United States 

Office of 

Personnel Management

 

The Federal Government’s Human Resources Agency 

Retirement and Insurance Service 

Benefits Administration Letter
 

Number: 03- 302 Date: January 15, 2003 

Subject: Cost Factors for First Quarter of FY 2003 

This letter provides the “costs factors" for the Federal civilian benefit programs for the first quarter 

of FY 2003. 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. To 

support the requirement to produce quarterly financial statements, we will provide updated cost 

factor information prior to the beginning of each quarter as well as at fiscal year-end for annual 

reporting purposes. 

PENSIONS 

CSRS. For most or “regular” CSRS employees, the cost factor for the first quarter of FY 2003 will be 

24.4 percent of basic pay; this is an increase from the 24.2 percent used for FY 2002 annual 

reporting. The cost factors for other categories of CSRS coverage are attached. 

FERS. For regular FERS employees, the cost factor for the first quarter of FY 2003 remains 11.5 per 

cent of basic pay. The cost factors for other categories of FERS coverage are also on the 

attachment. 

Calculating the Imputed Cost for Pensions 

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

Step 2: Aggregate the basic pay paid to all employees in each CSRS and FERS coverage 

category during the first quarter of FY 2003. 

Step 3: Multiply the aggregated 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" for 

the first quarter of FY 2003. 

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

FERS-covered employees during the first quarter of FY 2003. 

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 for the first quarter of FY 2003. 

Civil Service Federal Employees’ Federal Employees Federal Employees Federal 

Retirement Group Life Health Benefits Retirement Long Term 

System Insurance Program Program System Care Insurance 

Program 
 

FEDERAL EMPLOYEE HEALTH BENEFIT PROGRAM 

The cost factor for the first quarter of FY 2003 for the Federal Employee Health Benefit Program 

(FEHB) is $918. 

Calculating the Imputed Cost for the FEHB 

Step 1: Ascertain the actual FEHB enrollment at the beginning and end of the quarter: October 

1, 2002 and December 31, 2002 -- include ALL enrolled employees, both full-time and 

less than full-time. 

Step 2: Add the October 1, 2002 and December 31, 2002 enrollment and divide by two to derive 

the "constructed FEHB enrollment". 

Step 3: Multiply the constructed FEHB Program enrollment, computed in Step 2, by the 

FY 2003 cost factor of $918 - this is the imputed cost for the FEHB for the first quarter of 

FY 2003. 

FEDERAL EMPLOYEES LIFE INSURANCE PROGRAM 

The cost factor for the first quarter of FY 2003 for the Federal Employees Life Insurance Program 

(FEGLI) remains at 0.02 percent of basic pay. 

Calculating the Imputed Cost for in FEGLI 

Step 1: Determine the aggregate basic pay of ALL employees covered by Basic life insurance 

during the first quarter of FY 2003. 

Step 2: Multiply the amount determined in Step 1 by 0.02 per cent of basic pay to determine 

imputed cost for FEGLI for the first quarter of FY 2003. 

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 

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COST FACTORS FOR THE CSRS AND FERS 

CSRS 

CATEGORY COST FACTOR (%) 

Regular 24.4 

Regular offset 18.8 

Law enforcement officers 38.9 

Law enforcement officers - offset 34.4 

Air traffic controllers 32.4 

Air traffic controllers – offset 27.6 

Members of Congress 27.6 

Members of Congress – offset 25.3 

Congressional employees 33.1 

Congressional employees – offset 27.8 

FERS 

CATEGORY COST FACTOR (%) 

Regular 11.5 

Law enforcement officers 24.0 

Air traffic controllers 23.2 

Members of Congress 17.1 

Congressional employees 17.2 

Military reserve technicians 14.0 

CIA Special Overseas 16.5 

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