Updating Interest Rates Charged on Outstanding Civil Service Retirement Contributions Would Save Millions
FPCD-82-39
Published: Aug 04, 1982. Publicly Released: Aug 04, 1982.
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Highlights
GAO assessed an outdated provision of the civil service retirement system which establishes the rate of interest charged to employees who owe contributions to the retirement fund.
Recommendations
Matter for Congressional Consideration
| Matter | Status | Comments |
|---|---|---|
| Congress should amend title 5 of the U.S. Code to provide that the annual rate of interest charged on prior service contributions each year be made equal to the average rate of return earned by the retirement fund's investments during the preceding year. Specifically, subsection 8334(e) of title 5 should be amended by striking out the second sentence and inserting: "The interest is computed at the rate of 4 percent a year to December 31, 1947, and 3 percent a year beginning January 1, 1948, through December 31, 1982, compounded annually. Thereafter, the rate of interest for each calendar year shall be established by December 31 of the preceding year by OPM, to equal the average yield for the preceding fiscal year on all issues in which monies in the Fund were invested." |
Closed – Implemented
|
When we confirm what actions the agency has taken in response to this recommendation, we will provide updated information. |
Recommendations for Executive Action
| Agency Affected | Recommendation | Status |
|---|---|---|
| Office of Personnel Management | The Director, OPM, should process all applications to make prior service contributions. |
Closed – Implemented
When we confirm what actions the agency has taken in response to this recommendation, we will provide updated information.
|
| Office of Personnel Management | The Director, OPM, should terminate the practice of allowing credit for redeposit service before a redeposit has been made. |
Closed – Implemented
When we confirm what actions the agency has taken in response to this recommendation, we will provide updated information.
|
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Topics
Civil service pensionsCivil service retirement systemGovernment employeesRetireesInterest ratesPensionsPolicy evaluationCivil servicePersonnel managementBudgeting