Federal Employees Retirement SystemCoverage

SUMMARY: The Office of Personnel Management (OPM) is proposing

regulations concerning exclusions from coverage under the Federal

Employees Retirement System (FERS) for employees who have at least 5

years of service creditable under the Civil Service Retirement System

(CSRS). These regulations would clarify the existing regulations to

specifically state the requirement that, if the employee has a break in

service ending after 1986, the employee's past service must include

some service covered by CSRS to be excluded from automatic FERS

coverage. The regulations are necessary to clarify the current

regulations and to conform to OPM's guidance since implementation of

FERS.

DATES: Comments must be received on or before September 26, 1994.

ADDRESSES: Send comments to Reginald M. Jones, Jr., Assistant Director

for Retirement Policy Development; Retirement and Insurance Group;

Office of Personnel Management; P.O. Box 57; Washington, DC 20044; or

deliver to OPM, Room 4351, 1900 E Street SW., Washington, DC.

FOR FURTHER INFORMATION CONTACT: Harold L. Siegelman, (202) 606-0299.

SUPPLEMENTARY INFORMATION: The general rule that a Federal employee who

is covered by social security is automatically covered by the Federal

Employees Retirement System (FERS) unless the employee is excluded from

FERS coverage by statute or regulation is stated in section 842.103 of

Title 5, Code of Federal Regulations. (FERS coverage is available only

to employees covered by social security. See generally definition of

employee under 5 CFR 842.102.) However, our current coverage

regulations present many of the statutory exclusions to FERS coverage

in terms of election rights that belong in part 846 of Title 5, Code of

Federal Regulations. To simplify the regulations, we propose to revise

sections 842.101 and 842.104 to limit the scope of subpart A of part

842 to automatic FERS coverage, leaving the regulation of all transfer

issues to part 846.

Section 8402(b) of title 5, United States Code, establishes the

statutory exclusions from coverage under FERS. The regulations

implementing this provision are contained in section 842.104 of Title

5, Code of Federal Regulations. These proposed regulations seek to

clarify the regulations and eliminate redundancies in a manner

consistent with OPM's implementation of FERS since the system's

inception.

Section 8402(b)(1) of title 5, United States Code, excludes certain

senior officials from automatic FERS coverage.

The statute applies to senior officials who were placed under

mandatory social security coverage at the beginning of 1984 and who

have continuous service since December 31, 1983. Proposed section

842.104(b) would use essentially the same language as our current

section 842.104(c) of Title 5, Code of Federal Regulations, to

implement this paragraph.

Section 8402(b)(2) of title 5, United States Code, provides two

mutually exclusive sets of exclusions from automatic FERS coverage.

Subparagraph (A) applies to employees who reenter service on or after

January 1, 1987 (the general effective date of the FERS Act of 1986)

after a break in service. Subparagraph (B) applies to employees not

covered by subparagraph (A), specifically, employees who have served

continuously since December 31, 1986. OPM has applied this approach to

the exclusion since the inception of FERS.

Employees who have had a break in service ending after December 31,

1986, are excluded from automatic FERS coverage if they satisfy the

two-part test under subparagraph (A). The two-part test requires both

some service (at least 1 day) covered by the Civil Service Retirement

System (CSRS) or the Foreign Service Retirement System (FSRS) and at

least 5 years of civilian service creditable under CSRS rules as of the

last separation from service. Proposed section 482.104(c) would revise

our current section 842.104(b) of Title 5, Code of Federal Regulations,

to clarify our existing regulation that implements this provision.

Employees who have not had a break in service ending after December

31, 1986, are excluded from automatic FERS coverage if they satisfy the

one-part test under subparagraph (B). These employees are excluded from

automatic FERS coverage--even if they have no prior service covered by

CSRS or FERS--as long as they did have at least 5 years of creditable

civilian service (under CSRS rules) before January 1, 1987. Proposed

section 842.104(d) would merge and revise current paragraphs (a) and

(e) of section 842.104 of Title 5, Code of Federal Regulations, to

simplify and clarify the regulations. Paragraph (e) particularly needs

to be revised because the regulatory text does not show that it applies

only to employees with just social security coverage such as those

serving under multiple term appointments continuously since December

31, 1986. The supplementary information in our notice of interim

rulemaking (published at 51 FR 47195, 47196, on December 31, 1986)

states the intended scope of this paragraph, which also reflects our

guidance to the employing agencies that make these determinations.

Proposed section 842.104(e) defines a break in service for the

purpose of applying these rules as a separation from CSRS-covered

service lasting more than 3 days, consistent with our general practice.

However, in unusual circumstances employees will also be considered to

have had a break in service in situations in which there may be no

period of separation from service but the individual acquires automatic

social security coverage (e.g., when a District of Columbia employee

who is excluded from social security transfers to a Federal position).

Proposed section 842.104(e) restates the current section 842.104(f)

applicable to certain employees who have exercised their election

rights under section 8461(n) of title 5, United States Code, to retain

coverage under a retirement system for employees of nonappropriated

fund instrumentalities.

OPM's guidance on making coverage determinations is not affected by

these amendments, which are intended to clarify the regulations and

ensure that they will be interpreted correctly and in accordance with

our existing guidance, ``The CSRS and FERS Handbook for Personnel and

Payroll Offices'' (formerly FPM Supplement 830-1), chapter 10.

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 842

Administrative practice and procedure, Air traffic controllers,

Firefighters, Government employees, Law enforcement officers, Pensions,

Reporting and recordkeeping, Retirement.

U.S. Office of Personnel Management.

Lorriane A. Green,

Deputy Director.

Accordingly, OPM proposes to amend 5 CFR part 842 as follows:

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

1. The authority citation for part 842 continues to read as

follows:

Authority: 5 U.S.C. 8461(g); Secs. 842.104 and 842.106 also

issued under 5 U.S.C. 8461(n); Sec. 842.105 also issued under 5

U.S.C. 8402(c)(1) and 7701(b)(2); Sec. 842.106 also issued under

section 7202 (m)(2) of the Omnibus Budget Reconciliation Act of

1990, Pub. L. 101-508 and 5 U.S.C. 8402(c)(1); Secs. 842.604 and

842.611 also issued under 5 U.S.C. 8417; Sec. 842.607 also issued

under 5 U.S.C. 8416 and 8417; Sec. 842.614 also issued under 5

U.S.C. 8419; Sec. 842.615 also issued under 5 U.S.C. 8418;

Sec. 842.703 also issued under 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. 1001-508; subpart H also issued under 5 U.S.C. 1104.

Subpart A--Coverage

2. Section 842.101 is revised to read as follows:

Sec. 842.101 Purpose and scope.

(a) This subpart contains regulations concerning automatic coverage

under the Federal Employees Retirement System (FERS). References to

FERS coverage in this subparts are to automatic, as opposed to

elective, FERS coverage.

(B) Part 846 of this chapter contains regulations concerning

elective FERS coverage. FERS elections are available under limited

circumstances to employees not subject to automatic FERS coverage.

3. Section 842.104 is revised to read as follows:

Sec. 842.104 Statutory exclusions.

(a) Lack of social security coverage. An individual not covered by

social security (title II of the Social Security Act and chapter 21 of

the Internal Revenue Code of 1954), including an individual covered by

full CSRS (and thereby excluded from social security coverage), is

excluded from FERS coverage.

(b) Senior officials subject to social security coverage despite

continuous service. An individual who has served without a break in

service of more than 365 days since December 31, 1983, in one or more

of the following positions is excluded from FERS coverage.

(1) The Vice President;

(2) A Member of Congress;

(3) A non-SES appointee to a position listed in 5 U.S.C. 5312

through 5317;

(4) A Senior Executive Service or Senior Foreign Service noncareer

appointee; or

(5) An individual appointed by the President (or his designee) or

the Vice President under section 105(a)(1), 107(a)(1), or (b)(1) of

title 3, United States Code, to a position for which the maximum rate

of basic pay is at or above the rate for Level V of the Executive

Schedule.

(c) Employees rehired after December 31, 1986, following a break in

service. An employee who is rehired after December 31, 1986, who has

had a break in service and who, at the time of the last separation from

the service, had at least 5 years of civilian service creditable under

CSRS rules, any part of which was covered by CSRS or the Foreign

Service Retirement System, is excluded from FERS coverage.

(d) Employees who have not had a break in service ending after

December 31, 1986. An employee who has not had a break in service of

more than 3 days ending after December 31, 1986, and who, as of

December 31, 1986, has at least 5 years of creditable civilian service

under CSRS rules (even if none of this service was covered by CSRS), is

excluded from FERS coverage.

(e) Break in service. For the purposes of paragraph (c) and (d) of

this section, ``break in service'' means a separation from CSRS-covered

service lasting at least 4 days, or a transfer or separation of less

than 4 days when the employee becomes subject to automatic coverage

under social security (title II of the Social Security Act and chapter

21 of the Internal Revenue Code of 1954).

(f) Coverage under a retirement system for NAF employees. An

employee who has elected coverage under a retirement system for NAF

employees in accordance with Sec. 842.106 is excluded from FERS

coverage during that and all subsequent periods of service, including

service as reemployed annuitant.

[FR Doc. 94-18369 Filed 7-27-94; 8:45 am]

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