[Federal Register Volume 59, Number 239 (Wednesday, December 14, 1994)]
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From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 94-30614]
Federal Register / Vol. 59, No. 239 / Wednesday, December 14, 1994 /
[[Page Unknown]]
[Federal Register: December 14, 1994]
VOL. 59, NO. 239
Wednesday, December 14, 1994
OFFICE OF PERSONNEL MANAGEMENT
5 CFR Part 842
RIN 3206-AF92
Federal Employees Retirement System--Coverage
AGENCY: Office of Personnel Management.
ACTION: Final rule.
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SUMMARY: The Office of Personnel Management (OPM) is issuing final
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 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.
EFFECTIVE DATE: January 13, 1995.
FOR FURTHER INFORMATION CONTACT: Harold L. Siegelman, (202) 606-0299.
SUPPLEMENTARY INFORMATION: On July 28, 1994, OPM published (at 59 FR
38376) proposed regulations and requested comments 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). We received one
comment on the proposed regulations.
The commenter disagreed with our interpretation of section
8402(b)(2) of title 5, United States Code. Section 8402(b) of title 5,
United States Code, establishes the statutory exclusions from automatic
coverage under FERS.
1. OPM's Interpretation of the Statute
Section 8402(b)(2) of title 5, United States Code, provides two
sets of exclusions from automatic FERS coverage. These exclusions are
ambiguous in that they can be read to overlap or to be mutually
exclusive. OPM, as the agency charged with the administration of these
provisions, adopted the interpretation that the exclusions were
mutually exclusive. This decision was contemporaneous with the statute
and made by the same administrators involved with enactment of the
statute. The courts have determined that such agency interpretations
are entitled to great deference.
The effect of OPM's determination that the exclusions in section
8402(b)(2) are mutually exclusive is that--
Subparagraph (A) applies to all 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; and
Subparagraph (B) applies only to employees not covered by
subparagraph (A), specifically, employees who have served
continuously since December 31, 1986.
2. The Change in Regulatory Text Makes No Substantive Change
OPM has applied this approach to the exclusions since the inception
of FERS. On pages 16 and 17 of the September 1986 edition of the FERS
pamphlet RI 90-1, OPM provided information about enrolling in FERS. In
describing the options available to ``employees in the interim plan,''
those with continuous service who had both CSRS and Social Security, it
simply states:
If you have five years of creditable civilian service by
December 31, 1986, then you remain under CSRS and Social Security *
* *. You can elect to transfer to FERS.
In describing the options available to ``rehires,'' the pamphlet states
the requirement of some prior covered service to avoid automatic FERS
coverage, in addition to the 5-years-of-service requirement.
Installment 1 of the CSRS & FERS Handbook for Personnel and Payroll
Offices (formerly FPM Supplement 830-1) clearly states OPM's
interpretation. Section 10A1.1-2I.2 explains the ``5-Year Test'' for
determining whether an employee being rehired, transferred, or
converted is automatically covered by FERS. It states--
If there is no break in service of more than 3 days ending after
December 31, 1986, the 5-year test is met if the employee had 5
years of creditable civilian service as of December 31, 1986 * * *.
If the employee has had a break in service of more than 3 days
ending after 1986, the 5-year test is met if the employee had any
amount of past coverage under CSRS * * * and also had 5 years of
creditable civilian service as of the break in service. (At 3.)
The examples include--
(c) Rehires on or after January 1, 1987, who had 5 or more years
of creditable civilian service on the date of separation from last
Federal employment AND had some prior coverage under CSRS * * * are
excluded from automatic FERS coverage. [Emphasis in original.] (Id.;
cf. example (d) at p. 4.)
In proposing to change our regulatory language implementing
paragraph (b)(2) of section 8402, we were merely clarifying the
language to state our original, contemporaneous, and continuing
interpretation of the controlling statute, by specifically stating 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.
3. Commenter's Arguments Conflict With Congress' Use of Language in
This Area of the Law
The commenter argues that the proper distinction between
subparagraphs (A) and (B) is that subparagraph (A) applies to
reemployed annuitants. He argues that the language in subparagraph
(A)(i), ``having been subject to [CSRS],'' refers to an annuitant who
has been reemployed, not to a coverage requirement. Service ``subject
to (CSRS)'' is a term of art for service covered by CSRS (i.e., subject
to deductions). Congress has used ``subject to this Act,'' and later
``subject to subchapter III'' language as requiring coverage since at
least Public Law 83-730, enacted August 31, 1954. The Commenter's
suggestion that this language suddenly has another meaning cannot
reasonably be read in that manner. Current CSRS law retains this
convention in section 8333(b) of title 5, United States Code, uses the
same ``is subject to (CSRS)'' to create the coverage requirement for
CSRS annuities. The commenter's suggestion that this language suddenly
has another meaning is unreasonable considering the history of this
phrase.
Furthermore, the commenter's suggestion that the language refers to
reemployed CSRS annuitants is not even consistent with the manner in
which such persons are described elsewhere in the FERS Act. Section
302(a)(12)(A) of the FERS Act uses the narrower language ``is subject
to section 8344 of title 5, United States Code'' to describe a
reemployed CSRS annuitant. (Pub. L. 99-336, 100 Stat. 514, 604.)
Similarly, sections 8344 (CSRS) and 8468 (FERS) of title 5, United
States Code, use the language ``an annuitant * * * becomes reemployed''
to refer to a reemployed annuitant.
The commenter also quoted a paragraph from the House Conference
Report that he claims supports his view that the two subparagraphs
cannot be mutually exclusive. That paragraph states:
The conferees agreed that individuals with at least 5 years
creditable service in CSRS, who return after more than a one year
break in service, should retain entitlement to CSRS benefits unless
they elect to be covered by FERS benefits. (H. Conf. Rept. No. 99-
606, May 16, 1986, p. 43, reprinted in 1986 U.S. Code Cong. and
Admin. News 1405, 1526.)
Since persons who have performed no covered CSRS service have no
``entitlement to CSRS benefits'' to be ``retained,'' we do not see how
this language supports the commenter's argument. The passage is not
inconsistent with OPM's interpretation of section 8402(b). On the
contrary, the House Conference Report contains language supporting
OPM's interpretation. In the discussion of FERS coverage the report
states:
The conference agreement adopts the Senate provisions with
modifications. Similar to the House committee bill, rehired
employees with 5 years or more prior service subject to CSRS retain
coverage under a revised CSRS. (Emphasis added.) (Ibid. Rept. at
126, reprinted at 1509.)
We again point out that the ``subject to CSRS'' language is a long-used
term of art for the coverage requirement.
The commenter also quotes a passage from the Report of Senate
Governmental Affairs Committee on the Senate version of the bill that
became the FERS Act. The ``subsection (a)(3)'' mentioned in this
passage refers to a transfer provision in the Senate bill that was not
enacted, and does not refer to a ``subsection (a)(3)'' anywhere in
chapter 84 of title 5, United States Code, or in Title III of the FERS
Act. The passage states:
Subsection (a)(3) provides that an individual electing to
transfer to [FERS], who becomes an employee or Member after a break
in service for a period including January 1, 1987, retains any
rights to make deposits for service under CSRS, prior to that date.
(S. Rept. No. 99-116, October 30, 1985, p. 70, reprinted in 1986
U.S. Code Cong. and Admin. News 1405, 1475.
Again, we do not see how this language is inconsistent with OPM's
interpretation of section 8402(b). This passage discusses only the
rights of certain employees who make the decision to transfer to FERS
after a break in service. This passage does not address employees who
are automatically covered by FERS or the requirements that employees
must satisfy to avoid automatic FERS coverage.
Furthermore, the language of the passage itself is contrary to the
claimant's position. To ``retain'' any rights to make deposits for
service under CSRS, the individual seeking to make deposit must first
have that right under CSRS. An individual with no covered CSRS service
never had such a right to ``retain.'' The employees to whom this
passage refers have some prior service that was creditable but not
covered AND some prior service that was covered. For example, an
individual who elects FERS with 3 years of service under temporary
appointments (FICA only coverage) and 3 years under a career
conditional appointment (CSRS coverage) retains the right to pay the
deposit for the period under the temporary appointments in order to
receive benefits under CSRS for the entire 6 years of service before
the FERS election.
We agree with the commenter that, if taken out of context and read
by itself, subparagraph (B) of section 8402(b)(2) would not support
OPM's interpretation. However, the subparagraph does not have to be
read by itself and may be interpreted in conjunction with subparagraph
(A) as OPM has done. We concede that our interpretation of the statute
is not the only construction possible. However, the agency's function
in administering the statute is to choose among the reasonable
interpretations. The interpretation set out in these regulations is a
reasonable one, made contemporaneously with the enactment of the
statute by agency officials involved with the enactment of the statute.
Finally, we emphasize that these regulations make no changes in
current instructions for determining retirement coverage, which are
published in 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.
Office of Personnel Management.
Lorraine A. Green,
Deputy Director.
Accordingly, OPM is amending 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. 101-508;
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 subpart 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 payable 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, had at least 5 years of credible 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 a reemployed annuitant.
.[FR Doc. 94-30614 Filed 12-13-94; 8:45 am]
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