SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Federal Retirement Reform Act of 
1995''.

SEC. 2. FEDERAL RETIREMENT PROVISIONS RELATING TO MEMBERS OF CONGRESS 
              AND CONGRESSIONAL EMPLOYEES.

    (a) Accrual Rates Relating to Members of Congress and Congressional 
Employees Under the Federal Employees Retirement System.--Section 8415 
of title 5, United States Code, is amended--
            (1) by striking out subsections (b) and (c);
            (2) in subsections (a) and (g) by inserting ``or Member'' 
        after ``employee'' each place it appears; and
            (3) in subsection (g)(2) by striking out ``Congressional 
        employee''.
    (b) Contribution Rates Relating to Members of Congress and 
Congressional Employees Under the Federal Employees Retirement 
System.--Section 8422(a)(2) of title 5, United States Code, is 
amended--
            (1) in subparagraph (A) by striking out ``employee (other 
        than a law enforcement officer, firefighter, air traffic 
        controller, or Congressional employee)'' and inserting in lieu 
        thereof ``employee or Member (other than a law enforcement 
        officer, firefighter, or air traffic controller)''; and
            (2) in subparagraph (B)--
                    (A) by striking out ``a Member,''; and
                    (B) by striking out ``air traffic controller, or 
                Congressional employee,'' and inserting in lieu thereof 
                ``or air traffic controller,''.
    (c) Administrative Regulations.--The Secretary of the Senate and 
the Clerk of the House of Representatives, in consultation with the 
Office of Personnel Management, may prescribe regulations to carry out 
the provisions of this section and the amendments made by this section 
for applicable employees and Members of Congress.
    (d) Effective Dates.--
            (1) In General.--Except as otherwise provided in this 
        subsection, the provisions of this section shall take effect on 
        the date of the enactment of this Act.
            (2) Accrual rate; annuity computation.--
                    (A) General rule.--The amendments made by 
                subsection (a) shall take effect on the date of the 
                enactment of this Act and shall apply only with respect 
                to the computation of an annuity relating to--
                            (i) the service of a Member of Congress as 
                        a Member or as a Congressional employee 
                        performed on or after January 1, 1997; and
                            (ii) the service of a Congressional 
                        employee as a Congressional employee performed 
                        on or after January 1, 1997.
                    (B) Exception.--An annuity shall be computed as 
                though the amendments made under subsection (a) had not 
                been enacted with respect to--
                            (i) the service of a Member of Congress as 
                        a Member or a Congressional employee or 
                        military service performed before January 1, 
                        1997; and
                            (ii) the service of a Congressional 
                        employee as a Congressional employee or 
                        military service performed before January 1, 
                        1997.
            (3) Contribution rates.--The amendments made by subsection 
        (b) shall take effect on the first day of the first applicable 
        pay period beginning on or after January 1, 1997.

SEC. 3. INCREASE IN YEARS USED TO DETERMINE AVERAGE PAY.

    (a) Definition of Average Pay.--
            (1) Civil service retirement system.--Section 8331(4) of 
        title 5, United States Code, is amended to read as follows:
            ``(4) `average pay' means--
                    ``(A) with respect to service performed before the 
                effective date of section 3 of the Federal Retirement 
                Reform Act of 1995, the largest annual rate resulting 
                from averaging an employee's or Member's rates of basic 
                pay in effect over any 3 consecutive years of 
                creditable service or, in the case of an annuity under 
                subsection (d) or (e)(1) of section 8341 of this title 
                based on service of less than 3 years, over the total 
                service, with each rate weighted by the time it was in 
                effect; and
                    ``(B) with respect to service performed on and 
                after the effective date of section 3 of the Federal 
                Retirement Reform Act of 1995, the largest annual rate 
                resulting from averaging an employee's or Member's 
                rates of basic pay in effect over any 5 consecutive 
                years of creditable service, or, in the case of an 
                annuity under subsection (d) or (e)(1) of section 8341 
                of this title based on service of less than 5 years, 
                over the total service, with each rate weighted by the 
                time it was in effect.''.
            (2) Federal employee retirement system.--Section 8401(3) of 
        title 5, United States Code, is amended to read as follows:
            ``(3) the term `average pay' means--
                    ``(A) with respect to service performed before the 
                effective date of section 3 of the Federal Retirement 
                Reform Act of 1995, the largest annual rate resulting 
                from averaging an employee's or Member's rates of basic 
                pay in effect over any 3 consecutive years of service 
                or, in the case of an annuity under this chapter based 
                on service of less than 3 years, over the total 
                service, with each rate weighted by the period it was 
                in effect; and
                    ``(B) with respect to service performed on and 
                after the effective date of section 3 of the Federal 
                Retirement Reform Act of 1995, the largest annual rate 
                resulting from averaging an employee's or Member's 
                rates of basic pay in effect over any 5 consecutive 
                years of service, or, in the case of an annuity under 
                this chapter based on service of less than 5 years, 
                over the total service, with each rate weighted by the 
                period it was in effect.''.
    (b) Application Clarification.--
            (1) Civil service retirement system.--In computing an 
        annuity under any provision of chapter 83 of title 5, United 
        States Code, the product resulting from using average pay 
        determined under section 8331(4)(A) of such title in accordance 
        with such applicable provision of such chapter, shall be added 
        to the product resulting from using average pay determined 
        under section 8331(4)(B) of such title.
            (2) Federal employee retirement system.--In computing an 
        annuity under any provision of chapter 84 of title 5, United 
        States Code, the product resulting from using average pay 
        determined under section 8401(3)(A) of such title in accordance 
        with such applicable provision of such chapter, shall be added 
        to the product resulting from using average pay determined 
        under section 8401(3)(B) of such title.
    (c) Regulations.--The Office of Personnel Management shall 
prescribe regulations to carry out the provisions of this section.
    (d) Effective Date.--This section shall take effect on January 1, 
1996.

SEC. 4. REDUCTION IN ACCRUAL RATES.

    (a) Civil Service Retirement System.--Section 8339 of title 5, 
United States Code, is amended to read as follows:
``Sec. 8339. Computation of annuity
    ``(a)(1) Except as otherwise provided by this section, the annuity 
of an employee retiring under this subchapter is--
            ``(A) with respect to service performed before January 1, 
        1996--
                    ``(i) 1\1/2\ percent of his average pay multiplied 
                by so much of his total service as does not exceed 5 
                years; plus
                    ``(ii) 1\3/4\ percent of his average pay multiplied 
                by so much of his total service as exceeds 5 years but 
                does not exceed 10 years; plus
                    ``(iii) 2 percent of his average pay multiplied by 
                so much of his total service as exceeds 10 years; plus
            ``(B) with respect to service performed on or after January 
        1, 1996--
                    ``(i) 1.4 percent of his average pay multiplied by 
                so much of his total service as does not exceed 5 
                years; plus
                    ``(ii) 1.65 percent of his average pay multiplied 
                by so much of his total service as exceeds 5 years but 
                does not exceed 10 years; plus
                    ``(iii) 1.9 percent of his average pay multiplied 
                by so much of his total service as exceeds 10 years.
    ``(2) Notwithstanding paragraph (1), when it results in a larger 
annuity--
            ``(A) 1 percent of the average pay of an employee plus $25 
        is substituted for the percentage specified under paragraph 
        (1)(A) (i), (ii), or (iii), or any combination thereof; and
            ``(B) .9 percent of the average pay of the employee plus 
        $25 is substituted for the percentage specified under paragraph 
        (1)(B) (i), (ii), or (iii), or any combination thereof.''.
    (b) Federal Employees Retirement System.--Section 8415 of title 5, 
United States Code (as amended by section 2(a) of this Act) is further 
amended--
            (1) in subsection (a) by striking out ``1 percent of that 
        individual's average pay multiplied by such individual's total 
        service.'' and inserting in lieu thereof a dash and the 
        following:
            ``(1) 1 percent of that individual's average pay multiplied 
        by such individual's service performed before January 1, 1996; 
        plus
            ``(2) .9 percent of that individual's average pay 
        multiplied by such individual's service performed on or after 
        January 1, 1996.''; and
            (2) in subsection (g)(1) by inserting before the period 
        ``or .9 percent, as applicable''.
Federal Retirement Reform Act of 1995 - Revises the Civil Service Retirement System and the Federal Employees' Retirement System (FERS) with regard to years for determining average pay and accrual rates for annuity computation, including, under FERS, changes in the accrual and contribution rates relating to Members of Congress and congressional employees.
Federal Retirement Reform Act of 1995