United States

Office of 

Personnel Management

The Federal Government’s Human Resources Agency

Retirement and Insurance Service

Benefits Administration Letter

 

Number: 02-315 Date: September 11, 2002 

Subject: Fiscal Year 2002 Cost Factors for CSRS, FERS, FEHB and FEGLI

As required by Statement of Federal Financial Standards No. 5 -- Liabilities of the Federal 

Government – this letter provides the fiscal year 2002 “costs factors” for the Federal civilian benefit 

programs. Agencies will use these cost factors to calculate their imputed costs relating to the

“pensions” (the Civil Service Retirement and Federal Employees’ Retirement Systems), the Federal 

Employees Health Benefits Program and the Federal Employees Group Life Insurance Program.

PENSIONS

The cost factors for the Civil Service Retirement System (CSRS) and the Federal Employees’ 

Retirement System (FERS) are expressed as percentages of “basic pay.” Basic pay is the portion of 

gross pay from which agencies withhold CSRS and FERS deductions; it, generally, excludes 

bonuses, allowances, overtime, and holiday pay. The cost factor represents the percentage of basic 

pay that would have to be remitted by and for covered employees to pay fully the Government’s cost 

to provide a CSRS or FERS benefit. 

CSRS. For most or “regular” CSRS employees, the fiscal year 2002 cost factor remains 24.2

percent of basic pay, the same as for fiscal years 2001 and 2000. Since the percentage of basic 

pay actually remitted to OPM by and for CSRS-covered employees is less than 24.2 percent, 

agencies must recognize an imputed cost for the shortfall. The cost factors for other categories of 

CSRS coverage are attached. Although the CSRS normal cost and, thus, the cost factors will 

change in fiscal year 2003, this should not impact upon the fiscal year 2002 imputed cost calculation.

FERS. For regular FERS employees, the fiscal year 2002 cost factor remains 11.5 per cent of basic 

pay, the same as that for fiscal years 2001 and 2000. Unlike for the CSRS, the Government’s cost 

to provide a FERS benefit is fully funded by the contributions remitted by and for covered 

employees. The cost factors for other categories of FERS coverage are also on the attachment.

Civil Service

Retirement

System

Federal Employees’

Group Life

Insurance Program

Federal Employees

Health Benefits

Program

Federal Employees

Retirement

System

Federal

Long Term

Care Insurance

Program
2

Calculating Imputed Cost for Pensions:

Step 1 Sort all employees covered by the CSRS or FERS by their coverage category.

Step 2: Aggregate the annual basic pay of all employees in each CSRS and FERS coverage

category.

Step 3: Multiply the aggregated annual basic pay for each coverage category computed in 

Step 2 by the applicable cost factor.

Step 4: Compute the grand total of each of the individual calculations in Step 3 – this is total 

cost to provide CSRS and FERS benefits to agency employees or the “service cost”. 

Step 5: Determine the total employee withholdings and agency contributions for all CSRS 

and FERS-covered employees.

Step 6: From the service cost derived in Step 4, subtract the total contributions (agency and 

employee) for all employees covered by the CSRS and FERS – this is the imputed cost

for the CSRS and FERS.

Step 7: Record the imputed cost computed in Step 5 as a charge to SGL account 6730F.24 –

Imputed Cost -- and a credit to SGL account 5780F.24 – Imputed Financing Sources.

Illustration: Calculating Imputed Cost for Pensions:

Step 1: Agency XYZ has 10 employees who are regular CSRS-covered employees,10 who are 

regular FERS-covered employees, and 5 who are CSRS covered law-enforcement 

officers. 

Step 2: The annual basic pay for each category of covered employee is:

Regular CSRS $500,000

Regular FERS $250,000

CSRS Law-enforcement $375,000

Step 3:

A B

Aggregate 

Annual Basic 

Pay

Cost Factor

[A * B]

CSRS Regular $500,000 24.2% $121,000

FERS Regular $250,000 11.5% $28,750

CSRS Law-enforcement $375,000 40.0% $150,000
3

Step 4:

Service Cost

CSRS Regular $121,000

FERS Regular $28,750

CSRS Law-enforcement 150,000

Total $299,750

Step 5:

Withholdings and Contributions

Employee

Withholdings

Agency

Contributions

Total

CSRS Regular $35,000 42,550 $77,550

FERS Regular 2,000 26,750 28,750

CSRS Law-enforcement 28,125 33,788 61,913

Total $168,213

Step 6:

Imputed Cost

A B C

Service Cost Total

Contributions

Imputed Cost

[A less B]

$299,750 $168,213 $131,537

Step 7: Agency XYZ posts its imputed cost for CSRS and FERS:

6730F.24 Imputed Cost 131,537

5780F.24 Imputed Financing Sources 131,537

FEDERAL EMPLOYEES HEALTH BENEFITS PROGRAM

Although the Government provides health benefits to Federal employees after they retire, no 

contributions are made by or for employees during their active working careers. Thus, agencies 

must recognize the Government’s entire cost to provide post-retirement health benefits to their 

employees as an imputed cost. The cost factor for post-retirement health benefits is expressed as 

an amount per employee currently enrolled in the FEHB Program; for fiscal year 2002, the factor is 

$3,473 per enrolled employee. 

Calculating Imputed Cost for Employees Enrolled in the FEHB Program:

Step 1: Ascertain actual enrollment in the FEHB Program at three points in time: October 1, 

2001; March 31, 2002; and September 30, 2002; include ALL enrolled employees, 

both full-time and less than full-time.
4

Step 2: Multiply the October 1 enrollment by one; the March 31 enrollment by two; and the 

September 30 enrollment by one.

Step 3: Calculate the grand total of each of the individual calculations in Step 2.

Step 4: Divide the grand total in Step 3 by four to derive the “constructed FEHB enrollment."

Step 5: Multiply the constructed FEHB Program enrollment, computed in Step 4, by the fiscal 

year 2002 cost factor of $3,473 – this is the imputed FEHB cost.

Step 6: Record the imputed cost as a charge to SGL account 6730F.24, with a corresponding 

credit to SGL account 5780F.24. 

Illustration: Calculating Imputed Cost for Employees Enrolled in the FEHB Program:

10/1/01 3/31/02 9/30/02

Step 1: Actual enrollment 72 66 60

Step 2: Multiplier 72 x 1 = 72 66 x 2 = 132 60 x 1 = 60

Step 3: Grand Total 264

Step 4: Constructed Enrollment [Grand Total Divided by Four] 66

Step 5: Imputed Cost [Constructed Enrollment Times Cost Factor] $229,218

Step 6: Agency XYZ posts the following entry:

6730F.24 Imputed 

Cost

229,218

5780F.24 Imputed Financing Sources 229,218

FEDERAL EMPLOYEES LIFE INSURANCE PROGRAM

The FEGLI Program provides life insurance benefits to eligible Federal retirees. The contributions 

remitted by and for covered employees do not fully cover the cost to provide post-retirement FEGLI 

Program benefits. Thus, agencies must recognize the unfunded portion of this cost as an imputed 

cost. The fiscal year 2002 cost factor for the FEGLI Program is 0.02 percent of basic pay, the same 

as in previous years. 

Calculating the Imputed Cost for Employees Enrolled in the FEGLI Program:

1. Determine the aggregate annual basic pay of ALL employees covered by Basic life 

insurance.

2. Multiply the amount determined in Step 1 by the cost factor [.02 per cent of basic pay] to 

determine imputed cost.

3. Record imputed cost computed in Step 2 as a charge to SGL account 6730F.24, with a 

corresponding credit to SGL account 5780F.24. 
5

Illustration: Calculating Imputed Cost for Employees Enrolled in the FEGLI Program:

Agency XYZ has determined the aggregate annual basic pay of its employees covered by Basic life 

insurance to be $1,125,000. It determines its fiscal year 2002 imputed cost for the FEGLI Program, 

as follows:

A B C

Annual Basic Pay Cost Factor (%) Imputed Cost

[A x B]

$1,125,000 .02 $225

Agency XYZ posts the following entry:

6730F.24 Imputed 

Cost

225

5780F.24 Imputed Financing Sources 225

ASSURANCE FOR AUDITORS

Due to the need to provide you with these cost factors so early, our independent public accounting 

firm has had insufficient time to opine on them. Nonetheless, the fiscal years 2001 cost factors for 

regular CSRS and FERS coverage, as well as those for the FEHB and FEGLI Programs were 

disclosed in the footnotes accompanying our fiscal year 2001 financial statements, which were 

audited and upon which was issued an unqualified opinion. The cost factors for CSRS, FERS, and 

the FEGLI Program did not change for fiscal year 2002, nor did the policies, procedures and controls 

pertaining to the calculation of any of the cost factors, including that for FEHB Program. Thus, your 

auditors can rely upon the disclosures in fiscal year 2001 financial statements and the audit opinion

thereon. 

INQUIRIES

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

we have a record of them. You may of course call us on 202-606-0606. 

Robert A. Yuran, Chief

Financial Policy Staff

Attachment
.

Attachment

2002 COST FACTORS FOR THE CSRS AND FERS

CSRS

CATEGORY COST FACTOR (%)

Regular 24.2

Regular offset 19.3

Law enforcement officers 40.0

Law enforcement officers - offset 36.2

Air traffic controllers 31.9

Air traffic controllers – offset 28.2

Members of Congress 29.3

Members of Congress – offset 27.0

Congressional employees 32.5

Congressional employees – offset 27.8

FERS

CATEGORY COST FACTOR (%)

Regular 11.5

Law enforcement officers 24.6

Air traffic controllers 23.1

Members of Congress 16.5

Congressional employees 16.7

Military reserve technicians 11.9