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Proposed Rule2023-14983

Federal Employees' Retirement System; Present Value Conversion Factors for Spouses of Deceased Separated Employees

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Published

July 14, 2023

Issuing agencies

Personnel Management Office

Abstract

The Office of Personnel Management (OPM) is issuing a proposed rule to revise the table of reduction factors for early commencing dates of survivor annuities for spouses of separated employees who die before the date on which they would be eligible for unreduced deferred annuities. The annuity factor for spouses of deceased employees who die in service when those spouses elect to receive the basic employee death benefit in 36 installments under the Federal Employees' Retirement System (FERS) Act of 1986 remains unchanged. These proposed revisions are necessary to ensure that the tables conform to the economic and demographic assumptions adopted by the Board of Actuaries and published in the Federal Register on April 14, 2023, as required by law.

Full Text

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<title>Federal Register, Volume 88 Issue 134 (Friday, July 14, 2023)</title>
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[Federal Register Volume 88, Number 134 (Friday, July 14, 2023)]
[Proposed Rules]
[Pages 45100-45102]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2023-14983]

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Proposed Rules
Federal Register
________________________________________________________________________

This section of the FEDERAL REGISTER contains notices to the public of
the proposed issuance of rules and regulations. The purpose of these
notices is to give interested persons an opportunity to participate in
the rule making prior to the adoption of the final rules.

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Federal Register / Vol. 88, No. 134 / Friday, July 14, 2023 /
Proposed Rules

[[Page 45100]]

OFFICE OF PERSONNEL MANAGEMENT

5 CFR Part 843

[Docket ID: OPM-2023-0008]
RIN 3206-AO13

Federal Employees' Retirement System; Present Value Conversion
Factors for Spouses of Deceased Separated Employees

AGENCY: Office of Personnel Management.

ACTION: Proposed rule.

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

SUMMARY: The Office of Personnel Management (OPM) is issuing a proposed
rule to revise the table of reduction factors for early commencing
dates of survivor annuities for spouses of separated employees who die
before the date on which they would be eligible for unreduced deferred
annuities. The annuity factor for spouses of deceased employees who die
in service when those spouses elect to receive the basic employee death
benefit in 36 installments under the Federal Employees' Retirement
System (FERS) Act of 1986 remains unchanged. These proposed revisions
are necessary to ensure that the tables conform to the economic and
demographic assumptions adopted by the Board of Actuaries and published
in the Federal Register on April 14, 2023, as required by law.

DATES: Send comments on or before August 14, 2023.

ADDRESSES: You may submit comments identified by docket number and/or
Regulatory Information Number (RIN) and title, by the following method:
<bullet> Federal eRulemaking Portal: <a href="https://www.regulations.gov">https://www.regulations.gov</a>.
Follow the instructions for submitting comments.

All submissions received must include the agency name and docket number
or RIN for this document. The general policy for comments and other
submissions from members of the public is to make these submissions
available for public viewing at <a href="https://www.regulations.gov">https://www.regulations.gov</a> as they are
received without change, including any personal identifiers or contact
information.

FOR FURTHER INFORMATION CONTACT: Karla Yeakle, (202) 606-0299.

SUPPLEMENTARY INFORMATION: On April 14, 2023, OPM published a notice at
88 FR 23108 in the Federal Register to revise the normal cost
percentages under the Federal Employees' Retirement System (FERS) Act
of 1986, Public Law 99-335, 100 Stat. 514, as amended, based on
economic assumptions and demographic factors adopted by the Board of
Actuaries of the Civil Service Retirement System. By statute under 5
U.S.C. 8461(i), the revisions to the actuarial assumptions require
corresponding changes in factors used to produce actuarially equivalent
benefits when required by the FERS Act.
Section 843.309 of title 5, Code of Federal Regulations, regulates
the payment of the basic employee death benefit. Under 5 U.S.C.
8442(b), the basic employee death benefit may be paid to a surviving
spouse as a lump sum or as an equivalent benefit in 36 installments. In
its meeting on May 10, 2022, the Board of Actuaries of the Civil
Service Retirement System (the Board) reviewed the long-term economic
assumptions and determined that they should remain unchanged;
therefore, the factors used to convert the lump sum to 36-installment
payments under 5 CFR 843.309(b)(2) will remain unchanged.
Section 843.311 of title 5, Code of Federal Regulations, regulates
the benefits for the survivors of separated employees under 5 U.S.C.
8442(c). This section provides a choice of benefits for eligible
current and former spouses. If the current or former spouse is the
person entitled to the unexpended balance under the order of precedence
under 5 U.S.C. 8424, he or she may elect to receive the unexpended
balance instead of an annuity. If the separated employee died before
having attained the minimum retirement age, the annuity commences on
the day the deceased separated employee would have been eligible for an
unreduced annuity as specified under this section. If the current or
former spouse instead elects to receive an adjusted annuity earlier,
beginning on the day after the death of the separated employee, the
annuity is actuarially reduced to compensate for it being paid at an
earlier date, and is reduced using the factors in appendix A to subpart
C of part 843 to make the annuity actuarially equivalent to the present
value of the annuity that the spouse or former spouse otherwise would
have received. This reduces the risk of any unfunded liability to the
Civil Service Retirement and Disability Fund. These proposed revisions
amend appendix A to subpart C of part 843 to conform the factors to the
revised actuarial assumptions.
OPM has determined that a 30-day period for comments on this
proposed rule is sufficient to allow for meaningful public input. These
proposed revisions to Appendix A to subpart C of part 843 are necessary
under 5 U.S.C. 8461(i). Under section 8461(i) and 5 CFR part 841,
subpart D, OPM is required to make changes to the factors used to
produce actuarially equivalent benefits under the FERS Act whenever the
Board of Actuaries established under 5 U.S.C. 8347(f) revises related
economic assumptions. In May 2022, the Board of Actuaries made such
revisions. Accordingly, OPM must now implement these revisions and is
proposing the corresponding changes, which must go into effect the
first day of the fiscal year. OPM historically has not received
comments on previous iterations of this rulemaking.

Expected Impact of This Rule

OPM is issuing this proposed rule to revise the table of reduction
factors for early commencing dates of survivor annuities for spouses of
separated employees who die before the date on which they would be
eligible for unreduced deferred annuities. The factors that are
currently in effect can be found in appendix A to subpart C of part
843.
Of all the applications for survivor annuity death benefits OPM
receives annually, OPM expects this rule to impact approximately one
percent of those survivor annuity death applications it receives that
is based on the death of a separated employee. Of the changes this rule
implements, the most significant change is to conform the factors to
the revised actuarial assumptions when the current or former spouse
elects to receive an adjusted annuity beginning on the day after the
death of the separated employee, the annuity is reduced using the
factors in

[[Page 45101]]

appendix A to subpart C of part 843 to make the annuity actuarially
equivalent to the present value of the annuity that the spouse or
former spouse otherwise would have received. When OPM updates the FERS
normal cost, the FERS law at 5 U.S.C. 8461(i) requires that OPM make
corresponding changes to the factors used to produce actuarially
equivalent benefits under FERS. Specifically, this rule is needed to
revise the present value conversion factors for certain benefits
payable under FERS to current and former spouses of deceased separated
employees. This rule allows certain survivors to make choices about
what benefits they want to receive and, in some instances, when they
want the benefits to begin. Considering the small number of survivor
annuities affected, OPM does not anticipate this rule will
substantially impact local economies or have a large impact in local
labor markets. However, OPM is requesting comment in this rule
regarding the impact.

Regulatory Review

OPM has examined the impact of this rule as required by Executive
Order 12866 and Executive Order 13563, which directs agencies to assess
all costs and benefits of available regulatory alternatives and, if
regulation is necessary, to select regulatory approaches that maximize
net benefits (including potential economic, environmental, public,
health, and safety effects, distributive impacts, and equity). This
rule was not designated as a ``significant regulatory action,'' under
Executive Order 12866 and, therefore, was not reviewed by the Office of
Management and Budget (OMB).

Regulatory Flexibility Act

OPM certifies that this rule will not have a significant economic
impact on a substantial number of small entities.

Federalism

We have examined this rule in accordance with Executive Order
13132, Federalism, and have determined that this rule will not have any
negative impact on the rights, roles and responsibilities of State,
local, or tribal Governments.

Civil Justice Reform

This regulation meets the applicable standard set forth in
Executive Order 12988.

Unfunded Mandates Reform Act of 1995

This rule will not result in the expenditure by state, local, and
tribal governments, in the aggregate, or by the private sector, of $100
million or more in any year and it will not significantly or uniquely
affect small Governments. Therefore, no actions were deemed necessary
under the provisions of the Unfunded Mandates Reform Act of 1995.

Paperwork Reduction Act

Notwithstanding any other provision of law, no person is required
to respond to, nor shall any person be subject to a penalty for failure
to comply with a collection of information subject to the requirements
of the Paperwork Reduction Act of 1995 (44 U.S.C. 3501 et seq.) (PRA),
unless that collection of information displays a currently valid OMB
Control Number.
This rule involves an OMB approved collection of information
subject to the PRA titled ``Application for Death Benefits (FERS)/
Documentation and Elections in Support of Application for Death
Benefits when Deceased was an Employee at the Time of Death (FERS),''
OMB Control Number 3206-0172. The public reporting burden for this
collection is estimated to average 60 minutes per response, including
time for reviewing instructions, searching existing data sources,
gathering and maintaining the data needed, and completing and reviewing
the collection of information. The total burden hour estimate for this
form is 16,751 hours. The systems of record notice for this collection
is: OPM SORN CENTRAL-1-Civil Service Retirement and Insurance Records.

List of Subjects in 5 CFR Part 843

Air traffic controllers, Disability benefits, Firefighters,
Government employees, Law enforcement officers, Pensions, Retirement.

Office of Personnel Management.
Kayyonne Marston,
Federal Register Liaison.

For the reasons stated in the preamble, the Office of Personnel
Management proposes to amend 5 CFR part 843 as follows:

PART 843--FEDERAL EMPLOYEES RETIREMENT SYSTEM--DEATH BENEFITS AND
EMPLOYEE REFUNDS

0
1. The authority citation for part 843 continues to read as follows:

Authority: 5 U.S.C. 8461; 843.205, 843.208, and 843.209 also
issued under 5 U.S.C. 8424; 843.309 also issued under 5 U.S.C. 8442;
843.406 also issued under 5 U.S.C. 8441.

Subpart C--Current and Former Spouse Benefits

0
2. Revise appendix A to subpart C of part 843 to read as follows:

Appendix A to Subpart C of Part 843--Present Value Conversion Factors
for Earlier Commencing Date of Annuities of Current and Former Spouses
of Deceased Separated Employees

With at least 10 but less than 20 years of creditable service--

------------------------------------------------------------------------
Age of separated employee at birthday before death Multiplier
------------------------------------------------------------------------
26...................................................... .1081
27...................................................... .1146
28...................................................... .1215
29...................................................... .1289
30...................................................... .1367
31...................................................... .1451
32...................................................... .1539
33...................................................... .1634
34...................................................... .1735
35...................................................... .1840
36...................................................... .1954
37...................................................... .2071
38...................................................... .2196
39...................................................... .2326
40...................................................... .2460
41...................................................... .2611
42...................................................... .2772
43...................................................... .2939
44...................................................... .3124
45...................................................... .3314
46...................................................... .3525
47...................................................... .3743
48...................................................... .3978
49...................................................... .4230
50...................................................... .4500
51...................................................... .4792
52...................................................... .5106
53...................................................... .5442
54...................................................... .5804
55...................................................... .6190
56...................................................... .6614
57...................................................... .7070
58...................................................... .7565
59...................................................... .8100
60...................................................... .8680
61...................................................... .9312
------------------------------------------------------------------------

With at least 20, but less than 30 years of creditable service--

[[Page 45102]]

51...................................................... .5526
52...................................................... .5887
53...................................................... .6274
54...................................................... .6691
55...................................................... .7137
56...................................................... .7623
57...................................................... .8149
58...................................................... .8717
59...................................................... .9332
------------------------------------------------------------------------

With at least 30 years of creditable service--

------------------------------------------------------------------------
Multiplier by separated
employee's year of birth
Age of separated employee at birthday -------------------------------
before death From 1950
After 1966 through 1966
------------------------------------------------------------------------
46...................................... .4989 .5332
47...................................... .5300 .5665
48...................................... .5634 .6021
49...................................... .5991 .6403
50...................................... .6374 .6813
51...................................... .6786 .7253
52...................................... .7228 .7725
53...................................... .7703 .8232
54...................................... .8213 .8778
55...................................... .8763 .9365
56...................................... .9357 1.0000
------------------------------------------------------------------------

[FR Doc. 2023-14983 Filed 7-13-23; 8:45 am]
BILLING CODE 6325-38-P

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