OPM Revises FERS Actuarial Factors Across Three Actions, Effective October 2026

Background and trigger

All three actions stem from a single actuarial event: at its meeting on June 16, 2025, the Board of Actuaries of the Civil Service Retirement System recommended revisions to the demographic assumptions used in actuarial valuations of the Civil Service Retirement System and FERS. Those demographic assumptions include assumed rates of future mortality, employee withdrawal, retirement, and merit and longevity pay increases. The Board simultaneously concluded that long-term economic assumptions should remain unchanged from what was determined at the Board's April 2, 2020 meeting — continuing a rate of investment return of 4.0 percent, an assumed inflation rate of 2.40 percent, an assumed rate of FERS annuitant Cost of Living Adjustments at 80 percent of the assumed rate of inflation, and a projected rate of General Schedule salary increases of 2.65 percent. Under 5 U.S.C. 8461(i), whenever the Board revises related actuarial assumptions, OPM is required to make corresponding changes to the factors used to produce actuarially equivalent benefits under the FERS Act.

Normal cost percentages

OPM is publishing revised normal cost percentages for employees covered by FERS, effective at the beginning of the first pay period commencing on or after October 1, 2026. The normal cost — defined in the notice as the entry age normal cost of the provisions of FERS that relate to the Civil Service Retirement and Disability Fund — must be computed by OPM in accordance with generally accepted actuarial practices and standards using dynamic assumptions. The notice explains that employees' contributions are established by law and constitute only a portion of the cost of funding the retirement system, with employing agencies required to pay the remaining costs. Separate normal cost percentages apply for three subdivisions: regular FERS, generally covering employees first hired before 2013; FERS-Revised Annuity Employees (FERS-RAE), created by section 5001 of Public Law 112-96 and generally covering employees first hired in 2013, whose retirement contributions were permanently increased by 2.30 percent of pay; and FERS-Further Revised Annuity Employees (FERS-FRAE), established by section 401 of Public Law 113-67 and generally covering employees first hired in 2014 and after, requiring a further increase of 1.30 percent of pay above the FERS-RAE contribution percentage. Among the revised percentages published, Members are assigned normal costs of 25.5 percent (FERS), 19.0 percent (FERS-RAE), and 19.2 percent (FERS-FRAE), while Capitol Police covered under 5 U.S.C. 8412(d) and 8425(c) are assigned 38.9 percent, 39.3 percent, and 39.5 percent respectively. Agency appeals of the normal cost percentages must be filed no later than December 23, 2026.

Present value factors

In a companion notice published the same day, OPM is adjusting the present value factors applicable to three categories of FERS retirees: those who elect to provide survivor annuity benefits to a spouse based on a post-retirement marriage; retiring employees who elect the alternative form of annuity; and retirees who elect to credit certain service with nonappropriated fund instrumentalities. The revised factors will apply to survivor reductions or employee annuities that commence on or after October 1, 2026. OPM last published the present value factors currently in effect on April 14, 2023, at 88 FR 23109.

The notice explains the mechanism for each scenario. Under 5 CFR 842.706(a), the alternative form of annuity reduction must produce an annuity that is the actuarial equivalent of the annuity of a retiree who does not elect that form. For post-retirement marriage survivor annuities under 5 U.S.C. 8416(b), 8416(c), and 8417(b), Congress enacted provisions permitting OPM to cease collection of survivor election deposits by lump sum or installments and instead establish a permanent actuarial reduction in the retiree's annuity; OPM must translate the deposit amount into a lifetime benefit reduction using the present value factors. For nonappropriated fund instrumentality service credit, the new factors will apply to cases in which the date of computation under 5 CFR 847.603 or 847.809 is on or after October 1, 2026. Among the published figures, the present value factor for age 62 is 222.9, declining to 216.3 at age 63, 209.6 at age 64, 202.9 at age 65, and continuing downward through 168.6 at age 70.

Survivor annuity reduction factors (direct final rule)

The third action is a direct final rule — rather than a notice — revising 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, under 5 CFR 843.311. The rule states that if a current or former spouse elects to receive an adjusted annuity earlier, beginning the day after the death of the separated employee, the annuity is actuarially reduced using the factors in appendix A to subpart C of 5 CFR part 843 to make it actuarially equivalent to the present value of the annuity the spouse otherwise would have received. The rule explains that this reduction reduces the risk of any unfunded liability to the Civil Service Retirement and Disability Fund.

In the same rule, OPM is also removing the "1950 Through 1966" column from the table titled "With at least 30 years of creditable service." OPM states this column is being removed because individuals born before 1966 have already reached their minimum retirement age, making those factors unnecessary — since the factors' purpose is to reduce annuities when a separated employee dies before attaining the minimum retirement age. The Basic Employee Death Benefit factors under 5 CFR 843.309 — governing payment in 36 installments to a surviving spouse — are not changed, because the Board determined the long-term economic assumptions should remain unchanged.

OPM estimates this rule will impact approximately one percent of all survivor annuity death benefit applications OPM receives annually. OPM has determined that a 30-day comment period is sufficient for meaningful public input.

What to watch

The direct final rule is effective August 24, 2026, unless significant adverse comments are received by July 23, 2026; if significant adverse comments are received, OPM will publish a timely withdrawal of the rule in the Federal Register and issue a notice of proposed rulemaking. The revised normal cost percentages and present value factors both take effect at the start of the first pay period on or after October 1, 2026. Agency appeals of normal cost percentages must be filed no later than December 23, 2026.