WHETHER POSTAL EMPLOYEES ARE ENTITLED TO RECEIVE 

SERVICE CREDIT, FOR PURPOSES OF THEIR RETIREMENT 

ANNUITY UNDER THE FEDERAL EMPLOYEES’ RETIREMENT 

SYSTEM, FOR PERIODS OF EMPLOYMENT DURING WHICH 

THE UNITED STATES POSTAL SERVICE HAS NOT MADE ITS 

REQUIRED EMPLOYER CONTRIBUTIONS

The Office of Personnel Management may not address the United States Postal Service’s failure 

to make statutorily required retirement contributions by denying its employees accrued service credit 

under the Federal Employees’ Retirement System during their periods of qualifying federal employment.

November 1, 2011

MEMORANDUM OPINION FOR THE GENERAL COUNSEL

OFFICE OF PERSONNEL MANAGEMENT

AND 

THE GENERAL COUNSEL AND EXECUTIVE VICE PRESIDENT

UNITED STATES POSTAL SERVICE

On June 22, 2011, the United States Postal Service (“USPS” or “Postal Service”) notified 

the Office of Personnel Management (“OPM”) that, because of its financial difficulties, the 

Postal Service, as a cash conservation measure, was suspending its employer contributions to the 

Civil Service Retirement and Disability Fund (“the Fund”) on behalf of those postal employees 

covered by the Federal Employees’ Retirement System Act (“FERS”), 5 U.S.C. §§ 8401-8479 

(2006 & Supp. IV 2010). In light of that suspension, OPM requested an opinion from our Office 

regarding (1) whether, and to what extent, OPM has discretion to offset the Postal Service’s 

obligation to make employer retirement contributions against a “surplus” the Postal Service 

asserts that it has accumulated in the Fund; and (2) whether postal employees are entitled to 

receive service credit, for purposes of determining their eligibility for retirement and calculating 

the amount of their retirement annuity, for periods of employment during which the Postal

Service has not made its required employer contributions.1

 The Postal Service, an independent 

agency, joined OPM in the request for an opinion and agreed to be bound by our decision.2

In its submission to the Office of Legal Counsel (“OLC”), the Postal Service indicated 

that, despite earlier disagreement, it now “does not contest OPM’s position that the Postal 

Service is still obligated by the statute to make its employer contribution, despite the existence 

of the surplus.” USPS Mem. 14; see also id. at 4. The Postal Service, however, also specifically 

stated that it considers the question “whether the [Postal Service’s] Board [of Governors] was 

 1

 See Memorandum for Virginia Seitz, Assistant Attorney General, Office of Legal Counsel, from Elaine 

Kaplan, General Counsel, Office of Personnel Management (July 14, 2011) (“OPM Mem.”). OPM enclosed with 

its submission an undated paper it had received from USPS, with the heading “Effect of Suspension of Agency 

Contribution to FERS on Employees” (“USPS Paper”). OPM has agreed provisionally to provide service credit 

to postal employees who may retire while the issue is pending before our Office. OPM Mem. at 2.

2

 See Memorandum for Virginia Seitz, Assistant Attorney General, Office of Legal Counsel, from Mary 

Anne Gibbons, General Counsel and Executive Vice President, United States Postal Service (Aug. 12, 2011) 

(“USPS Mem.”). 
Opinions of the Office of Legal Counsel in Volume 36

2

justified in its decision to suspend the employer contribution in order to conserve cash so as to 

avoid a shutdown in mail service” to be outside “the scope of [OLC’s] review.” Id. at 3 n.2. 

Thus, we do not address (i) whether OPM could offset the Postal Service’s required 

contributions against any surplus it may have in the Fund; (ii) whether the Postal Service’s 

apparent statutory violation may be excused; or (iii) what other avenues of recourse OPM may 

have against the Postal Service for its failure to make the statutorily required contributions. 

Instead, this opinion addresses only the question whether, under the relevant provisions of the 

FERS statute, postal employees are entitled to receive service credit for periods during which the

Postal Service has not made the required employer contributions to the Fund. The Postal Service 

argues that its employees should receive such credit. Id. at 2-14. OPM disagrees, maintaining 

that employees cannot be credited with service for periods in which no employer contributions 

have been made into the Fund. OPM Mem. at 5-9. For the reasons that follow, we agree with 

the Postal Service that OPM may not address the Postal Service’s failure to make statutorily 

required contributions by denying its employees accrued service credit under FERS during their 

periods of qualifying federal employment.

I.

In 1986, Congress enacted the Federal Employees’ Retirement System Act of 1986, 

Pub. L. No. 99-335, 100 Stat. 514 (codified as amended at 5 U.S.C. §§ 8401-8479 and scattered 

sections of U.S.C.), a system of retirement and other benefits for federal employees that will 

gradually supersede the Civil Service Retirement System (“CSRS”), which has been in effect 

since 1920. See Pub. L. No. 66-215, 41 Stat. 614 (1920) (codified as amended at 5 U.S.C. 

§§ 8331-8351 (2006 & Supp. 2010)). In enacting FERS, Congress set out, among other things, 

“to establish a Federal employees’ retirement plan which is coordinated with title II of the Social 

Security Act”; “to ensure a fully funded and financially sound retirement benefits plan for 

Federal employees”; and “to assist in building a quality career work force in the Federal 

Government.” Pub. L. No. 99-335, § 100A(1), (2), & (5), 100 Stat. at 516 (codified at 5 U.S.C. 

§ 8401 note (2006)).3

FERS is a three-tiered retirement system that consists of Social Security, a basic annuity, 

and a Thrift Savings Plan (“TSP”). See 5 U.S.C. § 8403 (2006) (except as otherwise provided, 

benefits payable under FERS are in addition to benefits payable under the Social Security Act); 

id. §§ 8410-8425 (2006 & Supp. IV 2010) (basic annuity); id. §§ 8431-8440f (2006 & Supp. IV 

2010) (TSP).

 With certain exceptions, the Act became effective on January 1, 1987. 

Id. § 702, 100 Stat. at 631 (codified at 5 U.S.C. § 8401 note). Since then, most newly hired 

federal employees who are covered by Social Security have also been covered by FERS.

4

 3

 From Congress’s enactment of the Social Security Act in 1935, Pub. L. No. 74-271, 49 Stat. 620 (1935), 

until 1983, federal employees were excluded from Social Security coverage. In 1983, the Social Security Act was 

amended to cover newly hired federal employees. Pub. L. No. 98-21, § 101, 97 Stat. 65, 67-70 (1983) (codified at 

42 U.S.C. § 410). That expansion of Social Security was a major impetus behind the adoption of FERS, the new 

retirement system for federal employees, in 1986. See generally S. Rep. No. 99-166, at 1-2 (1985) (providing 

background on the CSRS and amendment of the Social Security Act to cover federal employees), reprinted in

1986 U.S.C.C.A.N. 1405, 1406.

 The Postal Service and its employees fall within FERS coverage. 39 U.S.C. 

4

 The TSP is a tax-deferred savings plan for federal employees in which employee contributions are 

matched in part by employer agency contributions.
Whether Postal Employees Are Entitled to FERS Service Credit When USPS Has Not Made Contributions

3

§ 1005(d) (2006 & Supp. III 2009). The dispute between OPM and the Postal Service concerns 

the basic annuity.

Under FERS, an “employee,” as defined in 5 U.S.C. § 8401(11) (2006), must complete at 

least five years of creditable civilian service under 5 U.S.C. § 8411 to be eligible for the annuity. 

5 U.S.C. § 8410 (2006). As a general matter, creditable service includes “employment as an 

employee . . . after December 31, 1986.” Id. § 8411(b)(1). With certain exceptions, the annuity 

of a retiring employee is 1 percent of that individual’s average pay (the highest average pay in 

effect over any three consecutive years of service) multiplied by that individual’s “total [years 

of] service.” Id. §§ 8415(a), 8401(3) (defining “average pay”). The statute establishes different 

potential retirement ages for employees depending on the number of years of service completed. 

Id. § 8412 (2006 & Supp. IV 2010). For example, an employee who is separated from service 

after becoming 62 years old and completing five years of service is entitled to an annuity. Id. 

§ 8412(c). “[S]ervice,” in turn, “means service which is creditable under section 8411.” Id. 

§ 8401(26). As these provisions make clear, the determination whether service is creditable 

under the statute has important ramifications for an employee’s eligibility to receive a basic 

annuity, the applicable retirement age, and the calculation of the amount of the annuity.5

The FERS basic annuity is funded through a combination of employee deductions and 

employer agency contributions to the Civil Service Retirement and Disability Fund. Id. §§ 8422, 

8423, 8401(6) (2006 & Supp. IV 2010). Under FERS, the employing agency is required to 

deduct and withhold from each employee’s basic pay a percentage that is equal to 7 percent of 

basic pay (with a different percentage applicable to Members of Congress and certain categories 

of employees) less the Old Age, Survivors, and Disability Insurance (“OASDI”) tax rate in 

effect, which is now 6.2 percent. Id. § 8422(a), (c) (2006 & Supp. IV 2010); 26 U.S.C. § 3101(a) 

(2006). Accordingly, the employer is required by the statute to deduct 0.8 percent of most 

employees’ basic pay for contribution to the Fund.

The employing agency’s own contribution to the Fund is much larger and is based on 

the “normal-cost percentage,” which is “the entry-age normal cost of the provisions of [FERS] 

which relate to the Fund,” as computed by OPM “in accordance with generally accepted 

actuarial practice and standards” and “expressed as a level percentage of aggregate basic pay.” 

5 U.S.C. § 8401(23) (defining “normal-cost percentage”); see id. § 8423(a) (2006 & Supp. IV 

2010).6

 5

 Creditable service is also important to other facets of the retirement system. For example, an employee is 

not entitled to retain the employer’s contributions to the TSP and earnings attributable to such contributions before 

completing specific periods of service. See 5 U.S.C. § 8432(g)(2) (2006).

 Under the statute, “each employing agency having any employees or Members subject 

6

 “Entry age normal cost” is 

generally understood as the percentage of every paycheck that should be invested, over the total 

career of each employee in a group of new entrants, to pay fully for all benefits received by that 

group, including all eligible survivors. Normal cost is formally defined as the present value of 

future benefits divided by the present value of future compensation. These values are expressed 

as a percentage of payroll, and provide a consistent measure of relative pension costs over time.

S. Rep. No. 99-166, at 35 (1985), reprinted in 1986 U.S.C.C.A.N. 1405, 1440. OPM publishes the “normal cost 

percentages” for particular categories of employees in the Federal Register. At the time the Postal Service 

suspended its employer contributions to the Fund, the government-wide normal cost percentage for most employees 

was 12.5 percent. Federal Employees’ Retirement System; Normal Cost Percentages, 75 Fed. Reg. 35,098 (June 21, 
Opinions of the Office of Legal Counsel in Volume 36

4

to section 8422(a) shall contribute to the Fund an amount” that is the product of the applicable 

normal-cost percentage and the aggregate amount of basic pay payable by the agency for the 

period involved. Id. § 8423(a)(1). In determining the normal-cost percentage to be applied,

the employee deductions required by section 8422 must be taken into account. Id. § 8423(a)(2).7 

Thus, for most employees, employing agencies contribute to the Fund an amount equal to 11.9 

percent of basic pay—the aggregate normal cost of 12.7 percent minus the 0.8 percent employee 

deduction—which is more than 93 percent of the normal cost. OPM, which has authority to 

prescribe regulations under the statute, id. § 8461(g) (2006), has construed FERS to require the 

employing agency to “remit in full the total amount of normal cost (which includes both 

employee deductions and Government contributions), so that payment is received by the Fund on 

the day of payment to the employee of the basic pay from which the employee deductions were 

made.” 5 C.F.R. § 841.504(h) (2011); see also id. § 841.413 (2011).8

II.

The dispute between OPM and the Postal Service was precipitated by the Postal Service’s 

decision, in light of its current financial crisis, to conserve cash by suspending its employer 

contributions for the basic annuity, effective June 24, 2011, for those postal employees covered 

by FERS. OPM Mem. at 1; USPS Mem. at 2. The Postal Service is continuing to withhold 

employee deductions from basic pay; it also continues to make its automatic and matching 

contributions to the TSP accounts of FERS employees and to remit those contributions, along 

 2010). For the first pay period commencing on or after October 1, 2011, the normal cost percentage for most 

employees rose to 12.7 percent. Federal Employees’ Retirement System; Normal Cost Percentages, 76 Fed. Reg. 

32,242, 32,243 (June 3, 2011).

7

 Section 8422(a) requires that “[t]he employing agency shall deduct and withhold from basic pay of each 

employee . . . a percentage of basic pay . . . .” 5 U.S.C. § 8422(a)(1). Thus, so long as the individual is an 

“employee,” see id. § 8401(11), and is not otherwise excluded from coverage under the statute, see id. § 8402 

(2006), the individual is “subject to section 8422(a),” and the employing agency is required to make contributions to 

the Fund under section 8423. There is no dispute here that the Postal Service’s employees for whom the employer 

contributions have been withheld are “employees” for purposes of FERS. As a general matter, the FERS definition 

of “employee” refers to the definition of “employee” for CSRS benefits under chapter 83, in 5 U.S.C. § 8331(1) 

(2006). Section 8331(1), in turn, defines the term by reference to 5 U.S.C. § 2105. Under section 2105(a), an 

“employee” is an individual who is “appointed in the civil service” by a federal official; “engaged in the 

performance of a Federal function”; and “subject to the supervision” of a federal official. 5 U.S.C. § 2105(a) 

(2006); see Taylor v. OPM, 82 M.S.P.R. 237, 241 (M.S.P.B. 1999). Employees of the Postal Service, who are 

generally covered by the retirement statutes by virtue of 39 U.S.C. § 1005(d), must still meet the definition of 

“employee” to be covered by FERS. See Taylor, 82 M.S.P.R. at 241. An “employee” for purposes of FERS 

must also be covered by title II of the Social Security Act. 5 U.S.C. § 8401(11).

8 FERS further requires OPM to compute the amount of the “supplemental liability” of the Fund as of 

the close of each fiscal year, both with respect to current or former employees of the Postal Service and other 

individuals. 5 U.S.C. § 8423(b)(1). The “supplemental liability” is the estimated excess of the actuarial present 

value of all future benefits payable from the Fund based on the service of current or former employees or Members 

of Congress over the sum of the actuarial present value of employee deductions, employer contributions, and the 

Fund balance. Id. § 8401(27). The amount of any supplemental liability must be amortized in 30 equal annual 

installments, with interest. Id. § 8423(b)(2). At the end of each fiscal year, OPM must notify the Postmaster 

General of the amount of the required installment computed with respect to current or former postal employees and 

the Secretary of the Treasury of the amount computed with respect to other individuals. Id. § 8423(b)(3). Upon 

receiving such notifications, the Postal Service is required to pay, and the Secretary of the Treasury is required to 

credit, to the Fund the amounts specified. Id. § 8423(b)(4).
Whether Postal Employees Are Entitled to FERS Service Credit When USPS Has Not Made Contributions

5

with employee TSP contributions. USPS Mem. at 2. OPM does not dispute that the Postal 

Service and its employees continue to satisfy all the requirements of the statute except the 

agency’s obligation to make employer contributions to the Fund for the basic annuity. The 

question we must address is thus narrow: whether postal employees are entitled to service credit 

for retirement purposes for the periods in which the Postal Service has suspended its employer 

contributions under 5 U.S.C. § 8423, but in all other respects has complied with the FERS 

statute.

OPM states that its “longstanding interpretation of the statute,” as codified in its 

regulations, provides that “in order for an employee to be covered under FERS, an agency must 

make the periodic contributions to the Retirement Fund that are required by law.” OPM Mem. 

at 2. OPM does not claim that FERS expressly provides that employer contributions are a 

necessary precondition for employee coverage or that employees shall not receive service credit 

for periods in which their employing agencies fail to make employer contributions. Instead, 

OPM points out that section 8423 of FERS mandates that USPS must make contributions to the 

Fund on behalf of employees covered by FERS. See 5 U.S.C. § 8423(a)(1) (“[e]ach employing 

agency having any employees . . . subject to section 8422(a) shall contribute to the Fund” an 

amount that is based on the normal-cost percentage set by OPM) (emphasis added)). And while 

section 8423 does not expressly make the mandatory employer contributions a precondition to 

employee eligibility, in OPM’s view, the relevant OPM regulation does:

To be covered under FERS, an individual must:

(a) Be an employee, Member, or specifically covered by another provision of law;

(b) Be covered by social security;

(c) Have retirement deductions withheld from pay and have agency contributions 

made; and

(d) Be paid based on units of time.

Except as provided in § 842.104 and as excluded by § 842.105, an employee or 

Member is covered by FERS.

5 C.F.R. § 842.103 (2011) (emphasis added); see also id. § 842.304(a) (2011) (providing, with 

exceptions not relevant here, that “an employee . . . is entitled to credit for all purposes under 

FERS for a period of civilian service with the Government or the U.S. Postal Service—

[p]erformed after December 31, 1986, which is covered service under subpart A of this part,” 

a reference back to section 842.103) (emphasis added).

As OPM explains, section 842.103 “merges the various statutory requirements applicable 

to FERS into one regulatory provision that determines whether an individual is covered by 

FERS.” OPM Mem. at 5. OPM’s basic claim is thus that, “while there is no single provision in 

the statute which states that each of these requirements is essential to ‘coverage,’ when read as 

a whole, it was clearly reasonable for OPM to make coverage dependent upon compliance with 

all of the statutory requirements.” Id. at 6. In OPM’s view, section 842.103 makes “clear” that 
Opinions of the Office of Legal Counsel in Volume 36

6

“to be ‘covered by FERS’ an individual must not only have deductions withheld from their 

pay—their employing agency must make the necessary contributions” as well. Id. at 5-6.

On its face, section 842.103 is not as free from ambiguity as OPM suggests. In 

particular, the last sentence in the provision states that “[e]xcept as provided in § 842.104 and 

as excluded by § 842.105, an employee or Member is covered by FERS,” 5 C.F.R. § 842.103, 

language that appears to define coverage under FERS without making employer contributions a 

prerequisite. We do not think that the ambiguity in this language can be resolved by examining 

OPM’s practice because there does not appear to be any relevant practice: OPM has pointed us 

to no instance of an agency refusing to remit the contributions it is statutorily required to pay 

under CSRS or FERS. Cf. OPM Mem. at 9 (stating that no agency has failed to make employer 

contributions under CSRS). Nonetheless, we assume that OPM’s interpretation of its own 

regulation is entitled to deference, and thus that section 842.103 has the meaning OPM suggests. 

See Talk Am., Inc. v. Michigan Bell Tel. Co., 131 S. Ct. 2254, 2261 (2011). 

In addition to relying on the statutory text and its regulation, OPM also finds support for 

its view in Congress’s purpose. OPM notes that “Congress created FERS as a fully funded 

pension system,” intending that “the Fund would be placed on a firm financial footing by 

requiring agencies to pay the full ‘normal costs’ for FERS employees.” OPM Mem. at 6. 

In light of Congress’s “‘interest in sound fiscal and accounting management,’” id. at 7 (quoting 

S. Rep. No. 99-166, at 29 (1985), reprinted in 1986 U.S.C.C.A.N. 1405, 1434), OPM contends 

that it is “highly unlikely that Congress would have provided that employees would be 

considered ‘covered’ by FERS and credited for their service if their employing agencies did not 

make the requisite contribution to the Fund.” Id.

The Postal Service, for its part, does not deny that FERS requires it to make its employer 

contributions, USPS Mem. at 4, 14, or that Congress intended that FERS be placed on a sound 

financial footing, id. But it points out that Congress chose to further this goal by requiring all 

employers to contribute to the Fund, not by depriving employees of service credit in the highly 

unusual situation in which an agency fails to make its required payments. Id. at 2-3. The Postal 

Service contends that under the statute, “creditable service is generated so long as employees 

are performing the required service for the Federal government and are contributing the required 

amounts to their pension, without regard to whether the employing agency cannot or does not 

make its employer contribution.” Id. at 2. None of the key statutory provisions, in the Postal 

Service’s view, “indicate[s] that creditable service under FERS is dependent on the employer 

contribution.” Id. at 6. The Postal Service emphasizes that in enacting the basic annuity, 

Congress “intended to provide clearly defined and reliable benefits to employees”—a purpose 

that would be “vitiated by OPM’s interpretation, which would predicate the level of employee 

benefits on the funding decisions of agency officials.” Id. at 3; see also id. at 12. Accordingly, 

the Postal Service argues that OPM’s interpretation of FERS, as embodied in its regulations, 

is at odds with the statute or, at least, unreasonable, id. at 5, and that OPM cannot enforce the 

Postal Service’s statutory obligation to contribute by denying service credit to its employees.

We assume that OPM’s authority to implement FERS by regulation, 5 U.S.C. § 8461(g), 

would entitle it, in appropriate circumstances, to deference in its construction of FERS pursuant 

to Chevron, U.S.A., Inc. v. Natural Res. Defense Council, Inc., 467 U.S. 837 (1984). However, 

OPM’s construction of the statute is entitled to deference only “if the statute is silent or 
Whether Postal Employees Are Entitled to FERS Service Credit When USPS Has Not Made Contributions

7

ambiguous with respect to the specific issue” at hand. Id. at 843. If, on the other hand, 

“Congress has directly spoken to the precise question at issue,” and in so doing made its intent 

clear, “that is the end of the matter.” Id. at 842. And here, for the reasons set forth below, we 

conclude that FERS makes clear that postal employees who otherwise qualify for retirement 

benefits under FERS are both covered by and accrue service credit under the statute 

notwithstanding the Postal Service’s failure to make its employer contributions pursuant to 

5 U.S.C. § 8423. Thus, OPM’s interpretation of FERS—that OPM can address the Postal 

Service’s failure to remit the required contributions by depriving employees of accrued service 

credit—is foreclosed by the statute.

III.

A.

“We begin with the text of the statute.” Kasten v. Saint-Gobain Performance Plastics 

Corp., 131 S. Ct. 1325, 1331 (2011). Section 8410 of FERS, which governs eligibility, provides: 

“Notwithstanding any other provision of this chapter, an employee or Member must complete 

at least 5 years of civilian service creditable under section 8411 in order to be eligible for an 

annuity under this subchapter.” 5 U.S.C. § 8410. Central to resolving this controversy is section 

8411, which governs creditable service. It provides that “[t]he total service of an employee . . . 

is the full years and twelfth parts thereof, excluding from the aggregate the fractional part of 

a month, if any.” Id. § 8411(a)(1). Section 8411 further specifies, in relevant part, that for

purposes of FERS, “creditable service of an employee . . . includes . . . employment as an 

employee . . . after December 31, 1986.” Id. § 8411(b), (b)(1). These provisions are not vague 

or unclear. They indicate plainly the category of employees who are eligible for FERS benefits, 

and Congress’s broad, but not unbounded, definition of “creditable service” for FERS purposes. 

Section 8401(11) excludes certain categories of individuals from the definition of 

“employee,” and section 8402 excludes certain categories of individuals from coverage under 

FERS. Id. §§ 8401(11), 8402. But these exclusions are irrelevant to the present dispute. 

As USPS points out, OPM does not argue that “the non-payment of the employer contribution 

means that Postal Service employees are no longer ‘employees’ under the FERS statute or that 

they now fall within one of the exceptions in 5 U.S.C. § 8402 by virtue of such non-payment.” 

USPS Mem. at 6. And the postal employees potentially affected by their employer’s nonpayment of its contributions are still engaged in “employment.” The plain language of FERS, 

then, supports the view that employees earn creditable service so long as they are employed 

as “employee[s]” after December 31, 1986, 5 U.S.C. § 8411(b)(1), regardless of whether their 

employer has suspended its contributions to the Fund.

To be sure, as noted earlier, OPM acknowledges that FERS’s definition of “creditable 

service” does not mention employer contributions. Its argument is that a correct determination 

of what counts as “creditable service” under FERS does not depend on the wording of section 

8411(b)(1) alone, but also on the overall statutory plan—in particular, on the fact that another 

provision of FERS clearly requires employer contributions as part of the overall FERS scheme.

We agree that section 8423 of FERS requires employers to make contributions to the 

Fund. We further agree that “[i]nterpretation of a word or phrase depends upon reading the 
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8

whole statutory text, considering the purpose and context of the statute.” Dolan v. U.S. Postal 

Serv., 546 U.S. 481, 486 (2006). However, the mere fact that employer contributions are a 

mandatory part of the overall FERS scheme does not indicate that OPM is authorized to suspend 

or eliminate the accrual of employees’ service credit as a remedy for an employer’s failure to 

make such contributions. Cf. Harris Trust & Sav. Bank v. Salomon Smith Barney Inc., 530 U.S. 

238, 247 (2000) (ERISA’s “‘comprehensive and reticulated’ scheme warrants a cautious 

approach to inferring remedies not expressly authorized by the text” (citations and internal 

quotation marks omitted)). As noted above, the specific statutory provision that addresses 

creditable service says nothing that suggests that an employee’s accrual of credit depends on 

the fact or extent of employer contributions. Section 8423 of FERS likewise fails to mandate, 

or even suggest, that a lapse in an employing agency’s contributions should result in a denial of 

service credit to that agency’s employees.

Certainly, as OPM states, section 8423 reflects Congress’s goal that “the Fund . . . be 

placed on a firm financial footing by requiring agencies to pay the full ‘normal costs’ for FERS 

employees.” OPM Mem. at 6. But it does so not by stipulating that employees will earn service 

credit (and therefore future benefits) only if their employers make all required contributions, but 

rather by imposing on agency employers a legal obligation to make the required contributions. 

OPM itself has suggested no reason to think that in practice this statutory mechanism has proven

ineffective in serving Congress’s goal. Cf. OPM Mem. at 9 (“no agency has ever defaulted on its 

obligation to make the required contributions” under CSRS). 

Moreover, the text of the FERS statute suggests that Congress considered the question 

of statutory mechanisms to address funding shortfalls and enacted a mechanism to deal with one 

kind of shortfall, without indicating that the suspension of employee service credit might be used 

as a solution to that or any other funding deficiency. Specifically, the statute provides that, in the 

event that OPM determines, on an annual review, that an agency’s employer contributions do not 

in fact satisfy the statute’s funding goals, OPM must notify the Postmaster General (or the 

Secretary of the Treasury, as applicable) of any “supplemental liability” and the amount of the 

required installment payments, amortized over 30 years. 5 U.S.C. § 8423(b); see supra n. 8. 

The Postal Service must then pay the amount specified in the notification to address the funding 

shortfall. 5 U.S.C. § 8423(b)(4)(B). The existence of this supplemental liability process does 

not affirmatively authorize the Postal Service to avoid making its employer contributions as 

they come due in favor of amortizing such payments over 30 years. But the existence of a 

supplemental liability remedy for at least one type of funding shortfall shows that Congress was 

aware of the possibility that the employer contributions remitted under section 8423 might in 

some circumstances fail to result in agency funding of the full costs of employee benefits. 

Congress chose nonetheless to provide expressly for only one response to such a possibility. 

In light of that awareness, the omission of any other mechanism for addressing this or other 

kinds of shortfalls, such as denying service credit to employees when their employer defaults 

on its contributions, suggests that “the statute fails to mention [other responses] ‘by deliberate 

choice, not inadvertence.’” Bruesewitz v. Wyeth LLC, 131 S. Ct. 1068, 1076 (2011) (citation 

omitted).

In sum, none of the most clearly relevant provisions of the statute suggests that either 

employee eligibility or creditable service under FERS depends upon the extent of the employer’s 

contributions to the Fund. As OPM insists, and the Postal Service effectively concedes, the plain 
Whether Postal Employees Are Entitled to FERS Service Credit When USPS Has Not Made Contributions

9

language of FERS’s key provisions specifies that agency employers must contribute to the Fund 

the normal cost of their covered employees’ basic pay. At the same time, these provisions fail to 

link an agency’s failure to comply with this requirement to the affected employees’ eligibility for 

an annuity or accrual of creditable service. Instead, they appear on their face to provide that an 

employee is entitled to service credit so long as he or she is employed as an “employee” after 

December 31, 1986. See 5 U.S.C. § 8411(a) & (b). Given the harsh penalty federal employees 

would suffer if they were denied FERS coverage or service credit for periods of employment 

during which their agency employers failed to make the required contributions to the Fund—an 

action over which the employees have no control—the absence of any reference in FERS’s key 

provisions to OPM’s authority to impose that particular remedy for an agency’s noncompliance 

strongly suggests that Congress did not intend such authority to exist. As we discuss next, we 

do not think any of OPM’s additional arguments in support of this authority are persuasive.

B.

OPM offers several other arguments that, in its view, show that the FERS statute requires 

employer contributions as a condition of employees’ coverage and accrual of creditable service 

under FERS. First, OPM relies heavily on the Postal Service’s concession that, to receive 

service credit under FERS, an employee must have deductions withheld from his or her wages, 

even though, in the Postal Service’s view, the employing agency’s contributions are not required 

for that purpose. OPM Mem. at 7; see USPS Mem. at 5-10. OPM insists that these two 

propositions cannot be reconciled because it is illogical to distinguish between the employee’s 

deduction and the employer’s contribution—both of which are statutorily required and neither 

of which is expressly linked by the statutory text to accrual of service credit—for purposes of 

determining whether an employee accrues creditable service for periods when employee 

deductions or employer contributions have not been made. OPM Mem. at 7.

We need not resolve this issue. As a practical matter, the Postal Service has continued 

to withhold from its employees’ basic pay the deductions required under 5 U.S.C. § 8422—

including the employee deductions—and to deposit the deductions into the Fund. USPS Mem. 

at 2. If fulfillment of the Postal Service’s obligations under section 8422 is a necessary condition 

to postal employees receiving credit under FERS, that condition is being met. Furthermore, 

although OPM and the Postal Service agree that a failure to make these employee deductions 

would affect employees’ ability to earn creditable service, we are unsure that they are correct. 

In our view, this issue is difficult, particularly in the context of a scheme in which it is the 

agency’s legal obligation to effectuate the employee deduction. See 5 U.S.C. § 8422(a). In fact, 

the answer to the question may well depend on the reason that employee deductions have not 

been made.9

 9

 For example, if the employer failed to make the employee deduction because the affected employee was 

not subject to deductions under 5 U.S.C. § 8422, the employee’s eligibility for coverage and ability to accrue 

creditable service under FERS might be implicated. Cf. Tomboc v. OPM, 355 Fed. Appx. 422, 424 (Fed. Cir. 2009) 

(noting that “[w]hile the absence of deductions” under the CSRA “is an indication” regarding whether a position is 

covered, “it is not necessarily dispositive”). Alternatively, if the employer failed to make the employee deductions 

because of an agency error, the error may be corrected, see 5 C.F.R. § 841.505 (2011); and, in any event, an agency 

error would not necessarily affect the employee’s entitlement to coverage. Cf. Noveloso v. OPM, 45 M.S.P.R. 321, 

324 n.2 (M.S.P.B. 1990) (noting, in addressing CSRS coverage, that “[i]f no deductions were withheld because of 

agency error, or because it was not determined until after the fact that such service should have been covered, the 

employment will still constitute covered service”); accord Staffney v. OPM, 54 M.S.P.R. 99, 102-03 (M.S.P.B. 

 In any event, even if employee deductions constitute a prerequisite to the accrual 
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10

of service credit under FERS—one that does not appear in the FERS eligibility or accrual 

provisions themselves—that would not necessarily mean that employer contributions likewise 

would be a prerequisite for the accrual of such credit, because the significance and treatment 

of employee deductions and employer contributions within the statutory scheme are different. 

Each argument for linking employee service credit to separate requirements in the statute would 

have to be considered on its own terms.

Both OPM and the Postal Service cite different subsections of section 8411—some 

requiring employee deductions as a condition of receiving creditable service and a couple 

requiring employee deductions and employer contributions—to support their respective 

positions. On the one hand, OPM contends that, where Congress intended to permit service 

credit to be afforded even if no contributions were made by the agency, it did so explicitly. 

It cites as an example section 8411(b)(3), which permits employees to receive service credit for 

periods of employment during which no employing agency contributions or employee 

deductions were paid into the Fund for certain service performed prior to January 1, 1989. 

OPM Mem. at 8 n.5. In such instances, the employee must make a deposit into the Fund of 

1.3 percent of his or her basic pay, with interest, for that period of service. Id. (citing 5 U.S.C. 

§ 8411(f)(2)).10 However, no employing agency contribution is required for that period. Id.11

 

1992) (same, under CSRS coverage); In re Kaltakji, 1 M.S.P.R. 63, 64 (M.S.P.B. 1978) (same). But see 5 U.S.C. 

§ 8339(i) (2006) (providing, for purposes of computing a CSRS annuity, that the total service of an employee 

“shall not include any period of civilian service . . . for which retirement deductions or deposits [under section 8334] 

have not been made” unless the employee makes a deposit under section 8334(c) or (d)(1) or no deposit is required 

for such service as specified under section 8334(g) or another statute). And, for the same reasons that an agency 

error may not affect the employee’s entitlement to coverage, a willful agency refusal to make the required employee 

deductions likewise may not affect that entitlement. For the reasons stated in the text, however, we need not decide 

the circumstances, if any, in which an employing agency’s failure to make the employee deductions and deposit 

them into the Fund would affect an employee’s coverage and accrual of service under FERS.

 

10 Section 8411(b)(3), with the introductory language in section 8411(b), provides: 

For the purpose of this chapter, creditable service of an employee or Member includes . . . 

(3) except as provided in subsection (f) or (h), any civilian service (performed before January 1, 

1989, other than any service under paragraph (1) or (2)) which, but for the amendments made by 

subsections (a)(4) and (b) of section 202 of the Federal Employees’ Retirement System Act of 

1986, would be creditable under subchapter III of chapter 83 of this title (determined without 

regard to any deposit or redeposit requirement under such subchapter, any requirement that the 

individual become subject to such subchapter after performing the service involved, or any 

requirement that the individual give notice in writing to the official by whom such individual is 

paid of such individual's desire to become subject to such subchapter) . . . .

5 U.S.C. § 8411(b), (b)(3). Section 8411(f)(2) prohibits an employee from receiving “credit under this chapter for 

any service described in subsection (b)(3) for which retirement deductions under subchapter III of chapter 83 have 

not been made, unless such employee or Member deposits an amount equal to 1.3 percent of basic pay for such 

service, with interest.” Id. § 8411(f)(2). Section 8411(f)(1) requires an employee who has received a refund of 

CSRS retirement deductions for service described in subsections (b)(2) or (b)(3) to “deposit[] an amount equal to 

1.3 percent of basic pay for such service, with interest,” as a condition of receiving credit for such service. Id. 

§ 8411(f)(1). 

The Senate Committee on Governmental Affairs released a Committee Print in October 1986, four months 

after the enactment of FERS, that set out a detailed section-by-section analysis of the statute. The committee print 

explains that section 8411(b) “provides that creditable service includes . . . (3) service before January 1, 1989, which 

was either non-covered or was not vested under CSRS in which case a contribution must be made under subsection 
Whether Postal Employees Are Entitled to FERS Service Credit When USPS Has Not Made Contributions

11

The Postal Service, on the other hand, cites two instances in which the statute expressly requires 

the payment of an employer contribution to render certain service creditable, arguing that there 

would have been no reason for Congress to have explicitly required an employer contribution 

if accrual of service credit is invariably conditioned on an agency’s having made employer 

contributions to the Fund. USPS Mem. at 8 (citing 5 U.S.C. § 8411(e), (g) (the latter of these 

added in subsequent amendments to FERS)).12

None of these examples, in our view, supports either inference. As the Postal Service 

observes, section 8411 sets forth a variety of rules regarding when certain types of service 

that fall outside the scope of section 8411(b)(1) (the service at issue here) nonetheless may 

be credited for FERS purposes. Id. Congress’s varying responses to divergent coverage and 

employee deduction scenarios do not shed light on what it intended as a general matter for 

employees otherwise covered by FERS. With respect to section 8411(b)(3), for example, 

Congress’s decision to allow the accrual of service credit for employees in a transitional period 

during the early implementation of FERS and to address the absence of retirement deductions by 

 

(f).” S. Comm. on Governmental Affairs, 99th Cong., Supplemental Information Regarding the Federal Employees’ 

Retirement System Act of 1986, at 7 (Comm. Print 1986) (“FERS Comm. Print”).

11 Section 8411(b)(3) is not unique in requiring employees who had not contributed to the Fund

(sometimes because they had been covered by other retirement systems) but who seek service credit within the 

FERS system, to make payments to the Fund equal to the amounts that would have been deducted as FERS 

employee contributions for that period of service—without any mention of the necessity of an employer 

contribution. See, e.g., 5 U.S.C. § 8411(b)(4) & (5) (the latter of these added in subsequent amendments to FERS); 

USPS Paper at 6. In still other instances, Congress treated service for which deductions were not paid to the Fund 

as creditable with no requirement of any kind of employee or employer deposit. See 5 U.S.C. § 8411(c)(1)(A) 

(military service performed before January 1, 1957); id. § 8411(d) (certain periods of leave without pay); USPS 

Paper at 7.

12 Section 8411(e) provides:

Credit shall be allowed for periods of approved leave without pay granted an employee to serve as 

a full-time officer or employee of an organization composed primarily of employees . . . , subject 

to the employee arranging to pay, through the employee’s employing agency, within 60 days after 

commencement of such leave without pay, amounts equal to the retirement deductions and agency 

contributions which would be applicable under sections 8422(a) and 8423(a), respectively, if the 

employee were in pay status. If the election and all payments provided by this subsection are not 

made, the employee may not receive credit for the periods of leave without pay, notwithstanding 

the third sentence of subsection (d).

5 U.S.C. § 8411(e) (emphasis added). Section 8411(g), in turn, provides that “[a]ny employee who—

“(1) served in a position in which the employee was excluded from coverage under this subchapter 

because the employee was covered under a retirement system established under section 10 of the 

Federal Reserve Act; and

“(2) transferred without a break in service to a position to which the employee was appointed by 

the President, with the advice and consent of the Senate, and in which position the employee is 

subject to this subchapter,

“shall be treated for all purposes of this subchapter as if any service that would have been creditable under 

the retirement system established under section 10 of the Federal Reserve Act was service performed while 

subject to this subchapter if any employee and employer deductions, contributions or rights with respect to 

the employee’s service are transferred from such retirement system to the Fund.” Id. § 8411(g) (emphasis 

added).
Opinions of the Office of Legal Counsel in Volume 36

12

requiring that the employee deposit an amount compensating for those missing employee 

deductions, 5 U.S.C. § 8411(f)(2), suggests, at most, that Congress viewed employee deductions 

as more significant to coverage requirements than employer contributions. By the same token, 

that Congress required employer contributions to be made as a condition of receiving service 

credit in the examples cited by the Postal Service, id. § 8411(e), (g), shows little more than that 

Congress chose to impose that additional requirement in those instances and explicitly provided 

for employer contributions to make the requirement clear.13

What these examples reveal is that, even where there was no other statutory commitment 

to treat service as creditable under FERS or where employees were covered under other federal 

retirement systems, Congress sometimes extended FERS service credit in exchange for the 

payment of specified employee deductions—or the payment of employer contributions, or 

the relinquishment of service credit under other retirement systems, or without imposing any 

conditions—to serve some other policy goal, such as increased portability of retirement benefits. 

See Pub. L. No. 99-335, § 100A(3), 100 Stat. at 516 (codified at 5 U.S.C. § 8401 note) (one 

purpose of FERS was “to enhance portability of retirement assets earned as an employee of the 

Federal Government”). In our view, the discrete scenarios addressed in section 8411 provide 

little assistance, one way or another, in the assessment whether Congress intended to authorize 

OPM to deny service credit to employees otherwise subject to the FERS retirement plan for 

periods of employment under that plan if agencies violated the statutory requirement that they 

make employer contributions to the Fund.

Finally, as noted above, OPM argues that, in light of Congress’s creation of FERS as 

a “fully funded pension system,” OPM Mem. at 6, and its purpose to ensure “sound fiscal 

and accounting management,” id. at 7 (citing S. Rep. No. 99-166, at 29, reprinted in 1986 

U.S.C.C.A.N. at 1434), “it is highly unlikely that Congress would have provided that employees 

be considered ‘covered’ by FERS and credited for their service if their employing agencies did 

not make the requisite contribution[s] to the Fund.” Id. But, of course, Congress did require 

employing agencies to make specified contributions to the Fund, and the Postal Service is legally 

obligated to do so. See supra pp. 3-4, 7-8. The question here is only whether Congress intended 

 13 For similar reasons, we do not find Congress’s treatment of reemployed annuitants in 5 U.S.C. § 8468, 

on which the Postal Service relies, see USPS Mem. at 6-7, particularly illuminating. In language added to that 

section after the enactment of FERS, the statute provides that, with certain exceptions, if the annuitant becomes 

reemployed, “deductions for the Fund shall be withheld from the annuitant’s pay under section 8422(a) and 

contributions under section 8423 shall be made.” 5 U.S.C. § 8468(a) (2006). The Postal Service makes much of the 

fact that a subsequent subsection provides that if an annuitant “subject to deductions under the second sentence of 

subsection (a)” serves for at least 5 years, the annuitant may elect to have his or her rights redetermined under 

FERS. Id. § 8468(b)(2)(A) (emphasis added). The Postal Service finds it significant that this subsection mentions 

“deductions” and not employer “contributions.” But an employee subject to “deductions” under the second sentence 

of section 8468(a) would also be subject to “contributions,” and so there was no need for Congress to repeat the full 

phrase in section 8468(b)(2)(A) to indicate the employees to whom it was referring. Moreover, contrary to the 

Postal Service’s assertion that Congress made clear that reemployed annuitants earn service credit “so long as 

‘deductions’ are being made from their basic pay,” USPS Mem. at 7, Congress merely referred to reemployed 

annuitants who were “subject to deductions,” without regard to whether the deductions were actually “being made.”

See 5 U.S.C. § 8468(b)(2)(A). More importantly, however, we believe again that Congress’s policy determination 

about the coverage of reemployed annuitants tells us little about whether Congress intended generally to condition 

coverage and accrual of service credit for FERS employees on the agency’s deposit of its employer contributions 

into the Fund.
Whether Postal Employees Are Entitled to FERS Service Credit When USPS Has Not Made Contributions

13

that the remedy for the Postal Service’s failure to meet its obligations would be to deny 

employees the service credit that the statute contemplates they will earn.

We agree with OPM that Congress was concerned with the fiscal management of the 

Fund. But “ensur[ing] a fully funded and financially sound retirement benefits plan for Federal 

employees,” Pub. L. No. 99-335, § 100A(2), 100 Stat. at 516 (codified at 5 U.S.C. § 8401 note), 

was only one of several congressional purposes in enacting FERS. Among other things, 

Congress also enacted FERS to establish a new retirement plan “to assist in building a quality 

career work force in the Federal Government.” Id. § 100A(5). That goal could well be 

subverted if Congress were to create a retirement system in which employees’ retirement 

benefits could be diminished or stripped away by their agencies’ failure to pay the statutorily 

required contributions into the Fund. Even recognizing that a fully funded pension system was 

an important congressional objective, “no legislation pursues its purposes at all costs. Deciding 

what competing values will or will not be sacrificed to the achievement of a particular object is 

the very essence of legislative choice—and it frustrates rather than effectuates legislative intent 

simplistically to assume that whatever furthers the statute’s primary objective must be the law.” 

Rodriguez v. United States, 480 U.S. 522, 525-26 (1987).

Further, although we do not “resort to legislative history to cloud a statutory text that is 

clear,” Ratzlaf v. United States, 510 U.S. 135, 147-48 (1994), we believe that, to the extent that 

the legislative history of FERS is illuminating, it undermines, rather than supports, the view that 

Congress intended to deny employees eligibility and creditable service under FERS for periods 

of employment in which their employing agencies fail to make their required employer 

contributions to the Fund.

The legislative history makes clear that Congress intended the basic annuity in FERS to 

operate as a defined benefit plan. See, e.g., S. Rep. No. 99-166, at 6, 9, 30, 42, reprinted in 1986 

U.S.C.C.A.N. at 1410, 1413-14, 1435, 1447; FERS Comm. Print at 7. Such a plan consists of 

“a general pool of assets” out of which an employee, “upon retirement, is entitled to a fixed 

periodic payment.” Hughes Aircraft Co. v. Jacobson, 525 U.S. 432, 439 (1999) (citation 

omitted). “A defined benefit plan promises a participant a specific amount of pension benefits 

at retirement determined under a formula based on years of participation in the plan, and in most 

nonbargained plans, based on an average of compensation.” Stephen R. Bruce, Pension Claims: 

Rights and Obligations 17-18 (1988) (“Bruce”); see also James E. Burk, Pension Plan 

Management Manual: Administration and Investment ¶ 1.01[8], at 1-8 (1987) (“Burk”) 

(benefits in a defined benefits plan determined “by a formula that is generally related to service 

and compensation”); H.R. Comm. on Post Office and Civil Serv., 98th Cong., Designating a 

Retirement System for Federal Workers Covered by Social Security 6 (Comm. Print 1984) 

(prepared by the Congressional Research Service) (“CRS Comm. Print”) (“A defined benefit 

plan determines benefit amount by a formula. Upon reaching the terms specified in the 

definition of eligibility (usually a combination of age and years of service), the worker receives 

the benefit computed from the application of the formula to the employee’s years of service and 

salary.”).14

 14 By contrast, under a “defined contribution plan,” the promise is that “certain contributions will be made 

and credited to an employee’s individual account. Contribution rates are fixed, usually as a percentage of the 
Opinions of the Office of Legal Counsel in Volume 36

14

The FERS basic annuity follows this model. FERS promises participants a specific level 

of benefits by application of a formula that is generally dependent on the employee’s average 

pay and total service, 5 U.S.C. § 8415(a), and that bases the employing agencies’ contributions 

on the “normal-cost percentage” of benefits, id. § 8423(a), which is actuarially computed by 

OPM. Id. § 8401(23); cf. Burk ¶ 2.01, at 2-4 (employer’s contribution in a defined benefit plan 

is actuarially computed). The benefit formula in a defined benefit plan “is geared to providing 

a specific retirement benefit rather than based on the rate of contributions made by the employer 

to the pension fund.” Burk ¶ 2.01, at 2-5. A pension plan covered by the Employee Retirement 

Income Security Act of 1974 (“ERISA”), 29 U.S.C. §§ 1001-1461 (2006 & Supp. III 2009), 

for example, “is liable for benefits without regard to whether the employer has made required 

contributions.” ABA Section of Labor and Employment Law, Employment Benefits Law 279 

(1991). Thus, it was well established by the time Congress enacted FERS, see USPS Mem. at 9, 

that a multiemployer pension plan covered by ERISA, which is analogous in many respects to 

the multi-agency approach of FERS, must award credit based on the service performed for a 

participating employer regardless of whether the employer made the required contributions for 

such service. As the Supreme Court recognized a year before the enactment of FERS:

The consistent view of the Secretary of Labor is that, under ERISA’s minimum 

participation, vesting, and benefit accrual standards for pension plans . . . 

a pension plan covered by ERISA must award credit “solely on the basis of 

service performed for a participating employer, regardless [of] whether that 

employer is required to contribute for such service or has made or defaulted on 

his required contributions.” In the Secretary’s judgment, “[a]ny plan term or 

Trustees’ resolution to the contrary is . . . unlawful and unenforceable.”

Cent. States, Se. & Sw. Areas Pension Fund v. Cent. Transp., Inc., 472 U.S. 559, 567 n.7 (1985) 

(citations omitted).15

 

employee’s earnings. Such plans do not guarantee an employee any fixed level of benefits at retirement. 

An employee’s benefit will vary, depending on the amount of the contributions and the interest and capital 

appreciation accumulated on them.” Burk ¶ 1.02[8], at 1-8 to 1-9; see also Hughes, 525 U.S. at 439; Bruce at 18. 

“Under defined contribution plans, employers know exactly what the pension obligation is and the benefits are fully 

funded at the time of the contribution. Employees bear the risk of variable market performance . . . .” CRS Comm. 

Print at 6-7.

15 Accord Cent. States, Se. & Sw. Areas Pension Fund v. Gerber Truck Serv., Inc., 870 F.2d 1148, 1151 

(7th Cir. 1988) (“Multi-employer plans are defined-contribution in, defined-benefits out. Once they promise a level 

of benefits to employees, they must pay even if the contributions they expected to receive do not materialize . . . .”);

Bruce at 135-36 (“[H]ours of service for use in determining [years of work] are determined solely on the basis of 

hours of work, or hours for which payment is due the employee from the employer, without reference to the 

delinquency or nondelinquency of the employer’s contributions to the [multiemployer] plan.”). As the Supreme 

Court noted, the longstanding position of the Secretary of Labor at the time of the enactment of FERS was that 

ERISA required that credit for hours worked “must be given solely on the basis of service performed for a 

participating employer, regardless whether that employer is required to contribute for such service or has made or 

defaulted on his required contributions. Any plan term or Trustees resolution to the contrary is, in our judgment, 

unlawful and unenforceable.” Dep’t of Labor Advisory Op. No. 76-89 (Aug. 31, 1976); accord Dep’t of Labor 

Advisory Op. No. 78-28A (Dec. 5, 1978); Dep’t of Labor Advisory Op. 78-21A (Oct. 16, 1978); Dep’t of Labor 

Advisory Op. No. 78-20A (Oct. 6, 1978); see also Rules and Regulations for Minimum Standards for Employee 

Pension Benefit Plans, 41 Fed. Reg. 56,462, 56,464 (Dec. 28, 1976) (explaining, with respect to 29 C.F.R. 

§ 2530.200b-2, regarding accrual of hours of service, that employee hours “must be credited to an employee 
Whether Postal Employees Are Entitled to FERS Service Credit When USPS Has Not Made Contributions

15

Given this backdrop, it would be reasonable to expect some indication in the text 

of FERS, or at least in its legislative history, if Congress had intended to depart from these 

principles and make accrual of employee benefits contingent on employer contributions. Instead, 

the legislative history underlines that Congress intended to establish a new retirement plan for 

federal employees that would “provid[e] employees with financial security through a retirement 

program that compares favorably with those found in the private sector.” S. Rep. No. 99-166, at 

38, reprinted in 1986 U.S.C.C.A.N. at 1443.16

Finally, OPM argues that construing FERS to give employees an entitlement to service 

credit without the employer’s contribution “would be inconsistent with the Director’s fiduciary 

responsibilities to the Fund.” OPM Mem. at 7. But, as set forth above, OPM is obligated under 

the statute to award service credit to employees who satisfy the statutory conditions set forth, 

supra pp. 7-9, and to “pay all benefits that are payable under subchapter II, IV, V, or VI of this 

chapter from the Fund.” 5 U.S.C. § 8461(a). As we read the statute, OPM is required to pay 

those benefits without regard to whether the employing agency—here, the Postal Service—has 

made its employer contributions to the Fund. The Director’s fiduciary obligations thus include 

awarding service credit and paying benefits in accordance with the statute, and he would not 

violate those obligations by doing so.

 It is unlikely, in light of this goal, that Congress 

would have incorporated into FERS an arrangement that would have been unlawful in the private 

sector without saying so.

IV.

“If, upon examination of ‘the particular statutory language at issue, as well as the 

language and design of the statute as a whole,’ . . . it is clear that [the agency’s] interpretation is 

incorrect, then we need look no further . . . .” Fort Stewart Sch. v. F.L.R.A., 495 U.S. 641, 645 

(1990) (quoting K Mart Corp. v. Cartier, Inc., 486 U.S. 281, 291 (1988)). In our view, FERS 

has “directly spoken to the precise question at issue,” Chevron, 467 U.S. at 842, and OPM may 

 regardless of whether contributions are required to be made to the plan on account of such hours or whether such 

contributions, even though required, have not in fact been made”). Before the passage of FERS, the IRS had also 

issued a Revenue Ruling explaining that a multiemployer plan that did not credit all years of service because of an 

employer’s failure to make the required contributions failed to meet the requirements of “a qualified pension plan” 

that it provide “definitely determinable benefits” to its employees and violated the minimum participation and 

vesting standards of the Internal Revenue Code. Rev. Ruling 85-130, 1985-2 C.B. 137.

16 See also, e.g., 132 Cong. Rec. 11,912 (1986) (statement of Rep. Myers) (conference report includes 

“many of the concepts that a great many of the better private retirement programs have”); id. at 11,909 (1986) 

(statement of Rep. Ford) (Congress had an opportunity “to create a new pension system with the best features found 

in the private sector”); id. at 11,304 (1986) (statement of Sen. Gore) (“The retirement system which we have 

developed employs a three-tier design that combines Social Security with a defined benefit tier that focuses on 

providing a reliable base pension benefit . . . .”); id. at 11,303 (1986) (statement of Sen. Glenn) (FERS “provides 

Government employees with a three-part program which is comparable to plans widely used in private industry” 

and “one that helps to recruit and maintain an excellent and skilled work force”); id. at 11,301 (1986) (statement 

of Sen. Stevens) (praising the new retirement plan as “a top notch, economical retirement system for the Federal 

workforce which is on part with the best in the private sector,” providing “solid retirement benefits” and “offering 

financial security to Federal retirees”); S. Rep. No. 99-166, at 4 (emphasizing that “the Federal Government must 

have the ability to attract and retain highly qualified individuals in all occupations” and that “[a]n attractive, flexible 

retirement plan can assist the government in meeting these objectives . . . to build a career workforce” and “to assist 

in recruiting midcareer employees”), reprinted in 1986 U.S.C.C.A.N. at 1408-09.
Opinions of the Office of Legal Counsel in Volume 36

16

not address the Postal Service’s failure to make the employer contributions required by FERS 

by denying postal employees coverage or creditable service under FERS. We do not address the 

propriety of any other action OPM might take to address the Postal Service’s failure to make the 

required contributions to the Fund.

/s/

VIRGINIA A. SEITZ

Assistant Attorney General