United States 

Office of 

Personnel Management 

The Federal Government’s Human Resources Agency

Retirement and Insurance Service 

 Financial Management Letter 

Number: F-00-07 Date: October 16, 2000

Subject: 2000 Cost Factors for Pension and Other Retirement Benefits 

As required by Statement of Federal Financial Standards No. 5 (SFFAS-5) -- Liabilities of 

the Federal Government – we are providing you with the fiscal year 2000 “costs factors” 

for the Federal civilian benefit programs. These factors will enable you to determine your 

imputed cost for Pensions and Other Retirement Benefits, as they relate to the Civil 

Service Retirement System (CSRS), Federal Employees Retirement System (FERS), 

Federal Employees Health Benefits Program (FEHB) and the Federal Employees’ Group 

Life Insurance Program (FEGLI). 

BACKGROUND 

The amounts you remit to OPM by and for employees covered by the Federal civilian 

benefit programs generally do not cover the actual cost of the benefits those employees 

will receive after they retire. As a consequence, you must recognize an “imputed cost” 

equal to the difference between the cost of providing benefits to your employees and the 

contributions you remit by and for them. Your imputed cost is recorded as a charge to 

standard general ledger (SGL) account 6730G – Imputed Costs, with a corresponding 

credit to SGL account 5780G -- Imputed Financing Sources. 

Civil Service Federal Employees Federal Employees Federal Employees 

Retirement Group Life Health Benefits Retirement 

System Insurance Program System 

 
IMPUTED COST OF THE CSRS AND FERS 

The cost factors for the CSRS and FERS are provided to you as a percentage of basic 

pay. Basic pay is the portion of gross pay from which you withhold CSRS and FERS 

deductions. Generally, basic pay excludes bonuses, allowances, overtime, and holiday 

pay. You should refer to the CSRS/FERS Handbook, Section 30A1.1-2 

[www.opm.gov/asd/hod/pdf/C030.pdf] for a complete definition of basic pay. 

CIVIL SERVICE RETIREMENT SYSTEM

For most “regular” CSRS-covered employees, the 2000 cost factor is 24.2 per cent of 

basic pay, the same as that for 1999. Accordingly, you must recognize, as an imputed 

cost, the difference between your actual cost, based on this factor, and the total 

contributions (employee and employer) you remit to OPM for covered employees (15.91 

per cent of basic pay). The cost factors for the CSRS are presented as Attachment A. 

FEDERAL EMPLOYEES RETIREMENT SYSTEM 

Unlike the CSRS, the FERS is fully funded. This means that the cost of providing a 

future FERS benefit is covered entirely by the contributions you remit by and for covered 

employees. In fact, the contributions you made by and for FERS-covered employees 

may actually exceed the actual cost of providing a future FERS benefit. The 2000 cost 

factors for FERS, presented as Attachment B, are the same as those for 1999. 

GUIDELINES FOR CALCULATING THE IMPUTED COST OF THE CSRS AND FERS 

To determine your imputed cost for CSRS and FERS, follow these steps: 

1. Sort all employees covered by CSRS and FERS by their category of coverage. 

2. Aggregate the annual basic pay of all employees in each category of CSRS and 

FERS coverage. 

3. Multiply the aggregate basic pay for each category of CSRS and FERS coverage 

computed in step 2 by the associated cost factor [for example, for “regular” CSRS 

and FERS employees the factors would be 24.2 and 11.5 per cent, respectively].

4. Compute the grand total of each of the individual calculations in step 3 for both 

CSRS and FERS -- this is the service cost of providing CSRS and FERS benefits. 
5. Subtract, from the amount derived in step 4, the total employer and employee 

contributions for all employees covered by CSRS and FERS. The result is your 

imputed cost for FERS and CSRS. 

6. Record the imputed cost computed in step 5 as a charge to SGL account 6730G.24 - 

Imputed Cost - with a corresponding credit to SGL account 5780G.24 - Imputed 

Financing Sources. 

ILLUSTRATION: CALCULATION OF IMPUTED COST OF THE CSRS AND FERS

Agency XYZ has “regular” CSRS employees, who earned basic pay of $500,000, and 

“regular“ FERS employees, who earned basic pay of $250,000. Applying the 2000 cost 

factors, Agency XYZ computes its service cost: 

A B C 

Annual Basic 

Pay Cost Factor (%) Service Cost [A * B] 

CSRS $500,000 24.2 $121,000

FERS $250,000 11.5 $28,750

TOTAL $149,750

Agency XYX then determines its employee withholdings and agency contributions for 

employees covered by the CSRS and FERS: 

A B C D E F 

Annual 

Basic Pay 

Employee 

Withholding 

Rate (%) 

Employee 

Withholdings 

Agency 

Contribution 

Rate (%) 

Agency 

Contributions 

Total 

Contributions 

[C + E] 

CSRS $500,000 7.4 $37,000 8.51 $42,550 $79,550

FERS $250,000 1.2 $3,000 10.7 $26,750 $29,750

TOTAL $109,300
Agency XYZ will then compute its imputed cost by subtracting the total employee 

withholdings and agency contributions for employees covered by the CSRS and FERS 

from its service cost: 

A B C 

Service Cost 

Total 

Contributions 

Imputed Cost 

[A - B] 

CSRS $121,000 $79,550 $41,450 

FERS 28,750 29,750 * (1,000) 

TOTAL $149,750 $109,300 $40,450 

Agency XYZ posts the following transaction: 

 6730G.24 Imputed Cost 40,450 

 5780G.24 Imputed Financing Sources 40,450 

FEDERAL EMPLOYEES HEALTH BENEFITS PROGRAM 

The FEHB Program provides post-retirement benefits to Federal employees, their 

dependents and survivors. Neither employing agencies nor employees, however, make 

contributions for post-retirement health benefits. As a consequence, you must recognize 

the entire cost of providing post-retirement health benefits to your employees as an 

imputed cost. Our actuaries have computed the 2000 cost factor as $2,733 per 

employee enrolled in the FEHB Program. 

______________________________________________________________________

_________ 

* FASAB Interpretation Number 4 requires that any excess of FERS contributions over 

FERS service cost be offset against the excess of CSRS service cost over CSRS 

contributions. 
GUIDELINES FOR CALCULATION OF IMPUTED COST OF THE FEHB PROGRAM 

To determine imputed cost, perform the following steps: 

1. Ascertain actual enrollment in the FEHB at three points in time: October 1, 1999; 

March 31, 2000; and September 30, 2000. 

2. Multiply the October 1, 1999 enrollment by one; the March 31, 2000 enrollment by 

two; and the September 30, 2000 enrollment by one. 

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

4. Divide the grand total in Step 3 by four – this is your constructed FEHB enrollment. 

5. Multiply the constructed FEHB enrollment determined in step 4 by the cost factor – 

this is your imputed cost. 

6. Record the imputed cost computed in step 5 as a charge to SGL account 

6730G.24, with a corresponding credit to SGL account 5780G.24. 

ILLUSTRATION OF CALCULATION OF IMPUTED COST OF THE FEHB PROGRAM 

10/1/99 3/31/00 9/30/00 

Actual enrollment 72 66 60

Multiplier 1 2 1

Product 72 132 60

Grand Total 264

Constructed Enrollment [Grand Total divided by 4] 66

Cost Factor $2,733

IMPUTED COST [Constructed Enrollment times Cost Factor] $180,378

 
Agency XYZ posts the following transaction: 

 6730G.24 Imputed Cost 180,378 

 5780G.24 Imputed Financing Sources 180,378 

FEDERAL EMPLOYEES LIFE INSURANCE PROGRAM 

The FEGLI Program provides life insurance benefits to eligible Federal retirees, their 

dependents and survivors. As with the FEHB Program, the imputed cost of FEGLI 

relates to post-retirement Basic life insurance coverage [the full cost of the optional life 

insurance coverages is borne by the retiree]. You must recognize the cost of providing 

post-retirement Basic life insurance as an imputed cost. The 2000 cost factor for FEGLI 

is the same as in previous years: that is, .02 per cent of basic pay. 

GUIDELINES FOR CALCULATING THE IMPUTED COST OF THE FEGLI PROGRAM 

Agencies will determine their imputed cost for life insurance by the following steps: 

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] – this is your imputed cost. 

3. Record the imputed cost computed in step 2 as a charge to SGL account 

6730G.24, with a corresponding credit to SGL account 5780G.24. 

ILLUSTRATION OF CALCULATION OF IMPUTED COST OF THE FEGLI PROGRAM 

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

by Basic life insurance to be $500,000. It determines its imputed cost for the FEGLI 

Program, as follows: 

A B C 

Aggregate 

Annual Basic Pay Cost Factor (%) Imputed Cost [A x B] 

$500,000 .02 $100 
Agency XYZ posts the following transaction: 

 6730G.24 Imputed Cost 100 

 5780G.24 Imputed Financing Sources 100 

2000 FACTS REPORTING 

New Footnote Requirement 

We direct your attention to a new Federal Agencies’ Centralized Trial-Balance System 

(FACTS) reporting requirement for 2000. Treasury Financial Manual, Transmittal Letter 

No. 593, requires that you disclose in a footnote your imputed costs relating to the 

CSRS, FERS, FEHB, and FEGLI [see Note 14: Federal Employee and Veteran Benefits 

Payable]. 

Trading Partner is “24” 

Please note also the “24” in each of the above illustrative entries for imputed cost -- 

6730G.24 – and imputed financing sources -- 5780G.24. As these entries involve 

intragovernmental [“G”] transactions, it is important that you use our two-digit 

department code – “24” – in your FACTS reporting. Again, when reporting the balances 

in accounts 5780G and 6730G, that relate to the CSRS, FERS, FEHB, and FEGLI, use 

partner code “24”, not “00”, as was required for 1999. 

Baseline to Gauge Reasonableness of Imputed Cost Calculations 

In early January 2001, we will provide you with our own calculation of your imputed costs 

for the CSRS, FERS, FEHB and FEGLI. Our calculation will be based on the cost 

factors and our estimate of the basic pay your employees earned in 2000 [for CSRS, 

FERS, and FEGLI] and your employees’ enrollment in the FEHB Program. The imputed 

costs we calculate and report to you should not, however, be used to post to your 

accounts. Rather, they should be used only as a baseline to gauge the reasonableness 

of your calculation of your imputed costs. 

ASSURANCE FOR AUDITORS 

Due to the need to provide you with these cost factors so soon after the end of fiscal year 

2000, our independent public accounting firm, KPMG LLP (KPMG), has had insufficient 

time to opine on them. Nonetheless, the 1999 cost factors for regular CSRS and FERS 

coverage, as well as those for FEHB and FEGLI were disclosed in the footnotes 

accompanying our 1999 financial statements, which KPMG audited and upon which they 

issued an unqualified opinion. The cost factors for CSRS, FERS, and FEGLI did not 

change for 2000, nor did the policies, procedures and controls pertaining to the 

calculation of any of the cost factors, including that for FEHB. Thus, your auditors can 

rely upon the disclosures in the 1999 financial statements and KMPG’s opinions 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 

Retirement and Insurance Service 

Attachments (2)