[Federal Register Volume 59, Number 192 (Wednesday, October 5, 1994)] [Unknown Section] [Page 0] From the Federal Register Online via the Government Publishing Office [www.gpo.gov] [FR Doc No: 94-24454] Federal Register / Vol. 59, No. 192 / Wednesday, October 5, 1994 / [[Page Unknown]] [Federal Register: October 5, 1994] VOL. 59, NO. 192 Wednesday, October 5, 1994 OFFICE OF PERSONNEL MANAGEMENT 5 CFR Part 846 RIN: 3206-AE01 Deemed Elections of Coverage Under the Federal Employees Retirement System AGENCY: Office of Personnel Management. ACTION: Final rule. ----------------------------------------------------------------------- SUMMARY: The Office of Personnel Management (OPM) is adopting, as final, its interim regulations to allow employees to remain covered by the Federal Employees Retirement System (FERS), if their employing agency erroneously placed them under FERS during the period when they would have had the opportunity to elect FERS coverage. These regulations deem employees to have elected FERS coverage unless they notify the employing agency that they do not want to be deemed to have elected FERS. These regulations are necessary to prevent the agency error from depriving such employees of their statutory right to have elected FERS coverage. EFFECTIVE DATE: November 4, 1994. FOR FURTHER INFORMATION CONTACT: Harold L. Siegleman, (202) 606-0299. SUPPLEMENTARY INFORMATION: On September 13, 1993, we published (at 58 FR 47821) interim regulations to allow employees to remain covered by the Federal Employees Retirement System (FERS), if their employing agency erroneously placed them under FERS during the period when they would have had the opportunity to elect FERS coverage. The interim regulations establish a procedure under which employees (who were denied the opportunity to elect FERS coverage because their employing agency erroneously placed them under FERS) would be deemed to have elected FERS coverage unless they notify the employing agency that they do not want to be deemed to have elected FERS. We designed the procedure to minimize the actions that both an agency and an employee would be required to perform to correct records. We received four comments on the interim regulations. All of the comments were supportive of the concept of allowing this group of employees the opportunity to have FERS coverage. The commenters expressed their concerns with specific aspects of our interim method for choosing FERS coverage. One commenter expressed concern that our proposal was too narrow because it failed to cover employees who were correctly placed under full CSRS, CSRS offset, or social security only, but were incorrectly or never informed of their opportunity to elect FERS. We believe that the decision of the United States Court of Appeals for the Federal Circuit in Killip v. Office of Personnel Management, 991 F.2d 1564 (Fed. Cir. 1993), leaves us without authority to permit coverage elections except for the situation of employees who were incorrectly denied any right of election whatsoever during the election period provided by statute. Specifically, the court determined that OPM did not have authority to allow retroactive belated FERS elections made after June 30, 1988, on the basis that the employing agency provided incomplete information to the employee, or that the employee was otherwise prevented form making an informed election by circumstances beyond the employee's control. Although the court decision technically applies only to elections that should have been made during the 1987 open season, the court's analysis is equally applicable to cases of employees rehired after the open season. We believe that the court decision prevents us from allowing retroactive transfers by any employees who did have an opportunity to make an election, regardless of circumstances that may have prevented the employee from making an informed election. Accordingly, we could not adopt this suggestion. Three commenters requested that we provide more information about the procedures that agencies will be expected to follow when implementing the regulations. We will provide agencies with instructions on documenting elections and correction of records under these regulations in the usual manner, through a payroll office letter. Three commenters objected to the interim procedure that deems the employee to have elected FERS coverage unless the employee informs the agency of the desire not to be covered by FERS. Each objected for different reasons. The interim procedures were based on the premise that most employees who have been automatically covered by FERS in error will want to continue to be covered under FERS. One commenter questioned this premise. However, our experience in handling belated FERS election requests causes us to believe this premise is correct. We continue to believe that this procedure will cause the maximum number of employees to have the retirement coverage they want without having to elect out of FERS. One commenter suggested that we require an affirmative FERS election to obviate the need for agencies to develop procedures for handling requests to waive the time limit. The commenter also suggested that the ``open-ended nature of the passive election almost guarantees that there will be waiver requests and that agencies will feel obligated to grant them,'' resulting in longer periods for which the records will have to be corrected. The commenter states, ``The agency will also sustain additional losses in contributions to the Thrift Savings Plan. (Agencies forfeit automatic and matching contributions that are more than one year old.)'' While these problems will occur, we believe that requiring an affirmative FERS election, which, under Killip, would also require an inflexible time limit, would not be sufficiently responsive to the needs of the employee who has already been placed in a difficult situation because of an agency error. Agencies can avoid problems concerning waiver of the time limit by providing adequate counseling and follow-up procedures to assure that employees make informed choices during the 60-day period. Although the regulatory procedures deem employees to have elected FERS if the employee takes no action, we strongly encourage agencies to follow-up all cases involving these regulations and to obtain and document express (and written) elections whenever possible. We expect agencies to approve waivers of the time limit in which to decline the deemed election unless they can document that the employee did not act with reasonable diligence or that the employee made an informed choice of FERS. Because of the adverse consequence for agencies that the commenter noted, agencies should develop procedures to fully document their counseling efforts and employee elections. One commenter questioned the provisions concerning the rights of survivors. The regulations provide a special rule if an employee dies during the election period. Because the employee's election period ended prematurely due to death, the benefits payable to the survivor (either FERS or the benefits available in the absence of a deemed election) depend on whether the deemed election is forced upon the survivor. Because of the unique situation created by a deemed election, the regulations allow a survivor to decline the deemed election. In this way, we are assuring that the deemed election will not deprive a survivor of benefits established by statute, while providing what the employee and survivor would be anticipating (benefits under FERS) unless the survivor chooses otherwise. One commenter raised questions concerning eligibility of an employee to be deemed to have elected FERS when a former spouse is entitled to a portion of the employee annuity or a survivor annuity. Deemed elections are permitted only for employees who were eligible to elect FERS during the election period. Agencies will have to confirm eligibility by obtaining a certification from the employee concerning former spouses, similar to the certification required on the SF 3109, Election of FERS Coverage, or by obtaining telephone approval from our Court-Ordered Benefits Section. Two commenters specifically raised questions about the effective date of the deemed elections. The effective date is the later of the employee's entry-on-duty date or the beginning of the first pay period commencing after June 30, 1987. In devising the interim procedure we wanted to minimize the correction of records. If as we expect most employees affected by these regulations will want FERS coverage, records correction will be minimal. The only correction action required in cases of employees whose entry-on-duty date is on or after the beginning of the first pay period in July 1987, will be an SF-50 showing that FERS coverage, as of the entry-on-duty date was by election, rather than automatic. Of course, if the employee was erroneously placed in FERS before the beginning of the first pay period of July 1987 or if the employee elects not to be covered by FERS, more substantial records corrections will be required. We will issue a payroll office letter to provide more details on correction of records. Regulatory Flexibility Act I certify that this regulation will not have a significant economic impact on a substantial number of small entities because the regulation will only affect Federal employees and agencies and retirement payments to retired Government employees and their survivors. List of Subjects in 5 CFR Part 846 Administrative practice and procedure, Government employees, Pensions, Retirement. Accordingly, under authority of 5 U.S.C. 8461(g), OPM is adopting its interim rules under 5 CFR part 846 published on September 13, 1993, at 58 FR 47821, as final rules without change. U.S. Office of Personnel Management. Lorraine A. Green, Deputy Director. [FR Doc. 94-24454 Filed 10-4-94; 8:45 am] BILLING CODE 6325-01-M
