Civil Service 

Retirement 

System 

Federal Employees’ 

Group Life 

Insurance Program 

Federal Employees 

Health Benefits 

Program 

Federal Employees 

Retirement 

System 

Long Term 

Care Insurance 

Program 

United States 

Office of 

Personnel Management 

The Federal Government’s Human Resources Agency

Retirement and Insurance Service 

Benefits Administration Letter 

Number: 02-302 Date: January 14, 2002 

Subject: Estimates of Imputed Costs 

For the second year, we are providing agencies with our estimate of their imputed costs for the 

Federal civilian benefit programs – Retirement (“Pensions”), Health Benefits and Life Insurance. 

 It is important that it be recognized that these are estimates only -- they should NOT be used to 

post to general ledger accounts. They are intended solely to be used as a baseline against which 

to gauge the reasonableness of the agency’s calculation of its imputed costs. 

. 

BASIS OF OUR CALCULATION 

Although we think our estimates are “in the ballpark,” we do not have the data needed to compute 

them with a high degree of precision. For instance, we have no knowledge of the basic pay of 

agency employees, the critical element in the calculation of the imputed costs of the Pensions and 

Life Insurance Programs. 

The following is presented so that agencies may have a basic understanding of the 

methodology we used to compute our imputed cost estimates: 

Pensions: We first derived an estimate of the annual basic pay subject to CSRS and FERS 

withholdings for each agency. We did this by dividing our fiscal year (FY) 2001 ending balance 

for the agency in our account 5400F.24 – Benefit Program Revenue – for CSRS and FERS by the 

employer contribution rates in effect in FY 2001. We then multiplied the quotient by 8.59 percent 

for CSRS and a negative 0.1 percent for FERS. The 8.59 percent for CSRS is derived by 

subtracting the FY 2001 total contribution rate by and for “regular” CSRS employees [15.61 

percent] from the cost factor for regular CSRS employees [24.2 percent]. For FERS, the negative 

0.1 percent equals the cost factor for regular FERS employees [11.5 percent] less the total 

contribution rate by and for “regular” FERS employees [11.6 percent]. 
2

Life Insurance: We assumed that the Life Insurance Program covers 90 percent of employees 

covered by CSRS or FERS. Thus, we derived the annual basic pay subject to Life Insurance 

deductions by multiplying our derived annual basic pay subject to CSRS and FERS (see above) by 

0.9. We then multiplied the product by the Life Insurance cost factor of 0.2 percent of annual basic 

pay. 

Health Benefits: We followed the instructions provided we provided to agencies in 

BAL No. 01-326. We used agency Headcount submissions for September 2000, March 2001 and 

September 2001 and applied the 2001 Health Benefits cost factor of $2,999 per enrollee. 

FACTS DISCLOSURE REQUIREMENT 

We want to remind agencies of the FY 2001 requirements for Federal Agencies’ Centralized TrialBalance System (FACTS) reporting of imputed cost information. The Financial Management 

Service (FMS) requires the disclosure in Note 13 -- Federal Employee and Veteran Benefits 

Payable – of imputed costs relating to Pensions, Health Benefits and Life Insurance. FMS staff will 

contact agencies about any significant differences between what is reported as imputed costs in 

Note 13 and the estimated imputed costs we have provided with this letter. 

SGL ENTRY 

Again, as a reminder, agencies must record imputed costs relating to Pensions, Health Benefits 

and Life Insurance as a charge to standard general ledger (SGL) account 6730F.24 --Imputed 

Costs -- and an equal credit to SGL account 5780F.24 -- Imputed Financing Sources, as follows: 

DR. 6730F.24 Imputed Costs 

 CR. 5780F.24 Imputed Financing Sources 

PROPOSED "FULL COST" LEGISLATION 

On November 6, 2001, the Federal Employment Management Reform Act of 2001 was 

introduced in the Senate. The bill, when enacted, will require agencies to pay the full 

Government share of the cost of the CSRS and FEHB beginning in FY 2003. What this means, 

in short, is that instead of merely recognizing an imputed cost for CSRS and FEHB on their 

books, agencies will be required to actually remit these amounts to OPM. 

We are working to determine the best way to collect these costs and will advise agencies in the 

near future. In the meantime, agency budgeteers will likely be approaching their accounting 

colleagues for help in estimating future costs under this legislation. Please provide all possible 

assistance. 
3

INQUIRIES 

If you have any questions about this letter, we would prefer that you email us at finance@opm.gov, 

so that we may have a record of them. You may also phone us on (202) 606-0606. 

 

 Robert A. Yuran, Chief 

 Financial Policy Staff 

Attachment