United States 

Office of 

Personnel Management 

The Federal Government’s Human Resources Agency

Benefits Administration Letter

Number 16 - 101 Date: 01/06/2016

Subject: Annual Changes 

Background 

Each year, we publish a Benefits Administration Letter (BAL) with updated information 

that changes annually, such as interest rates and cost-of-living adjustments. This BAL 

contains the figures for 2016. 

Cost-of-Living Adjustments 

There is no COLA payable in 2016. 

Increase in Children's Benefits

Since there is no COLA change for 2016 the children’s rate remains the same as the rate 

was last year. 

When the child has a living parent who was married to the employee or retiree, the 

benefit payable to that child is the lesser of: 

 $ 510 per month per child; or 

 $1,532 per month divided by the number of eligible children (if over 3). 

When the child has no living parent who was married to the employee or retiree, the 

benefit payable to that child is the lesser of: 

 $ 613 per month per child; or 

 $1,839 per month divided by the number of eligible children. 

FERS Basic Employee Death Benefit 

When a FERS employee dies, a surviving spouse (or former spouse) may be eligible for a 

death benefit called the Basic Employee Death Benefit (BEDB). This benefit is an 

amount equal to 50 percent of the employee's final annual pay (or average pay if higher), 

plus $15,000, adjusted for COLA's under CSRS rules. Since there is no change in the 

COLA this year, the $15,000 plus COLA amount for an employee who dies on or after 
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December 1, 2015, and before December 1, 2016, will remain the same as in 2015 which 

is equal to half of his/her final annual pay (or average pay, if higher), plus $32,326.58.

Chapter 70 of the CSRS and FERS Handbook has detailed information on the Basic 

Employee Death Benefit. 

The surviving spouse must elect whether to receive the BEDB in one payment or 36 

monthly installments. The current factor used to determine the monthly installment is 

.0299522. Additional information on this can be found at 

http://www.gpo.gov/fdsys/pkg/FR-2014-11-07/pdf/2014-26469.pdf in the November 7, 

2014 Federal Register. 

Interest Rate for Service Credit Payments, Refunds, and Voluntary Contributions 

The interest rate that applies to both CSRS and FERS for 2016 is 2.0%.

Salary Cap 

Employees who are subject to a salary cap pay retirement deductions on the capped 

amount and the capped amount is used to compute an employee’s high-3 average pay. 

The salary information on the SF-50, Notification of Personnel Action, should reflect the 

capped amount and not the salary that would have been payable without the cap. 

Reminder Regarding Military Deposits

Use the table below to compute military deposits for service during those years and for 

the 2016 rates. Chapter 23 of the CSRS and FERS Handbook has detailed information on 

Service Credit Payments for Post-56 Military Deposits and BAL 03-105 provides an 

explanation of the alternative method for employees under the Uniformed Services 

Employment Reemployment Rights Act (USERRA). 

Employees who want to pay deposits for military service they performed during any of 

these years need to request that the military pay center provide year-by-year earnings so 

that you can compute deposits correctly. 

Military Deposits 

1999 2000 Other Years

CSRS 7.25% 7.40% 7.00%

FERS 3.25% 3.40% 3.00%

This is a reminder that all military deposits have to be paid in full to the employing 

agency prior to the employee’s separation for retirement.
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Reminder Regarding Waiver of Military Retired Pay

Employees requesting to waive military retired pay should submit their request directly to 

the Defense Finance and Accounting Service at the following address 30 days before 

their planned retirement date to avoid delay in the finalization of their retirement. A copy 

of this request must be attached to the retirement application: 

Defense Finance and Accounting Service 

U.S. Military Retirement Pay 

London, KY 40742-7130 

Phone: 1-800-321-1080 

 Phone: 1-800-469-6559 - fax 

Chapter 22 of the CSRS and FERS Handbook (Chapter 22, Section 22 A4.1-2) contains 

information that must be provided and sample wording that can be used. 

Present Value Factors 

Revised factors went into effect on October 1, 2015, and were published in the Federal 

Register, volume 80, No. 64 on April 3, 2015.

CSRS factors can be accessed at 

https://www.gpo.gov/fdsys/pkg/FR-2015-04-03/pdf/2015-07677.pdf

FERS factors can be accessed at 

http://www.gpo.gov/fdsys/pkg/FR-2015-04-03/pdf/2015-07694.pdf. 

OPM uses present value factors to compute reductions to: 

 CSRS and FERS retiree’s benefits when the retiree elects the Alternative Form of 

Annuity; 

 CSRS and FERS benefits with a CSRS component when the retirees elect to 

credit refunded service that ended before March 1, 1991, without paying the 

deposit owed for the service; 

 CSRS and FERS benefits when the retirees marry after retirement and elect to 

provide a survivor annuity benefits; 

 Retirees’ benefits when the retiree elects to credit Nonappropriated Fund 

Instrumentality (NAFI) service for retirement purposes under Public Law 104-106 

or Public Law 107-107; and, 

 Retirement benefits for individuals with certain types of retirement coverage 

errors who can receive credit for service by taking an actuarial reduction under 

the provisions of the Federal Erroneous Retirement Coverage Correction Act. 

OPM uses discount factors to compute the reduction to annuity benefits when retirees 

elect to credit their NAF service. 
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Significant Social Security Figures for 2016

On October 15, 2015, the Social Security Administration published a Fact Sheet that 

listed 2016 figures that are significant for retirement matters. You can find that Fact 

Sheet on the Social Security Administration's Internet site, at 

https://www.socialsecurity.gov/news/press/factsheets/colafacts2016.html. We have 

included some of the figures here for your convenience. 

Social Security Maximum Wage Base: The Social Security maximum taxable wage 

remains unchanged from last year and is $118,500. 

Bend Points: The dollar amounts, or bend points, used in the benefit formula for workers 

who become eligible for benefits in 2016, and in the formula for computing maximum 

individual benefits for 2016, are $856 and $5,157. 

FERS Retiree Annuity Supplement Earnings Limit 

The Social Security earnings limitation remains unchanged for 2016 from last year and is 

$15,720. Any FERS annuitant who is receiving a FERS annuity supplement (unless he or 

she is under the minimum retirement age and retired under one of the special provisions 

for law enforcement officers, firefighters, air traffic controllers, or military reserve 

technicians separated for loss of military membership) will have his or her annuity 

supplement offset in 2016 by $1.00 for every $2.00 over this amount earned in 2016.

Increase in Age for Full Social Security Benefits 

Legislation passed in 1983 provided that the age for receiving full Social Security 

benefits will gradually increase from 65 to 67. The first increase took effect in January 

2001. It affects workers born in 1938 or later. More information on this change is 

available on Social Security's web site at www.ssa.gov. 

Note: This change does not affect the entitlement of any person who is age 62 to receive 

reduced benefits if he or she has sufficient Social Security credits to receive a benefit. 

Thrift Savings Plan (TSP) Deferral Limit 

The Internal Revenue Service annual limit on elective deferrals remains unchanged at 

$18,000 for tax year 2016. For purposes of the TSP, the term "elective deferrals" means 

the maximum amount that employees can contribute to their thrift accounts. 

In addition, TSP participants that are age 50 or over can make tax-deferred “catch-up” 

contributions from their basic pay to their TSP accounts. These contributions are a 

supplement to the participant’s regular employee contributions and do not count against 

the Internal Revenue Code’s elective deferral limit. Additional information is available 
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at: https://www.tsp.gov/PDF/formspubs/oc91-13.pdf. The catch-up contributions have 

their own annual limit and eligibility criteria. The limit remains unchanged and is $6,000 

for 2016. Additional information is available at: 

https://www.tsp.gov/PDF/formspubs/oc03-03.pdf and 

https://www.tsp.gov/PlanParticipation/EligibilityAndContributions/contributionLimits.ht

ml.

 Kenneth J. Zawodny, Jr. 

 Associate Director 

 Retirement Services