 10, 1996,
may elect to continue retirement coverage based on a qualifying move
under these regulations only if they have not already exercised an
election right under the provisions of the 1990 Portability Act. The
DoD issued a blanket waiver of the 30-day time limit for elections
under the 1990 Portability Act on March 4, 1996. Employees who delayed
their election right under the waiver may now elect to continue
coverage under either the 1990 Portability rules or the retroactive
provisions established by these regulations. DoD will allow until
December 31, 1996, for employees in this category--all of whom are DoD
employees who have made a qualifying employment move under the 1990
Portability Act on or after February 10, 1996--to make their retirement
coverage elections under the new regulations.
Continuous Retirement Coverage Requirement
Current NAFI employees who moved under conditions which would allow
an opportunity to elect to continue retirement coverage may make a
retroactive election only if they have remained continuously subject to
a retirement system established for NAFI employees since the qualifying
move. A break in service of 3 days or less is not considered a break in
retirement coverage for retroactive election eligibility purposes.
Likewise, a current FERS employee who would be eligible to
retroactively elect to continue NAFI retirement system coverage is
eligible to make that election only if he or she has remained
continuously subject to FERS since the qualifying move. (The statute
contains an inconsistent reference to continuous CSRS coverage
following the employment move (section 1043(c)(2)(B)(II)), which cannot
be given effect in conjunction with the plain and unambiguous statement
in section 1043(c)(2)(B)(III), as explained in the next paragraph.)
Moves to the CSRS
If the employment move on which an election would be based was from
a NAFI to the CSRS, the employee is not eligible to make a retroactive
election. Subclause (III) of section 1043(c)(2)(B) bars any individual
from making a retroactive election--
if such election would be based on a move to the Civil Service
Retirement System from a retirement system established for employees
[of a NAFI].
Therefore, an employee who is currently subject to CSRS has no new
opportunity under these regulations to elect to continue retirement
coverage based on a move from a NAFI retirement system to CSRS.
The bar on retroactive elections based on moves to the CSRS also
applies to employees now covered by FERS who elected FERS during the
1987 open season or later. If an employee moved from a NAFI retirement
system to CSRS (including the CSRS Interim provisions in effect from
January 1, 1984 through December 31, 1986, and the CSRS Offset
provisions in effect on and after January 1, 1987), and later elected
FERS coverage, he or she is not eligible to make a retroactive election
of NAFI retirement system coverage. Moves from a NAFI retirement system
to CSRS Interim coverage, followed by automatic, as opposed to
elective, FERS coverage, with all the CSRS Interim service being
retroactively converted to FERS service, will be considered a move to
FERS.
5. Alternative Election of Service Credit
Section 1043 of Public Law 104-106 also provides for an alternative
election for employees currently covered by FERS or a NAFI retirement
system. To be eligible to alternatively elect service credit, the FERS
or NAFI employee must meet all the eligibility criteria for a
retroactive election of retirement coverage. However, the requirement
that the employee not have had a previous opportunity to elect to
continue retirement coverage under the 1990 Portability Act provisions
does not apply. That is, an employee currently covered by FERS or
participating in a NAFI retirement system who previously elected his or
her current retirement coverage based on a past qualifying move, or who
had the opportunity to elect to continue retirement coverage, is
eligible to make an alternative election provided he or she meets all
other criteria.
Under the alternative election opportunity, an eligible employee
covered by FERS may elect to receive credit in his or her FERS
retirement benefit for any prior civilian service which would be
creditable for NAFI retirement system purposes and to continue coverage
under FERS for all future periods of Federal service. Similarly, a NAFI
employee who is participating in a NAFI retirement system may elect to
receive credit toward eligibility for a NAFI retirement benefit for any
prior civilian service which would be creditable for FERS purposes,
without regard to redeposit, and to continue coverage under the NAFI
retirement system for all future periods of Federal service. By making
this election in lieu of a retroactive election of retirement coverage,
an employee with multiple periods of service subject to another
retirement system could combine credit for the service under his or her
current retirement system. In contrast, by making a retroactive
election of retirement coverage, only service performed since the date
of the qualifying move becomes creditable under the new retirement
system.
For example, an individual was employed in a NAFI from 1981 through
1988 and subject to the NAFI's retirement system. Five months after her
separation from the NAFI, the same individual was employed in a civil
service position subject to FERS. She remained subject to FERS until
early 1995, and then after a 5-month break in service she became
employed by a NAFI covered by the NAFI retirement system and has
remained so employed to date. This employee now may choose among the
following elections:
A. Elect to be covered by FERS retroactive to the effective date of
her 1995 NAFI appointment. The employee would not receive FERS credit
for the NAFI service from 1981 through 1988 since her qualifying move
is the 1995 move from FERS to a NAFI (the move in 1988 from a NAFI to
the FERS is not qualifying since she did not remain continuously
covered by FERS); or
B. Elect to remain in the NAFI retirement system with retirement
eligibility credit for her FERS service. Should the employee move to a
FERS position in the future, she would remain covered by her NAFI
retirement system. Her FERS service would cease to be creditable for
any purpose under FERS.
C. Make no election. The employee would remain subject to a NAFI
retirement plan with service from 1988 to 1995 subject to FERS. Should
the employee move to FERS in the future, she may have an opportunity to
[[Page 41716]]
continue the NAFI retirement coverage if her move is qualifying.
To be eligible for the alternative election opportunity, the FERS
or NAFI employee must be otherwise eligible to elect to continue
retirement coverage retroactive to the date of a qualifying move.
Therefore, FERS employees who are unable to elect to retroactively
continue retirement coverage because they moved from a NAFI to CSRS are
also unable to elect to credit previous NAFI service under FERS. A FERS
or NAFI retirement system annuitant is also ineligible to elect to
credit previous service toward his or her annuity benefit.
6. Service Which Is Creditable Under the Alternative Election
Under the alternative election (to remain in the current retirement
system and receive credit for service performed under a previous
retirement system), section 1043 provides that any service which would
be qualifying for FERS or NAFI retirement purposes may be credited
toward the current retirement system. In many cases, employees opted to
withdraw their contributions to a retirement system upon employment in
a position that was subject to another retirement system with no
opportunity to combine the service. While a refund would generally
terminate an individual's service credit under FERS or a NAFI
retirement system, section 1043 provides for the transfer of service
credit regardless of refund status. In the case of a FERS employee who
has previously received a refund of his or her NAFI retirement
contributions and elects FERS service credit for the NAFI service, the
DoD or Coast Guard will transfer the employer contributions which were
deposited on the employee's behalf during the NAFI employment. In the
case of a NAFI employee who elects NAFI credit for previous FERS
service, OPM will certify the periods of FERS service as qualifying to
the DoD or Coast Guard if the employee has withdrawn his or her
contributions for the FERS service. For service subject to FERS,
transferable service would include non-contributory service performed
prior to January 1, 1989. Non-contributory service performed after
December 31, 1988, is not creditable FERS service and credit for such
service would therefore not transfer to a NAFI retirement system.
Military service is creditable under the general CSRS and FERS rules
and is not affected by these regulations.
7. Effective Dates
Prospective and retroactive elections of retirement coverage made
on or after August 10, 1996, are effective on the date of appointment
to a retirement-covered position which completed the qualifying move.
Under no circumstances can an election take effect earlier than the
first appointment subject to retirement coverage.
An alternative election to remain covered under the current FERS or
NAFI retirement system, and to obtain service credit for time under the
other system, is effective on the date of receipt of the election in
the employing agency. The service performed subject to another
retirement system becomes creditable under the current retirement
system at the time the election is made.
8. Transfer of Contributions
Section 1043 of Public Law 104-106 requires that for certain
elections, the current retirement system transfer to the elected
retirement system all retirement deductions withheld from the
employee's salary, interest on the employee's deductions, and
retirement contributions contributed by the employing agency on the
employee's behalf.
For elections of CSRS and FERS coverage, including elections of
FERS service credit, the DoD or the Coast Guard will transfer to the
Civil Service Retirement and Disability Fund the NAFI employee and
employer retirement contributions credited to the employee.
Employee retirement contributions transfer with interest because
this is specifically provided by section 1043(c)(2)(C)(i). No interest
is includable in a transfer of employer contributions.
Any employee deductions plus interest which are transferred to the
Civil Service Retirement and Disability Fund will become part of the
employee's credit which is payable to the employee or survivors in the
case of separation or death. The government share of the NAFI
contributions, if any, is not payable to the employee or the employee's
survivors under any circumstances. NAFI contributions transferred to
the Fund will thereafter accrue interest under current procedures.
For retroactive elections of NAFI retirement plan coverage, the
Office of Personnel Management will transfer to either the DoD or the
Coast Guard the total amount withheld from the employee's salary for
FERS retirement, any deposits made by the employee for civilian
service, interest accrued on the employee's deductions and
contributions, and amounts contributed by the employing agency without
interest. For elections by NAFI employees of NAFI retirement credit for
previous periods of FERS service, section 1043 does not allow OPM to
transfer any contributions associated with the FERS service to the DoD
or Coast Guard.
9. Employee Costs Associated With Retroactive Elections
Section 1043 of Public Law 104-106 provides that if the total
amount of the contributions transferred to the elected retirement
system do not cover the increase in the ``actuarial present value'' of
the employee's future retirement benefit attributable to the service
covered by the election, the employee must fund the difference. The
actuarial present value of a retirement benefit is the amount of money
that would have to be set aside to finance all of the retirement
benefits an employee would receive during his or her expected lifetime.
Therefore, section 1043 requires employees to fully finance the
increase in their retirement benefit attributable to the retroactive
election which is not otherwise funded by the transfer of
contributions.
The regulations require that the calculation of the actuarial
present value of NAFI service made creditable under CSRS or FERS be
delayed until the time a retirement or survivor benefit based on the
NAFI service actually becomes payable. By delaying the calculation, the
exact annuity benefit based on the employees' age, service, salary and
survivor election can be determined. This method is preferable to
calculating a future retirement benefit based on a set of assumed
conditions which may not reflect the employee's actual circumstances.
In the event the additional NAFI service does not increase the
retirement benefit payable to the employee or survivor, as in some
disability retirements, the employee will not be required to fund the
NAFI service.
The regulations do not require that the employee fund the increase
in the actuarial present value by making a deposit. Rather, the section
1043 funding requirement will be satisfied by a permanent reduction in
the monthly retirement benefit. The monthly reduction will be based on
actuarial factors which effectively collect the increase in the
actuarial present value over the remaining life expectancy of the
retiree or survivor. If the NAFI service does not create an annuity
entitlement or increase the payable benefit to the employee or
survivor, then the monthly reduction would be zero. If the NAFI service
does increase the CSRS or FERS benefit, the employee or survivor
annuity will reflect credit for
[[Page 41717]]
all the NAFI service attributable to the retroactive election and a
permanent actuarial reduction based on the amount required to fund the
annuity increase.
10. Calculation of Annuity Benefit Which Includes NAFI Service
At the time that a CSRS or FERS benefit payable to an employee or
survivor includes NAFI service made creditable by a retroactive
election, OPM will determine the actuarial present value of the NAFI
service, if any, and the monthly reduction in the annuity benefit. In
most cases the calculation will be made effective with the commencing
date of the retirement or survivor benefit. However, for FERS
disability annuitants and survivor annuitants, the calculation will not
be made until a benefit based on the employee's years of service and
salary becomes payable, usually at age 62. OPM will compare two annuity
benefit computations:
(A) The actuarial present value of a CSRS or FERS annuity that
includes credit for all NAFI service.
(B) The actuarial present value of a CSRS or FERS annuity without
credit for the NAFI service attributed to the election.
The actuarial present value is computed by multiplying the monthly
rate of annuity by a factor calculated by OPM's actuary using generally
accepted actuarial standards and on the basis of assumptions used by
the Board of Actuaries of the Civil Service Retirement System.
At the time OPM computes the actuarial present value of crediting
the NAFI service, we will increase the amount of contributions
transferred to the Fund by interest after the date of the transfer. The
difference between the actuarial present value of the benefits computed
under (A) and (B), above, is the actuarial present value of crediting
the NAFI service. The difference between the actuarial present value of
the NAFI service and the amount of contributions which were
transferred, plus interest, is the amount which will be funded by a
monthly annuity reduction. The regulations refer to this amount as the
``deficiency.''
If the additional NAFI service does not increase the annuity
otherwise payable to an individual, then there will be no reduction in
the annuity for the retroactive election. This could occur in cases
where the benefit payable is based on factors other than years of
service and salary. A disability benefit or a CSRS survivor annuity,
for example, may be based on a straight percentage of average salary
and additional NAFI service would not increase the benefit.
The deficiency is divided by the actuarial present value factor
corresponding to the employee or survivor's age at the time of the
calculation to determine the amount of the monthly annuity reduction.
After the annuity is reduced in this way, any further reductions for
survivor, CSRS-Offset, or the alternative form of annuity still apply.
Future cost-of-living adjustments are applied to the monthly annuity
payable after these reductions. If a survivor benefit becomes payable
after the death of a retired employee, the monthly survivor benefit is
not additionally reduced due to a deficiency. For example:
Employee retires at age 62 under FERS with 18 years of FERS service
and an additional 5 years of NAFI service made creditable under FERS.
High-three average salary is $40,000. The contributions transferred
from the NAFI retirement system, plus interest, equal $5,000.
Present value factor for age 62........... 161.3
Single life FERS annuity with credit for $843/month
NAFI service.
Actuarial present value................... $135,976 (161.3 x 843)
Single life FERS annuity without credit $600/month
for NAFI service.
Actuarial present value................... $96,780 (161.3 x 600)
Actuarial present value of NAFI service... $39,196 (135,976 - 96,780)
Unfunded amount (deficiency).............. $34,196 (39,196 - 5,000 in
contributions)
Monthly reduction......................... $212 (34,196 161.3)
Single life FERS annuity.................. $631/month (843 - 212)
FERS annuity with survivor benefit........ $567 (0.9 x 631)
Rate of survivor annuity.................. $315 (50% of $631)
In the above example, the employee did not retire earlier than he
would have otherwise been eligible to retire without the NAFI service.
Since annuity eligibility was not affected, the increase in the single
life annuity due to the NAFI service election is equal to the amount
transferred to the Fund divided by the appropriate present value
factor. (In the above example: $5,000 161.3 = $31. Annuity
without NAFI service increases $31 by the NAFI service election.)
When the NAFI service allows an employee to retire earlier than he
or she could have without the NAFI service, an additional step is added
to the computation of the funding deficiency. Because no annuity would
be immediately payable if NAFI service was not combined with civil
service, the present value of the immediate annuity that includes NAFI
service must be compared to the present value of the deferred annuity
that would have been the only benefit payable without crediting the
NAFI service. To determine the deficiency at the time the actual
annuity payments begin, we must therefore discount the present value of
the deferred annuity benefit at the time it would commence. In other
words, we begin by computing the present value of the deferred annuity
on its commencing date (without credit for the NAFI service). This is
computed by multiplying the deferred annuity rate by the actuarial
factor for the employee's age at the time the deferred annuity would
begin. By definition, the present value of the deferred annuity on its
commencing date (without credit for the NAFI service) is the amount
that would be required to fund such an annuity on that date. However,
the present value of the future deferred annuity on the date when
payments would begin, that is, the amount that would have to be set
aside on the actual annuity commencing date to fund the future deferred
annuity, is lower because the amount set aside would earn interest from
the actual immediate commencing date to the deferred annuity commencing
date. The method used to adjust the present value of the deferred
annuity is set out in section 847.607.
11. Effect of FERS Refunds
These regulations allow individuals who received a refund of their
FERS retirement contributions upon a move to a NAFI and elect to
continue coverage under FERS an opportunity to receive credit for the
FERS service represented by the refund. Employees under CSRS may repay
previous refunds at any time they are subject to CSRS. A refund of FERS
contributions generally cannot be repaid and the service represented by
the refund is not creditable toward FERS annuity eligibility or FERS
annuity computation. However, in the case of a NAFI employee who
retroactively elects FERS coverage, but received a refund of his or her
FERS contributions, the employee will receive credit for any periods of
refunded FERS service in the computation of the FERS benefit. The
amount of the FERS refund will accrue interest through the date of
separation. The refund amount plus interest will be added to the amount
of the funding deficiency, and therefore included in the actuarial
reduction in the annuity.
[[Page 41718]]
12. Present Value Factors
The following three charts contain the present value factors that
will apply to a CSRS or FERS annuity which includes NAFI service made
creditable by an election under section 1043 of Public Law 104-106
under the current economic assumptions of interest at 7 percent and
inflation at 4.5 percent together with the demographic assumptions
adopted by the Board of Actuaries. See 58 FR 49066, September 21, 1993.
CSRS Present Value Factors Applicable to an Annuity Payable Following an Election Under Section 1043 of Public
Law 104-106
----------------------------------------------------------------------------------------------------------------
Present Present Present
value of a value of a value of
Age at calculation monthly Age at calculation monthly Age at calculation a monthly
annuity annuity annuity
----------------------------------------------------------------------------------------------------------------
17............................... 377.9 42.................. 285.5 67.................. 150.7
18............................... 375.0 43.................. 280.8 68.................. 145.4
19............................... 372.0 44.................. 276.2 69.................. 140.2
20............................... 368.9 45.................. 270.4 70.................. 134.7
21............................... 365.8 46.................. 264.7 71.................. 129.4
22............................... 362.6 47.................. 259.2 72.................. 124.0
23............................... 359.3 48.................. 253.5 73.................. 118.8
24............................... 356.0 49.................. 247.2 74.................. 113.6
25............................... 352.6 50.................. 240.4 75.................. 108.5
26............................... 349.2 51.................. 235.0 76.................. 103.5
27............................... 345.7 52.................. 229.8 77.................. 98.7
28............................... 342.1 53.................. 224.4 78.................. 93.9
29............................... 338.4 54.................. 218.6 79.................. 89.4
30............................... 334.7 55.................. 212.6 80.................. 84.9
31............................... 331.0 56.................. 207.5 81.................. 80.5
32............................... 327.1 57.................. 202.4 82.................. 76.3
33............................... 323.3 58.................. 197.0 83.................. 72.3
34............................... 319.3 59.................. 192.3 84.................. 68.4
35............................... 315.3 60.................. 188.3 85.................. 64.7
36............................... 311.2 61.................. 182.9 86.................. 61.2
37............................... 307.1 62.................. 177.0 87.................. 57.9
38............................... 302.8 63.................. 171.9 88.................. 54.7
39............................... 298.6 64.................. 166.5 89.................. 51.8
40............................... 294.4 65.................. 161.1 90.................. 48.9
41............................... 290.0 66.................. 156.0
----------------------------------------------------------------------------------------------------------------
FERS Present Value Factors Applicable to an Annuity Payable Following an Election Under Section 1043 of Public
Law 104-106 When Annuity Is Increased by COLAS
----------------------------------------------------------------------------------------------------------------
Present Present Present
value of a value of a value of
Age at calculation monthly Age at calculation monthly Age at calculation a monthly
annuity annuity annuity
----------------------------------------------------------------------------------------------------------------
17............................... 301.7 42.................. 238.5 67.................. 139.1
18............................... 299.8 43.................. 235.0 68.................. 134.6
19............................... 297.9 44.................. 231.5 69.................. 130.1
20............................... 296.0 45.................. 227.9 70.................. 125.4
21............................... 294.0 46.................. 224.2 71.................. 120.7
22............................... 291.9 47.................. 220.3 72.................. 116.0
23............................... 289.8 48.................. 216.5 73.................. 111.4
24............................... 287.7 49.................. 212.6 74.................. 106.8
25............................... 285.4 50.................. 208.6 75.................. 102.2
26............................... 283.2 51.................. 204.5 76.................. 97.8
27............................... 280.8 52.................. 200.3 77.................. 93.5
28............................... 278.4 53.................. 196.1 78.................. 89.2
29............................... 276.0 54.................. 191.8 79.................. 85.0
30............................... 273.5 55.................. 187.4 80.................. 80.9
31............................... 270.9 56.................. 183.1 81.................. 77.0
32............................... 268.2 57.................. 178.6 82.................. 73.1
33............................... 265.5 58.................. 174.2 83.................. 69.4
34............................... 262.8 59.................. 169.7 84.................. 65.8
35............................... 260.0 60.................. 165.1 85.................. 62.4
36............................... 257.1 61.................. 160.4 86.................. 59.1
37............................... 254.1 62.................. 161.3 87.................. 56.0
38............................... 251.1 63.................. 157.1 88.................. 53.0
39............................... 248.1 64.................. 152.5 89.................. 50.2
40............................... 245.2 65.................. 148.0 90.................. 47.5
41............................... 241.9 66.................. 143.6
----------------------------------------------------------------------------------------------------------------
[[Page 41719]]
FERS Present Value Factors Applicable to an Annuity Payable Following an Election Under Section 1043 of Public
Law 104-106 When Annuity is Not Increased by COLAS
----------------------------------------------------------------------------------------------------------------
Present value Present value
Age at calculation of a monthly Age at calculation of a monthly
annuity annuity
----------------------------------------------------------------------------------------------------------------
40........................................... 169.2 51.............................. 161.9
41........................................... 168.8 52.............................. 161.6
42........................................... 168.4 53.............................. 161.2
43........................................... 168.1 54.............................. 160.6
44........................................... 167.7 55.............................. 160.0
45........................................... 166.9 56.............................. 160.0
46........................................... 166.1 57.............................. 160.2
47........................................... 165.4 58.............................. 160.4
48........................................... 164.7 59.............................. 161.2
49........................................... 163.7 60.............................. 162.7
50........................................... 162.4 61.............................. 163.5
----------------------------------------------------------------------------------------------------------------
13. Effects of an Election
Any prospective or retroactive election made under these
regulations is irrevocable. By electing to continue retirement
coverage, the employee also consents to a permanent reduction in the
future monthly annuity benefit if the benefit becomes payable at an
earlier date or is increased by the NAFI service. Once an employee has
elected coverage under a specific retirement system, he or she
continues to be covered by that retirement system for all future
periods of Federal service not otherwise excluded from retirement
coverage, whether employed in a civil service position or with a NAFI.
The elected retirement coverage will also apply to any service the
individual may perform as a reemployed annuitant.
A retroactive election of retirement coverage will have the same
effect as if it had been timely made at the time of the move. For
employees who elect to continue CSRS or FERS coverage, the NAFI service
performed since the move on which the election is based is fully
creditable in the future CSRS or FERS annuity for title and
computation, including average salary purposes. FERS employees who
elect FERS service credit for previous periods of NAFI service will
also receive full credit toward title and computation for any previous
period of creditable NAFI service.
NAFI employees who elect to remain covered by the NAFI retirement
system and receive credit for previous periods of FERS civilian service
may also elect whether the FERS service will be creditable for title
only, or for title and computation of the NAFI retirement benefit. If
the employee elects to receive credit for the FERS service in the
computation of the NAFI retirement benefit, he or she is required to
pay the actuarial present value of the FERS service made creditable by
the election. An election to credit FERS civilian service for any
purpose toward a NAFI retirement system will terminate an employee's
eligibility for a FERS annuity based on the same service. Although the
employee's contributions for the FERS service may remain to his credit,
an election to credit FERS service in a NAFI retirement benefit will
prevent the FERS service from remaining creditable for any purpose
under FERS.
14. Time Limit for Elections
Section 1043 of Public Law 104-106 amended the definition of a
qualifying move to allow retirement coverage elections when employees
move to or from a NAFI and any other Federal agency and also increased
the allowable break in service between retirement-covered civil service
and NAFI positions from not more than 3 days to 1 year. At the time of
employment, agencies will give qualifying employees 30 days in which to
make their election. This time limit may be extended if the agency
fails to provide a timely opportunity for the employee to make the
election.
The retroactive election opportunity expires 1 year after the
effective date of the regulations. Since that day (August 10, 1997) is
a Sunday, the deadline stated in the regulation is the following
Monday, August 11, 1997. Because section 1043 requires that eligible
employees receive timely notice of the opportunity to make the
retroactive election, and that employees be counselled concerning the
election opportunity, the employing agency will have authority to waive
the time limit in the event that an employee did not receive such
notice or counselling.
Waiver of Notice of Proposed Rulemaking
Under section 553(b)(3)(B) and (d)(3) of title 5, United States
Code, I find that good cause exists for waiving the general notice of
proposed rulemaking and to make these rules effective in less than 30
days. The regulations are effective August 10, 1996, 6 months after
enactment of the statutory change. The statute requires OPM to
establish by regulation the procedure for electing retirement coverage
retroactive to a qualifying move and for computing the costs associated
with the election and to prescribe the implementing regulations within
6 months of enactment. Elections under the new law cannot be made until
the implementing regulations take effect. Therefore, delaying
implementation of these regulations would unnecessarily delay the
availability of the benefits of the new law.
List of Subjects
5 CFR Parts 831, 837, 841, 842, 843, and 844
Administrative practice and procedure, Air traffic controllers,
Alimony, Claims, Disability benefits, Firefighters, Government
employees, Income taxes, Intergovernmental relations, Law enforcement
officers, Pensions, Reporting and recordkeeping requirements,
Retirement.
5 CFR Part 847
Administrative practice and procedure, Disability benefits,
Government employees, Pensions, Reporting and recordkeeping
requirements, Retirement.
James B. King,
Director.
Accordingly, OPM is amending Title 5, Code of Federal Regulations,
parts 831, 837, 841, 842, 843, 844, and adding 847 as follows:
PART 831--RETIREMENT
1. The authority citation for part 831 is revised to read as
follows:
[[Page 41720]]
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. 831.201(b)(6) also issued under 5 U.S.C. 7701(b)(2);
Sec. 831.303 also issued under 5 U.S.C. 8334(d)(2); Sec. 381.502
also issued under 5 U.S.C. 8337; Sec. 831.502 also issued under
section 1(3), E.O. 11228, 3 CFR 1964-1965 Comp.; Sec. 831.663 also
issued under 5 U.S.C.8339 (j) and (k)(2); Secs. 831.663 and 831.664
also issued under section 11004(c)(2) of the Omnibus Budget
Reconciliation Act of 1993, Pub. L. 103-66; Sec. 831.682 also issued
under section 201(d) of the Federal Employees Benefits Improvement
Act of 1986, Pub. L. 99-251, 100 Stat. 23; subpart S also issued
under 5 U.S.C. 8345(k); subpart V also issued under 5 U.S.C. 8343a
and section 6001 of the Omnibus Budget Reconciliation Act of 1987,
Pub. L. 100-203, 101 Stat. 1330-275; Sec. 831.2203 also issued under
section 7001(a)(4) of the Omnibus Budget Reconciliation Act of 1990,
Pub. L. 101-508; 104 Stat. 1388-328.
Subpart B--Coverage
2. In section 831.201(h), the reference ``Sec. 831.204'' is removed
and ``part 847 of this chapter'' is added in its place.
Sec. 831.204 [Removed]
3. Section 831.204 is removed.
Subpart G--Computation of Annuities
4. Section 831.704 is added to read as follows:
Sec. 831.704 Annuities including credit for service with a
nonappropriated fund instrumentality.
An annuity that includes credit for service with a nonappropriated
fund instrumentality performed after December 31, 1965, based on an
election under subpart D of part 847 of this chapter is computed under
part 847 of this chapter.
Subpart T--Payment of Lump Sums
5. Section 831.2009 is added to read as follows:
Sec. 831.2009 Lump sum payments which include contributions made to a
retirement system for employees of a nonappropriated fund
instrumentality.
A lump sum payment will include employee contributions and interest
as provided under subpart G of part 847 of this chapter.
PART 837--REEMPLOYMENT OF ANNUITANTS
6. The authority citation for part 837 continues to read as
follows:
Authority: 5 U.S.C. 8337, 8344, 8347, 8455, 8456, 8461, and 8468
and section 302 of Pub. L. 99-335, June 6, 1986, as amended.
Subpart A--General Provisions
7. Section 837.104 is added to read as follows:
Sec. 837.104 Reemployment of former employees of nonappropriated fund
instrumentalities.
A former employee of a nonappropriated fund instrumentality who has
made an election of retirement coverage under part 847 of this chapter
will continue to be covered under the elected retirement system for all
periods of service as a reemployed annuitant.
8. Section 837.506 is added to read as follows:
Sec. 837.506 Computation of redetermined annuity for former employees
of nonappropriated fund instrumentalities.
The redetermined annuity of a former employee of a nonappropriated
fund instrumentality who elected CSRS or FERS coverage under subpart D
of part 847 of this chapter is recomputed under part 847 of this
chapter.
PART 841--FEDERAL EMPLOYEES RETIREMENT SYSTEM--GENERAL
ADMINISTRATION
9. 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; subpart D also issued under 5 U.S.C. 8423; Sec. 841.504
also issued under 5 U.S.C. 8422; Sec. 841.506 also issued under 5
U.S.C. 7701(b)(2); Sec. 841.507 also issued under section 505 of
Pub. L. 99-335; Sec. 841.508 also issued under section 505 of Pub.
L. 99-335; Subpart J also issued under 5 U.S.C. 8469.
Subpart A--General Provisions
10. In section 841.102, paragraphs (b) through (f) are redesignated
as paragraphs (b)(1) through (b)(5), and paragraph (c) is added to read
as follows:
Sec. 841.102 Regulatory structure for the Federal Employees Retirement
System.
* * * * *
(c)(1) Part 831 of this chapter contains information about the
Civil Service Retirement System.
(2) Part 835 of this chapter contains information about debt
collection from FERS benefits.
(3) Part 837 of this chapter contains information about
reemployment of FERS annuitants.
(4) Part 838 of this chapter contains information about court
orders affecting FERS benefits.
(5) Part 847 of this chapter contains information about elections
under the Civil Service Retirement System or FERS relating to periods
of service with a nonappropriated fund instrumentality under the
jurisdiction of the armed forces.
(6) Parts 294 and 297 of this chapter and Sec. Sec. 831.106 and
841.108 of this chapter contain information about disclosure of
information from OPM records.
(7) Part 581 of this chapter contains information about garnishment
of Government payments including salary and CSRS and FERS retirement
benefits.
(8) Parts 870, 871, 872, and 873 of this chapter contain
information about the Federal Employees Group Life Insurance Program.
(9) Part 890 of this chapter contains information about coverage
under the Federal Employees Health Benefits Program.
(10) Chapter II (parts 1200 through 1299) of this title contains
information about appeals to the Merit Systems Protection Board.
(11) Chapter VI (parts 1600 through 1699) of this title contains
information about the Federal Employees Thrift Savings Plan.
PART 842--FEDERAL EMPLOYEES RETIREMENT SYSTEM--BASIC ANNUITY
11. The authority citation for part 842 is revised to read as
follows:
Authority: 5 U.S.C. 8461(g); Sec. Sec. 842.104 and 842.106 also
issued under 5 U.S.C. 8461(n); Sec. 842.105 also issued under 5
U.S.C. 8402(c)(1) and 7701(b)(2); Sec. Sec. 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 section 7001(a)(4) of the Omnibus Budget Reconciliation
Act of 1990, Pub. L. 101-508; Sec. 842.707 also issued under section
6001 of the Omnibus Budget Reconciliation Act of 1987, Pub. L. 100-
203; Sec. 842.708 also issued under section 4005 of the Omnibus
Budget Reconciliation Act of 1989, Pub. L. 101-239 and section 7001
of the Omnibus Budget Reconciliation Act of 1990, Pub. L. 101-508;
subpart H also issued under 5 U.S.C 1104.
Subpart A--Coverage
12. In section 842.104(f), the reference ``Sec. 842.106'' is
removed and ``part 847 of this chapter'' is added in its place.
Sec. 842.106 [Removed]
13. Section 842.106 is removed.
Subpart C--Credit for Service
14. In section 842.304, paragraph (d) is added to read as follows:
Sec. 842.304 Civilian Service.
* * * * *
(d) Credit for service performed as an employee of a
nonappropriated fund
[[Page 41721]]
instrumentality. (1) Credit for service with a nonappropriated fund
instrumentality is allowed in accordance with an election under part
847 of this chapter.
(2) Service under FERS for which the employee withdrew all
deductions is creditable in accordance with an election made under part
847 of this chapter.
(3) An annuity that includes credit for service with a
nonappropriated fund instrumentality or refunded service under
paragraph (d)(2) of this section is computed under part 847 of this
chapter.
15. Section 842.310 is added to read as follows.
Sec. 842.310 Service not creditable because of an election under part
847 of this chapter.
Any FERS service which becomes creditable under a retirement system
established for nonappropriated fund employees due to an election made
under part 847 of this chapter is not creditable for any purpose under
FERS.
PART 843--FEDERAL EMPLOYEES RETIREMENT SYSTEM--DEATH BENEFITS AND
EMPLOYEE REFUNDS
16. The authority citation for part 843 continues to read as
follows:
Authority: 5 U.S.C. 8461; Secs. 843.205, 843.208, and 843.209
also issued under 5 U.S.C. 8424; Sec. 843.309 also issued under 5
U.S.C. 8442; Sec. 843.406 also issued under 5 U.S.C. 8441.
Subpart B--One-Time Payments
17. Section 843.212 is added to read as follows:
Sec. 843.212 Lump-sum payments which include contributions made to a
retirement system for employees of a nonappropriated fund
instrumentality.
A lump-sum payment will include employee contributions and interest
as provided under subpart G of part 847 of this chapter.
Subpart C--Current and Former Spouse Benefits
18. Section 843.314 is added to read as follows:
Sec. 843.314 Amount of survivor annuity where service includes credit
for service with a nonappropriated fund instrumentality.
The survivor annuity in the case of an employee or survivor whose
service includes service with a nonappropriated fund instrumentality
made creditable by an election under subpart D of part 847 of this
chapter is computed under part 847 of this chapter.
PART 844--FEDERAL EMPLOYEES RETIREMENT SYSTEM--DISABILITY
RETIREMENT
19. The authority citation for part 844 continues to read as
follows:
Authority: 5 U.S.C. 8461.
Subpart A--General Provisions
20. Section 844.106 is added to read as follows:
Sec. 844.106 Disability annuities which include credit for service
with a nonappropriated fund instrumentality.
A disability annuity that includes credit for service with a
nonappropriated fund instrumentality performed after December 31, 1965,
based on an election under subpart D of part 847 of this chapter is
computed under part 847 of this chapter.
21. Part 847 is added to read as follows:
PART 847--ELECTIONS OF RETIREMENT COVERAGE BY CURRENT AND FORMER
EMPLOYEES OF NONAPPROPRIATED FUND INSTRUMENTALITIES
Subpart A--General Provisions
Sec.
847.101 Purpose and scope.
847.102 Regulatory structure.
847.103 Definitions.
847.104 OPM responsibilities.
847.105 Agency responsibilities.
847.106 Agency decision concerning eligibility.
847.107 Appeals to MSPB.
847.108 Computation of time.
Subpart B--Elections to continue retirement coverage after a qualifying
move
847.201 Purpose and scope.
847.202 Definition of qualifying move.
847.203 Elections of CSRS coverage.
847.204 Elections of FERS coverage.
847.205 Elections of NAFI retirement system coverage.
847.206 Time limit for making an election.
847.207 Effective dates of elections.
847.208 Changes of election.
847.209 Collection of CSRS and FERS retirement contributions from
NAFI employers.
847.210 Collection of NAFI retirement contributions from Federal
agencies.
847.211 Death of employee during election opportunity period.
Subpart C--Procedures for Elections Under the Retroactive Provisions
847.301 Purpose and scope.
847.302 Notice of election rights.
847.303 Election forms.
847.304 Time limit.
847.305 Basic records.
Subpart D--Elections of Coverage Under the Retroactive Provisions
General Provisions
847.401 Purpose and scope.
847.402 Definition of qualifying move.
Elections of CSRS or FERS Coverage Based on a Move from CSRS or FERS to
NAFI
847.411 Election requirements.
847.412 Elections of FERS instead of CSRS.
847.413 Effective date of an election.
847.414 Crediting future NAFI service.
847.415 OASDI coverage.
847.416 Credit for refunded FERS service.
Elections to Remain in FERS Coverage with Credit for NAFI Service Based
on a Move from NAFI to FERS
847.421 Election requirements.
847.422 Crediting future NAFI service.
847.423 Credit for refunded FERS service.
Elections to Remain in NAFI Coverage with Credit for FERS Service Based
on a Move from FERS to NAFI
847.431 Election requirements.
847.432 Effect of a refund of FERS deductions.
847.433 Exclusion from FERS for future service.
Elections of NAFI Coverage Based on a Move from NAFI to FERS
847.441 Election requirements.
847.442 Effective date.
847.443 Exclusion from FERS for future service.
Subpart E--Transfers of Contributions Under the Retroactive Provisions
847.501 Purpose and scope.
847.502 Transfers to the CSR Fund.
847.503 Transfers from the CSR Fund.
847.504 Amount of transfer.
847.505 When transfer occurs.
847.506 Procedures for transfer.
847.507 Earnings after transfer.
Subpart F--Additional Employee Costs Under the Retroactive Provisions
847.601 Purpose and scope.
847.602 Present value factors.
847.603 Date of present value and deficiency determinations.
847.604 Methodology for determining deficiency.
847.605 Methodology for determining the present value of annuity
with service credit.
847.606 Methodology for determining the present value of annuity
without service credit--credit not needed for title.
847.607 Methodology for determining the present value of annuity
without service credit--credit needed for title.
847.608 Reduction in annuity due to deficiency.
Appendix A to Subpart F of Part 847--List of Events for Which Inclusion
of NAFI Service May Affect the Rate of Annuity Payable
Subpart G--Computation of Benefits Under the Retroactive Provisions
847.701 Purpose and scope.
847.702 Lump-sum payments and refunds.
847.703 Reductions in annuity.
[[Page 41722]]
847.704 Maximum survivor annuity election.
847.705 Cost-of-living adjustments.
Authority: 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
Sec. 847.101 Purpose and scope.
(a) This part contains the regulations issued by the Office of
Personnel Management (OPM) to implement the statutory election rights
under the Portability of Benefits for Nonappropriated Fund Employees
Act of 1990 and section 1043 of the National Defense Authorization Act
for Fiscal Year 1996 of certain current and former NAFI employees.
(b) This part establishes--
(1) The eligibility requirements for making an election;
(2) The procedures for making elections;
(3) The methodologies to determine the employee costs associated
with the elections; and
(4) The methodologies to calculate benefits that include credit for
NAFI service based on such elections.
(c)(1) The regulations in this part apply to individuals covered by
CSRS or FERS (and their survivors) and the employers of such
individuals. The Department of Defense and the U.S. Coast Guard will
issue any necessary regulations to implement these election rights to
the extent they affect NAFI retirement systems under their
jurisdiction.
(2) The regulations in this part apply only to CSRS benefits and
FERS basic benefits. They do not apply to benefits under the Thrift
Savings Plan described in subchapter III of chapter 84, of title 5,
United States Code.
Sec. 847.102 Regulatory structure.
(a)(1) Subpart A of this part contains information applicable to
all elections under this part.
(2) Subpart B of this part contains information about prospective
retirement coverage elections under sections 8347(q) and 8461(n) of
title 5, United States Code.
(3) Subpart C of this part contains information about the
procedures applicable to retroactive retirement coverage and
alternative credit elections under section 1043(c)(2) of the National
Defense Authorization Act for Fiscal Year 1996.
(4) Subpart D of this part contains information about the types of
retroactive elections available, the eligibility requirements for each
type of election, the effects of an election on CSRS and FERS coverage
during future employment, and the effective dates of CSRS and FERS
coverage applicable to elections under section 1043(c)(2) of the
National Defense Authorization Act for Fiscal Year 1996.
(5) Subpart E of this part contains information about transferring
retirement contributions in connection with elections under section
1043(c)(2) of the National Defense Authorization Act for Fiscal Year
1996.
(6) Subpart F of this part contains information about determining
the employee costs associated with elections under section 1043(c)(2)
of the National Defense Authorization Act for Fiscal Year 1996.
(7) Subpart G of this part contains information about benefits
indirectly affected by elections under section 1043(c)(2) of the
National Defense Authorization Act for Fiscal Year 1996.
(b) Section 831.305 of this chapter contains information about CSRS
credit for NAFI service performed after June 18, 1952, but before
January 1, 1966.
(c)(1) Part 831 of this chapter contains information about the
Civil Service Retirement System.
(2) Parts 841 through 844 of this chapter contain information about
FERS basic benefits.
(3) Part 837 of this chapter contains information about
reemployment of annuitants.
(4) Parts 870, 871, 872, and 873 of this chapter contain
information about the Federal Employees Group Life Insurance Program.
(5) Part 890 of this chapter contains information about coverage
under the Federal Employees Health Benefits Program.
(6) Chapter II (parts 1200 through 1299) of this title contains
information about appeals to the Merit Systems Protection Board.
(7) Chapter VI (parts 1600 through 1699) of this title contains
information about the Federal Employees Thrift Savings Plan.
Sec. 847.103 Definitions.
(a) Except as provided in paragraph (b) of this section, the
definitions in sections 8331 and 8401 of title 5, United States Code,
apply throughout this part.
(b) In this part--
Actuarial present value means the amount of money (earning interest
at an assumed rate) required at the time of retirement to finance an
annuity that is payable in monthly installments for the annuitant's
lifetime based on mortality rates for annuitants under CSRS and FERS;
and increases each year at an assumed rate of inflation. Interest,
mortality, and inflation rates used in computing the present value are
those used by the Board of Actuaries of the Civil Service Retirement
System for valuation of CSRS and FERS, based on dynamic assumptions.
Age means the number of years an individual has been alive as of
his or her last birthday.
Agency means an executive agency as defined in section 105 of title
5, United States Code; a legislative branch agency; a judicial agency;
and the U.S. Postal Service and Postal Rate Commission.
Annuitant means a retiree or a survivor.
CSRS or FERS means the Civil Service Retirement System or the
Federal Employees Retirement System as described in chapters 83 and 84
of title 5, United States Code.
Deferred annuity date means the earliest date on which a retiree
would be eligible, without credit for the NAFI service, to receive a
deferred annuity based on his or her actual date of separation.
Deficiency means the remainder of the actuarial present value or
crediting NAFI service, after subtracting the amount credited to the
employee from a transfer to the Fund under subpart E of this part, and
earnings under Sec. 847.507 on the transferred amount.
Employee contributions with interest means the dollar amount
deducted from an employee's pay for retirement system participation,
plus any amounts the employee deposited for civilian service credit
under the retirement system, and interest, if any, payable under
Sec. 841.605 of this chapter (for FERS) or under applicable NAFI
retirement system rules.
Fund means the Civil Service Retirement and Disability Fund
established in section 8348 of title 5, United States Code.
Government contributions means the dollar amount which was
contributed on behalf of an employee by his or her employer for
retirement system participation.
Monthly annuity rate means the amount of the monthly single life
annuity under CSRS or FERS (computed without regard to any survivor
benefit reductions computed under sections 8339 (j) or (k), and 8418
through 8420 of title 5, United States Code), before any offset
relating to benefits under the Social Security Act under section 8349
of title 5, United States Code, but after including any reduction for
age (5 U.S.C. 8339(h) or 8415(f)) or for crediting nondeduction
civilian service performed before October 1, 1982 (5 U.S.C.A. 8339(i),
note).
[[Page 41723]]
NAFI means a nonappropriated fund instrumentality described in
section 2105(c) of title 5, United States Code.
Retiree means a former employee who, on the basis of his or her
service meets all the requirements for title to a CSRS or FERS annuity
and files claim therefor.
Survivor means a widow, widower, or former spouse entitled to a
CSRS or FERS annuity based on the service of a deceased employee,
separated employee, or retiree.
Sec. 847.104 OPM responsibilities.
(a) OPM will issue guidance to employing agencies to use when
notifying their employees about the opportunity to make an election
under this part and for counselling employees in connection with the
election.
(b) OPM will issue instructions to agencies concerning the transfer
of funds and recordkeeping in connection with these elections.
Sec. 847.105 Agency responsibilities.
(a) Each agency is responsible for notifying its employees of the
opportunity to make an election under this part and for determining if
an employee who wishes to make an election is qualified to do so, and
for counselling employees in accordance with guidance issued by OPM.
(b) If an agency determines that an employee is not eligible to
make an election under this part, the agency shall issue a final
decision to the employee that meets the requirements of Sec. 847.106,
including notice of the right to appeal under Sec. 847.107.
Sec. 847.106 Agency decision concerning eligibility.
(a) If the agency determines that the employee is not eligible to
make an election under this part, it must issue a final decision to the
employee.
(b) A final decision shall be in writing, shall fully set forth the
findings and conclusions of the agency, and shall contain notice of the
right to request an appeal provided in Sec. 847.107.
Sec. 847.107 Appeals to MSPB.
(a) An individual whose rights or interests under the CSRS or FERS
are affected by a final decision of the employing agency may request
the Merit Systems Protection Board to review such decision in
accordance with procedures prescribed by the Board.
(b) Paragraph (a) of this section is the exclusive remedy for
review of agency decisions concerning eligibility to make an election
under this part. An agency decision must not allow review under any
employee grievance procedures, including those established by chapter
71 of title 5, United States Code, and part 771 of title 5, Code of
Federal Regulations.
Sec. 847.108 Computation of time.
In computing a period of time for filing documents, the day of the
action or event after which the designated period of time begins to run
is not included. The last day of the period is included unless it is a
Saturday, a Sunday, or a legal holiday; in this event, the period runs
until the end of the next day which is not a Saturday, a Sunday, or a
legal holiday.
Subpart B--Elections to continue retirement coverage after a
qualifying move
Sec. 847.201 Purpose and scope.
This subpart contains OPM's regulations on the procedures,
eligibility requirements, time limits and effects of elections under
sections 8347(q) and 8461(n) of title 5, United States Code.
Sec. 847.202 Definition of qualifying move.
(a) A qualifying move occurring on or after August 10, 1996, which
would allow an opportunity to elect to continue retirement coverage
under CSRS and FERS must meet all the following criteria:
(1) The employee must not have had a prior opportunity to elect to
continue CSRS or FERS retirement coverage;
(2) The employee must have been vested in CSRS or FERS prior to the
move to a NAFI;
(3) The employee must have moved from a position covered by CSRS or
FERS to a retirement-covered position in a NAFI; and
(4) The employee must begin employment in a retirement-covered
position in a NAFI no later than 1 year after separation from CSRS- or
FERS-covered employment.
(b) A qualifying move occurring on or after August 10, 1996, which
would allow an opportunity to elect to continue retirement coverage
under a NAFI retirement system must meet all the following criteria:
(1) The employee must not have had a prior opportunity to elect to
continue NAFI retirement system coverage;
(2) The employee must have been a vested participant in the NAFI
retirement system (as the term ``vested participant'' is defined by
that retirement system) prior to the move to a CSRS- or FERS-covered
position;
(3) The employee must have moved from a NAFI to a civil service
position subject to CSRS or FERS coverage; and
(4) The employee must be appointed to a CSRS- or FERS-covered
position no later than 1 year after separation from retirement-covered
NAFI employment.
(c) A qualifying move occurring between January 1, 1987, and August
9, 1996, which would allow an opportunity to elect to continue
retirement coverage under CSRS or FERS must meet all the following
criteria:
(1) The employee must not have had a prior opportunity to elect to
continue CSRS or FERS retirement coverage;
(2) The employee must have been vested in CSRS or FERS prior to the
move to a NAFI;
(3) The employee must have moved from a CSRS- or FERS-covered
position within the Department of Defense or the U.S. Coast Guard to a
retirement covered position with a NAFI; and
(4) The employee must begin employment in a retirement-covered
position in a NAFI no later than 4 days after separation from CSRS- or
FERS-covered employment.
(d) A qualifying move occurring between January 1, 1987, and August
9, 1996, which would allow an opportunity to elect to continue
retirement coverage under a NAFI retirement system must meet all the
following criteria:
(1) The employee must not have had a prior opportunity to elect to
continue NAFI retirement system coverage;
(2) The employee must have been a vested participant in the NAFI
retirement system (as the term ``vested participant'' is defined by
that retirement system) prior to the move to the civil service;
(3) The employee must have moved from a NAFI to a CSRS- or FERS-
covered position within the Department of Defense or the U.S. Coast
Guard; and
(4) The employee must be appointed to a CSRS- or FERS-covered
position no later than 4 days after separation from retirement-covered
NAFI employment.
(e) A qualifying move under paragraphs (a) and (b) of this section
is considered to occur on the date the individual enters into the new
position, not at the time of separation from the prior position.
(f) A retroactive election opportunity under subpart D of this part
(pertaining to elections of CSRS, FERS, or NAFI retirement coverage) is
not considered a prior opportunity to elect retirement coverage under
this section.
Sec. 847.203 Elections of CSRS coverage.
(a) An employee who completes a qualifying move (under
Sec. 847.202(a) or (c)) from a CSRS-covered position to a NAFI may
elect to continue CSRS coverage.
(b) An employee who elects CSRS coverage under this section will be
[[Page 41724]]
covered by CSRS (or FERS, if the employee subsequently transfers to
FERS under part 846 of this chapter) during all periods of future
service not excluded from coverage by CSRS, including any periods of
service with a NAFI.
(c) An employee who makes an election under paragraph (a) of this
section and who has had a break in service exceeding 3 days is eligible
to elect FERS under part 846 of this chapter.
Sec. 847.204 Elections of FERS coverage.
(a) An employee who completes a qualifying move under
Sec. 847.202(a) and (c) from a FERS-covered position to a NAFI may
elect to continue FERS coverage.
(b) An employee who elects FERS coverage under this section will be
covered by FERS during all periods of future service not excluded from
coverage by FERS, including any periods of service with a NAFI.
Sec. 847.205 Elections of NAFI retirement system coverage.
(a) An employee who completes a qualifying move under
Sec. 847.202(b) and (d) from a NAFI position to a CSRS- or FERS-covered
position may elect to continue coverage under the NAFI retirement
system.
(b) An employee who elects NAFI retirement system coverage under
this section is excluded from coverage under CSRS or FERS during that
and all subsequent periods of employment, including any periods of
service as a reemployed annuitant.
Sec. 847.206 Time limit for making an election.
(a) Except as provided in paragraph (b) of this section, the time
limit for making the election is 30 days after the qualifying move.
(b) Agencies may waive the time limit if it finds that the employee
was not timely given the opportunity to make the election, or, despite
due diligence, was prevented by circumstances beyond his or her control
from making an election within the time limit.
(c) An agency decision to waive the time limit must comply with the
provisions of Sec. 847.106, including notification of the right of
appeal under Sec. 847.107.
Sec. 847.207 Effective dates of elections.
Elections under this subpart are effective on the date of the
qualifying move.
Sec. 847.208 Changes of election.
An election under this subpart is irrevocable when received by the
employing agency.
Sec. 847.209 Collection of CSRS and FERS retirement contributions from
NAFI employers.
CSRS and FERS salary deductions and contributions for NAFI
employees who have elected CSRS or FERS coverage under this subpart
must be made and submitted to OPM in the manner currently prescribed
for the transmission of withholdings and contributions.
Sec. 847.210 Collection of NAFI retirement contributions from Federal
agencies.
The Department of Defense and the U.S. Coast Guard will establish
procedures for agencies to withhold and submit retirement contributions
to the retirement systems for employees who elect to be covered by a
retirement system for NAFI employees under this subpart.
Sec. 847.211 Death of employee during election opportunity period.
(a) When an employee eligible to make an election under this
subpart dies before expiration of the time limit under Sec. 847.206,
the employee is deemed to have made the election and to be covered, at
time of death, by the retirement system that covered the employee
before the qualifying move.
(b) The deemed election under paragraph (a) of this section does
not apply if the eligible survivor elects to have it not apply.
(c) An election by the survivor to decline the deemed election must
be in writing and filed no later than 30 days after the employing
agency notifies the survivor of the right to decline the deemed
election.
Subpart C--Procedures for Elections Under the Retroactive Provisions
Sec. 847.301 Purpose and scope.
This subpart establishes the procedures applicable to elections
section 1043(c)(2) of the National Defense Authorization Act for Fiscal
Year 1996.
Sec. 847.302 Notice of election rights.
The employing agency must provide notice to all eligible employees
of the opportunity to elect to continue retirement coverage under
subpart D of this part. Failure to provide notice to the employee is
justification for waiving the time limit under Sec. 847.304.
Sec. 847.303 Election forms.
(a) Eligible employees may make an election under subpart D of this
part on a form prescribed by OPM and filed with the employing agency.
(b) For elections of retirement coverage under subpart D of this
part, the election form will require that the employee obtain a
certification from his or her previous retirement system showing dates
of service, amounts transferable from the previous retirement system to
the elected retirement system under subpart E of this part, and that
the employee became vested in the retirement system. If an employee was
covered by more than one retirement system, he or she must obtain
certification from each retirement system.
Sec. 847.304 Time limit.
(a) Except as provided in paragraph (b) of this section, the time
limit for making an election under subpart D of this part is August 11,
1997.
(b) Because Public Law 104-106 requires that eligible employees
receive timely notice of the opportunity to make the election under
subpart D of this part, and that employees must be counselled
concerning the election opportunity, the employing agency must waive
the time limit in paragraph (a) of this section in the event that an
employee did not receive such notice or counselling.
Sec. 847.305 Basic records.
(a) Agencies must establish and maintain retirement accounts for
employees subject to CSRS or FERS in the manner prescribed by OPM.
(b) The individual retirement record (Standard Form 2806 for CSRS,
or Standard Form 3100 for FERS) is the basic record for action on all
claims for annuity or refund, and those pertaining to deceased
employees and annuitants.
Subpart D--Elections of Coverage Under the Retroactive Provisions
General Provisions
Sec. 847.401 Purpose and scope.
This subpart contains OPM's regulations concerning the types of
elections available, the eligibility requirements for each type of
election, the effects of an election on CSRS and FERS coverage during
future employment, and the effective dates of CSRS and FERS coverage
applicable to retroactive retirement coverage and credit elections
under section 1043(c)(2) of the National Defense Authorization Act for
Fiscal Year 1996.
Sec. 847.402 Definition of qualifying move.
(a) A qualifying move occurring after December 31, 1965, and before
August 10, 1996, which would allow an employee the opportunity to elect
to
[[Page 41725]]
continue retirement coverage under CSRS or FERS retroactive to the date
of the move must meet all the following criteria:
(1)(i) For moves occurring before February 10, 1996, the employee
must not have had a prior opportunity to elect to continue CSRS, FERS,
or NAFI retirement coverage under Sec. 847.202 (c) or (d);
(ii) For moves occurring on or after February 10, 1996, the
employee must not have made an election under Sec. 847.202 (c) or (d);
(2) The employee must have been vested in CSRS or FERS prior to the
move to a NAFI;
(3) The employee must have moved from a position covered by CSRS or
FERS to a retirement-covered position in a NAFI;
(4) The employee must have begun employment in a retirement-covered
position in a NAFI no later than 1 year after separation from CSRS- or
FERS-covered employment; and
(5) The employee must, since moving to the NAFI position, have
continuously participated in a retirement system established for NAFI
employees, disregarding any break in service of not more than 3 days.
(b) A qualifying move occurring after December 31, 1965, and before
August 10, 1996, which would allow an employee the opportunity to elect
to continue retirement coverage under a NAFI retirement system
retroactive to the date of the qualifying move must meet all the
following criteria:
(1)(i) For moves occurring before February 10, 1996, the employee
must not have had a prior opportunity to elect to continue CSRS, FERS,
or NAFI retirement coverage under Sec. 847.202(c) or (d);
(ii) For moves occurring on or after February 10, 1996, the
employee must not have made an election under Sec. 847.202(c) or (d);
(2) The employee must have been a vested participant in the NAFI
retirement system (as the term ``vested participant'' is defined by
that retirement system) prior to the move to a FERS-covered position;
(3) The employee must have moved from a NAFI to a civil service
position subject to FERS coverage or CSRS/SS coverage, as defined in
Sec. 846.102 of this chapter, followed by the employee's automatic
conversion to FERS coverage;
(4) The employee must have been appointed to a FERS-covered
position no later than 1 year after separation from retirement-covered
NAFI employment; and
(5) The employee must, since moving to the FERS position, have been
continuously covered by FERS, disregarding any break in service of not
more than 3 days.
(c) A move from a NAFI to CSRS, including CSRS/SS as defined under
Sec. 846.102 of this chapter followed by an election of FERS coverage
under Sec. 846.201 of this chapter, is not a qualifying move for an
election of retirement coverage under Sec. 847.431 (pertaining to
elections of NAFI service credit for FERS service) and Sec. 847.441
(pertaining to elections of NAFI retirement coverage).
(d) A qualifying move under paragraphs (a) and (b) of this section
is considered to occur on the date the individual entered into the new
position, not at the time of separation from the prior position.
ELECTIONS OF CSRS OR FERS COVERAGE BASED ON A MOVE FROM CSRS OR FERS TO
NAFI
Sec. 847.411 Election requirements.
(a) An employee who completed a qualifying move under
Sec. 847.402(a) may elect to be covered by CSRS, if the qualifying move
was from a CSRS-covered position, or FERS, if the qualifying move was
from a FERS-covered position, for all Federal service following the
qualifying move. Employees who elect to be covered by CSRS will be
prospectively covered by the CSRS Offset provisions set out in subpart
J of part 831 of this chapter.
(b) A survivor eligible for benefits under the NAFI retirement
system which covered an employee at the time of death may make an
election under this section if the employee was otherwise eligible to
make an election, but died before expiration of the time limit under
Sec. 847.304.
Sec. 847.412 Elections of FERS instead of CSRS.
(a) An employee who elects CSRS coverage under Sec. 847.411(a) may,
during the 6-month period beginning on the date the election under
Sec. 847.411(a) is filed with the employing agency, elect to become
subject to FERS.
(b) An election of FERS under this section is subject to the
provisions of part 846 of this subchapter and takes effect on the first
day of the first pay period after the employing agency receives the
election.
Sec. 847.413 Effective date of an election.
(a) An election under Sec. 847.411 is effective on the first day of
NAFI employment subject to retirement coverage following CSRS- or FERS-
covered employment.
(b) Deductions and contributions for CSRS or FERS coverage under
Sec. 831.111 or Sec. 841.501 of this chapter begin effective on the
first day of the next pay period after the agency receives the
employee's election under Sec. 847.411(a).
(c) An election under Sec. 847.411 is irrevocable when received by
the employing agency.
(d) NAFI service performed on and after the effective date of an
election under Sec. 847.411 becomes fully creditable for retirement
eligibility and computation of the annuity benefit, including
computation of average pay.
847.414 Crediting future NAFI service.
An employee who elects CSRS or FERS coverage under Sec. 847.411
will be covered by CSRS or FERS during all periods of future service
not excluded from coverage by CSRS or FERS, including any periods of
service with a NAFI and service as a reemployed annuitant.
Sec. 847.415 OASDI coverage.
An employee who elects CSRS coverage under Sec. 847.411 is
prospectively subject to both the Old Age, Survivors, and Disability
Insurance (OASDI) tax and CSRS as described in subpart J of part 831 of
this chapter, known as CSRS Offset, effective from the first day of the
next pay period after the employing agency receives the employee's
election under Sec. 847.411(a).
Sec. 847.416 Credit for refunded FERS service.
(a) An employee or survivor who elects FERS coverage under
Sec. 847.411 will receive credit in the FERS annuity for the service
represented by any refund of the unexpended balance under Sec. 843.202
of this chapter.
(b) The amount of the refund, increased by interest as computed
under Sec. 842.305(e) of this chapter, will be added to the deficiency
computed under Sec. 847.604 and collected in accordance with the
provisions of Sec. 847.609 (pertaining to a monthly reduction in the
annuity benefit).
ELECTIONS TO REMAIN IN FERS COVERAGE WITH CREDIT FOR NAFI SERVICE BASED
ON A MOVE FROM NAFI TO FERS
Sec. 847.421 Election requirements.
(a)(1)(i) A FERS employee who completed a qualifying move under
Sec. 847.402(b) may, instead of the election provided by Sec. 847.441
(pertaining to elections of NAFI retirement coverage), elect to remain
subject to FERS for all subsequent periods of service.
(ii) Prior service under a NAFI retirement system becomes
creditable under FERS rules without regard to whether a refund of
contributions for
[[Page 41726]]
such period has been paid by the NAFI retirement system.
(2) A FERS employee who has had a previous opportunity to elect
retirement coverage under Sec. 847.202(c) and (d) is not excluded from
making this election.
(b) A survivor may make an election under paragraph (a) of this
section if the employee was otherwise eligible to elect FERS coverage
and FERS service credit, but died before expiration of the time limit
under Sec. 847.304.
(c) NAFI service made creditable under FERS by an election under
this section become creditable for FERS retirement eligibility and FERS
annuity computation, including average pay, upon receipt of the
election by the employing agency.
(d) A election under this section is irrevocable when received by
the employing agency.
Sec. 847.422 Crediting future NAFI service.
An employee who elects to remain in FERS coverage with credit for
NAFI service under Sec. 847.421(a) will be covered by FERS during all
periods of future service not excluded from coverage by FERS, including
any periods of service with a NAFI and service as a reemployed
annuitant.
Sec. 847.423 Credit for refunded FERS service.
(a) An employee or survivor who elects FERS coverage with credit
for NAFI service under Sec. 847.421 will receive credit in the FERS
annuity for the service represented by any refund of the unexpended
balance under Sec. 843.202 of this chapter.
(b) The amount of the refund, increased by interest as computed
under Sec. 842.305(e) of this chapter, will be added to the deficiency
computed under Sec. 847.604 and collected in accordance with the
provisions of Sec. 847.609 (pertaining to a monthly reduction in the
annuity benefit).
ELECTIONS TO REMAIN IN NAFI COVERAGE WITH CREDIT FOR FERS SERVICE BASED
ON A MOVE FROM FERS TO NAFI
Sec. 847.431 Election requirements.
(a)(1)(i) A NAFI employee who completed a qualifying move from FERS
under Sec. 847.402(a) may, instead of the election provided by
Sec. 847.411 (pertaining to elections of CSRS and FERS coverage), elect
to remain subject to the current NAFI retirement system for all
subsequent periods of service.
(ii) Prior service under FERS becomes credible under the NAFI
retirement system rules.
(2) A NAFI employee who has had a previous opportunity to elect
retirement coverage under Sec. 847.202(c) and (d) is not excluded from
making this election.
(b) A survivor may make an election under paragraph (a) of this
section if the employee was otherwise eligible, but died before
expiration of the time limit under Sec. 847.304.
(c) An election under this section is irrevocable when received by
the employing agency.
Sec. 847.432 Effect of a refund of FERS deductions.
OPM will inform the NAFI retirement system of the amount of service
performed under FERS, without regard to whether a refund of
contributions for such period has been paid under FERS.
Sec. 847.433 Exclusion from FERS for future service.
(a) An employee who elects NAFI retirement system coverage with
credit for FERS service under Sec. 847.431(a) is excluded from coverage
under FERS during that and all subsequent periods of employment,
including any periods of service as a reemployed annuitant.
(b) FERS service which becomes creditable in a NAFI retirement
benefit based on an election under Sec. 847.431 is not creditable for
any purpose under FERS.
ELECTIONS OF NAFI COVERAGE BASED ON A MOVE FROM NAFI TO FERS
Sec. 847.441 Election requirements.
(a) An employee who completed a qualifying move under
Sec. 847.402(b) may elect to be covered by a NAFI retirement system for
all Federal service following the qualifying move.
(b) A survivor eligible for benefits under FERS may make an
election under this section if the employee was otherwise eligible to
make an election, but died before expiration of the time limit under
Sec. 847.304.
Sec. 847.442 Effective date.
(a) An election under Sec. 847.441 is effective on the first day of
FERS-covered employment following NAFI employment subject to retirement
coverage.
(b) Deductions and contributions for NAFI retirement system
coverage begin effective on the first day of the next pay period after
the agency receives the employee's election under Sec. 847.441(a).
(c) An election under Sec. 847.441 is irrevocable when received by
the employing agency.
Sec. 847.443 Exclusion from FERS for future service.
An employee who elects NAFI retirement system coverage with credit
for FERS service under Sec. 847.441(a) is excluded from coverage under
FERS during that and all subsequent periods of employment, including
any periods of service as a reemployed annuitant.
Subpart E--Transfers of Contributions Under the Retroactive
Provisions
Sec. 847.501 Purpose and scope.
This subpart regulates transferring retirement contributions and
crediting those contributions to offset the employee costs in
connection with elections section 1043(c)(2) of the National Defense
Authorization Act for Fiscal Year 1996.
Sec. 847.502 Transfers to the CSR Fund.
For elections of CSRS or FERS coverage under Sec. 847.411 or FERS
coverage and service credit under Sec. 847.421, the amount under
Sec. 847.504 will be transferred to the Fund using the procedures
established under Sec. 847.506.
Sec. 847.503 Transfers from the CSR Fund.
For elections of NAFI retirement system coverage under
Sec. 847.441, the amount under Sec. 847.504 will be transferred from
the Fund using the procedures established under Sec. 847.506.
Sec. 847.504 Amount of transfer.
(a) All transfers must include employee contributions with
interest, if not previously refunded, and Government contributions for
civilian service which becomes creditable under the elected retirement
system due to an election under Secs. 847.411, 847.421, and 846.441.
(b) If the employee has withdrawn his or her contributions to the
retirement system, the amount required by paragraph (a) of this
section, less the amount refunded, will be transferred.
Sec. 847.505 When transfer occurs.
(a) OPM, the Department of Defense, and the U.S. Coast Guard will
transfer the amount specified in Sec. 847.504 as soon as practicable
after receipt of an election of retirement coverage under subpart D of
this part.
(b) The transfer of contributions may not be delayed until the
employee retires or separates from service.
Sec. 847.506 Procedures for transfer.
OPM, the Department of Defense, and the U.S. Coast Guard will
jointly determine the procedure for transfer of contributions.
Sec. 847.507 Earnings after transfer.
Amounts transferred to the Fund under Sec. 847.502 that are used to
determine the deficiency under Sec. 847.604 accrue interest at the rate
[[Page 41727]]
prescribed under Sec. 841.603 of this chapter from the date of receipt
in OPM through the date determined under Sec. 847.603 (pertaining to
the date of calculation of any deficiency).
Subpart F--Additional Employee Costs Under the Retroactive
Provisions
Sec. 847.601 Purpose and scope.
(a) The purpose of this subpart is to establish the methodology
that OPM will use to determine--
(1) The cost of an employee's election under Sec. 847.411 or
Sec. 847.421; and
(2) The amount by which annuity payments may be affected as a
result of the election.
(b) This subpart applies only to CSRS and FERS benefits. The
Departments of Defense, and the U.S. Coast Guard will issue regulations
providing methodologies for NAFI's under their jurisdictions.
Sec. 847.602 Present value factors.
(a) OPM publishes the following tables (available at personnel and
payroll offices):
(1) One table of present value factors for all CSRS annuities;
(2) One table of present value factors for FERS annuities that do
not receive cost-of-living adjustments before the retiree attains age
62; and
(3) One table of present value factors for FERS annuities that
receives cost-of-living adjustments before the retiree attains age 62.
(b)(1) Each present value factor will equal the amount of money
(earning interest at an assumed rate) required at the date of
computation to fund an annuity that starts out 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 Fund;
and increases each year, assuming a certain rate of inflation.
(2) Interest, mortality, and inflation rates used in computing the
present value are those used by the Board of Actuaries of the Civil
Service Retirement System for valuation of CSRS and FERS, based on
dynamic assumptions.
(3) The present value factors are unisex factors obtained by
averaging distinct present value factors, which take into account
mortality for retirees and survivors under CSRS and FERS.
(c)(1) When OPM publishes in the Federal Register notice of normal
cost percentages under Sec. 841.407 of this chapter, it will also
publish the CSRS and FERS tables of present value factors for use for
this part.
(2) The present value factors will be based on the assumptions used
to compute the normal cost percentages.
(3) Changes in the tables of present value factors will be
effective on the first day of the month in which the changes in the
normal cost percentages become effective.
Sec. 847.603 Date of present value and deficiency determinations.
(a) For determining the deficiency under Sec. 847.604, OPM will
determine, under Secs. 847.605 through 847.607, the present values of
future retirement benefits (with and without credit for the NAFI
service) as of the first date on which inclusion of credit for the NAFI
service will affect the rate of annuity payable.
(b) Appendix A to this subpart contains a table in which the left
column is a list of events for which inclusion of credit for the NAFI
service will affect the rate of annuity payable and the right column
indicates the date on which the deficiency will be determined.
Sec. 847.604 Methodology for determining deficiency.
(a) When an event listed in the left column of the table in
Appendix A to this subpart occurs, OPM will compute the deficiency, as
follows:
(1) As of the date of computation under Sec. 847.603, OPM will
determine--
(i) The present value of the annuity including credit for the NAFI
service under Sec. 847.605;
(ii) The present value of the annuity without credit for the NAFI
service under Sec. 847.606 or Sec. 847.607, as applicable; and
(iii) The amount credited to the employee from a transfer to the
Fund under subpart E of this part including earnings under
Sec. 847.507.
(2) OPM will add the amount determined under paragraphs (a)(1)(ii)
and (iii) of this section and subtract that sum from the amount
determined under paragraph (a)(1)(i) of this section.
(b) If the amount determined under paragraph (a)(2) of this section
is greater than zero, the deficiency is equal to that amount.
(c) If no event listed in the left column of the table in Appendix
A to this subpart occurs--that is, the additional service credit does
not cause an increase in an employee annuity or a survivor annuity
actually paid--or, if the amount determined under paragraph (a)(2) of
this section is less than or equal to zero, the deficiency equals zero.
Sec. 847.605 Methodology for determining the present value of annuity
with service credit.
(a) OPM will determine the present value of the annuity including
service credit for NAFI service under paragraph (b) or (c) of this
section.
(b) In cases in which the annuity is payable to a retiree, the
present value under paragraph (a) of this section equals the monthly
annuity rate including credit for the NAFI service as of the date of
computation under Sec. 847.603 times the present value factor for the
retiree's age on that date.
(c) In cases in which the annuity is payable to a survivor, the
present value under paragraph (a) of this section equals the monthly
annuity rate including credit for the NAFI service as of the date of
computation under Sec. 847.603 times the present value factor for the
survivor's age on that date.
Sec. 847.606 Methodology for determining the present value of annuity
without service credit--credit not needed for title.
(a) If credit for the NAFI service is not necessary to provide
title to an annuity payable on the date of computation under
Sec. 847.603, OPM will determine the present value of the annuity
without credit for the NAFI service under paragraph (b) or (c) of this
section.
(b) In cases in which the annuity is payable to a retiree, the
present value under paragraph (a) of this section equals the monthly
annuity rate without credit for the NAFI service as of the date of
computation under Sec. 847.603 times the present value factor for the
retiree's age on that date.
(c) In cases in which the annuity is payable to a survivor, the
present value under paragraph (a) of this section equals the monthly
annuity rate including credit for the NAFI service as of the date of
computation under Sec. 847.603 times the present value factor for the
survivor's age on that date.
Sec. 847.607 Methodology for determining the present value of annuity
without service credit--credit needed for title.
(a) If credit for the NAFI service is necessary to provide title to
an annuity payable on the date of computation under Sec. 847.603, OPM
will determine the present value of the annuity without credit for the
NAFI service under paragraph (b) or (c) of this section.
(b)(1) In cases in which the annuity is payable to a retiree, the
present value under paragraph (a) of this section equals the present
value of the deferred annuity without credit for the NAFI service as of
the deferred annuity date discounted for interest to that date
determined under Sec. 847.603.
(2) The present value of the deferred annuity without credit for
the NAFI
[[Page 41728]]
service as of the deferred annuity date equals the retiree's monthly
annuity rate without credit for the NAFI service as of the deferred
annuity date times the present value factor for the retiree's age on
that date.
(3) The present value under paragraph (b)(2) of this section is
discounted for interest by dividing that amount by a factor equal to
the value of exponential function in which--
(i) The base is one plus the assumed interest rate under
Sec. 841.405 of this chapter on the date determined under Sec. 847.603,
and
(ii) The exponent is one-twelfth of the number of months between
the date determined under Sec. 847.603 and the deferred annuity date.
(c) In cases in which the annuity is payable to a survivor, the
present value under paragraph (a) of this section equals zero, that is,
no survivor annuity would ever become payable without credit for the
NAFI service.
Sec. 847.608 Reduction in annuity due to deficiency.
Any annuity payable in the case of an employee who has made an
election under subpart D of this part will include credit for the NAFI
service. The monthly annuity rate on the date determined under
Sec. 847.603 will be permanently reduced by an amount equal to the
amount of any deficiency divided by the present value factor for the
annuitant's age on that date.
Appendix A to Subpart F of Part 847--List of Events for Which
Inclusion of NAFI Service May Affect the Rate of Annuity Payable
------------------------------------------------------------------------
Date deficiency will be
Type of event determined
------------------------------------------------------------------------
CSRS or FERS nondisability retirement..... Commencing date of annuity.
CSRS disability retirement................ Commencing date of
annuity.\1\
FERS disability retirement................ First day of month following
62nd birthday.\2\
CSRS death in service..................... Commencing date of survivor
annuity.\3\
FERS death in service..................... Commencing date of survivor
annuity.
FERS death of disability annuitant prior Commencing date of survivor
to age 62. annuity.
FERS death of separated employee.......... Commencing date of survivor
annuity.
CSRS or FERS redetermination of annuity... Commencing date of
redetermined annuity
benefit.
------------------------------------------------------------------------
\1\ Disability annuity with and without credit for NAFI service must be
computed. If annuity payable under each computation is identical due
to guaranteed minimum annuity, then deficiency is zero.
\2\ Generally, the date the deficiency is determined will be the
disability retiree's 62nd birthday. However, if an annuity benefit
based on the retiree's actual years of service and salary becomes
payable prior to age 62, the deficiency is computed at that time.
\3\ Deficiency amount could be zero if survivor is eligible for the
guaranteed minimum annuity amount under both computations.
Subpart G--Computation of Benefits Under the Retroactive Provisions
Sec. 847.701 Purpose and scope.
This subpart establishes the methodology that OPM will use to
determine benefit payable in connection with an election made under
subpart D of this part.
Sec. 847.702 Lump-sum payments and refunds.
(a) Employee contributions with interest which are transferred to
the Fund under subpart E of this part are included in any lump-sum
credit or unexpended balance payable to the employee or the employee's
survivors under subpart T of part 831 of this chapter or under part 843
of this chapter.
(b) Government contributions which are transferred to the Fund
under subpart E of this part are not included in any lump-sum credit or
unexpended balance and are not payable to the employee or the
employee's survivors.
Sec. 847.703 Reductions in annuity.
The CSRS or FERS basic annuity of an employee or survivor who has
elected retirement coverage under subpart D of this part is reduced in
the following order--
(a) For age, if applicable, as provided under sections 8339(h) and
8415(f) of title 5, United States Code.
(b) For noncontributory service performed before October 1, 1982,
if applicable, as provided under 5 U.S.C.A. 8339(i), note.
(c) For deficiency, as determined under subpart F of this part.
(d) To provide a survivor annuity to a spouse or former spouse, if
applicable, as provided under sections 8339(j)(4) and 8419(a) of title
5, United States Code.
(e) Any other reductions which may apply.
Sec. 847.704 Maximum survivor annuity election.
The amount of the employee's benefit after reduction for any
deficiency under Sec. 847.608 is--
(a) For CSRS, the maximum amount that may be designated as the
survivor base under section 8339 (j) or (k) to title 5, United States
Code;
(b) For FERS, the employee annuity (for survivor benefit purposes)
under sections 8416 through 8420 of title 5, United States Code.
Sec. 847.705 Cost-of-living adjustments.
Cost-of-living adjustments are applied to the rate payable to the
retiree or survivor, including the reduction for any deficiency
described in Sec. 847.608.
[FR Doc. 96-20333 Filed 8-8-96; 8:45 am]
BILLING CODE 6325-01-M
