178
serting ‘‘National Oceanic and Atmospheric Administra-
tion Commissioned Officer Corps Retirement Fund;’’. 
(c) TRANSFER OF APPROPRIATIONS.—There shall be 
transferred on October 1, 2006, into the fund established 
under section 246A(a) of the National Oceanic and At-
mospheric Administration Commissioned Officer Corps 
Act of 2002 (title II of Public Law 107–372, as added 
by subsection (a)), any obligated and unobligated balance 
of appropriations made to the Department of Commerce 
that are available as of the date of the enactment of this 
Act for benefits payable on account of military retirement 
and survivor benefit programs to commissioned officers of 
the NOAA Commissioned Officer Corps and to their sur-
vivors, and amounts so transferred shall be part of the 
assets of the Fund, effective October 1, 2006. 
(d) EFFECTIVE DATE.—Subsection (c) (relating to 
payments from the Fund) and (e) (relating to payments 
into the Fund) of section 246A of the National Oceanic 
and Atmospheric Administration Commissioned Officer 
Corps Act of 2002 (title II of Public Law 107–372, as 
added by subsection (a)), shall take effect on October 1, 
2006.
SEC. 406. COAST GUARD MILITARY RETIREMENT SYSTEM. 
(a) ACCRUAL FUNDING FOR COAST GUARD RETIRE-
MENT.—
179
(1) IN
GENERAL.—Chapter 11 of title 14, 
United States Code, is amended by adding at the 
end the following new subchapter: 
‘‘SUBCHAPTER V—COAST GUARD MILITARY 
RETIREMENT FUND
‘‘§ 441. Establishment and purpose of Fund; defini-
tions 
‘‘(a) ESTABLISHMENT OF FUND; PURPOSE.—There 
is established on the books of the Treasury a fund to be 
known as the Coast Guard Military Retirement Fund 
(hereinafter in this subchapter referred to as the ‘Fund’), 
which shall be administered by the Secretary. The Fund 
shall be used for the accumulations of funds in order to 
finance on an actuarially sound basis liabilities of the 
Coast Guard under military retirement and survivor ben-
efit programs. 
‘‘(b) MILITARY RETIREMENT AND SURVIVOR BEN-
EFIT PROGRAMS DEFINED.—In this subchapter, the term 
‘military retirement and survivor benefit programs’ 
means—
‘‘(1) the provisions of this title and title 10 cre-
ating entitlement to, or determining the amount of, 
retired pay; 
‘‘(2) the programs providing annuities for sur-
vivors of members and former members of the
180
armed forces, including chapter 73 of title 10, sec-
tion 4 of Public Law 92–425, and section 5 of Pub-
lic Law 96–402; and 
‘‘(3) the authority provided in section 1048(h) 
of title 10. 
‘‘(c) SECRETARY DEFINED.—In this subchapter, the 
term ‘Secretary’ means the Secretary of Homeland Secu-
rity when the Coast Guard is not operating as a service 
in the Navy and the Secretary of Defense when the Coast 
Guard is operating as a service in the Navy. 
‘‘§ 442. Assets of the Fund 
‘‘There shall be deposited into the Fund the fol-
lowing, which shall constitute the assets of the Fund: 
‘‘(1) Amounts paid into the Fund under section 
445 of this title. 
‘‘(2) Any return on investment of the assets of 
the Fund. 
‘‘(3) Amounts transferred into the Fund pursu-
ant to section 406(d) of the Family Budget Protec-
tion Act of 2004. 
‘‘§ 443. Payments from the Fund 
‘‘(a) IN GENERAL.—There shall be paid from the 
Fund the following: 
‘‘(1) Retired pay payable to persons on the re-
tired list of the Coast Guard.
181
‘‘(2) Retired pay payable under chapter 1223 of 
title 10 to former members of the Coast Guard and 
the former United States Lighthouse Service. 
‘‘(3) Benefits payable under programs that pro-
vide annuities for survivors of members and former 
members of the armed forces, including chapter 73 
of title 10, section 4 of Public Law 92–425, and sec-
tion 5 of Public Law 96–402. 
‘‘(4) Amounts payable under section 1048(h) of 
title 10. 
‘‘(b) AVAILABILITY OF ASSETS OF THE FUND.—The 
assets of the Fund are hereby made available for payments 
under subsection (a). 
‘‘§ 444. Determination of contributions to the Fund 
‘‘(a) INITIAL UNFUNDED LIABILITY.—(1) Not later 
than June 30, 2005, the Secretary shall determine the un-
funded liability of the Fund attributable to service per-
formed as of September 30, 2004, which is ‘active service’ 
for the purposes of section 212. The Secretary shall estab-
lish an amortization schedule, including a series of annual 
installments commencing October 1, 2005, which provides 
for the liquidation of such liability by October 1, 2044. 
‘‘(2) The Secretary shall redetermine the unfunded 
liability of the Fund as of the close of the fiscal year, for 
each beginning after September 30, 2004, through the fis-
182
cal year ending September 30, 2039, and shall establish 
a new amortization schedule, including a series of annual 
installments commencing on October 1 of the second sub-
sequent fiscal year, which provides for the liquidation of 
such liability by October 1, 2044. 
‘‘(3) The Secretary shall redetermine the unfunded 
liability of the Fund as of the close of the fiscal year for 
each fiscal year beginning after September 30, 2039, and 
shall establish a new amortization schedule, including a 
series of annual installments commencing on October 1 
of the second subsequent fiscal year, which provides for 
the liquidation of such liability over five years. 
‘‘(b) ANNUAL CONTRIBUTIONS FOR CURRENT SERV-
ICES.—(1) The Secretary shall determine each fiscal year, 
in sufficient time for inclusion in the budget request for 
the following fiscal year, the total amount of Department 
of Homeland Security, or Department of Defense, con-
tributions to be made to the Fund during that fiscal year 
under section 445(a) of this title. That amount shall be 
the sum of the following: 
‘‘(A) The product of—
‘‘(i) the current estimate of the value of 
the single level percentage of basic pay to be de-
termined under subsection (c)(1)(A) at the time
183
of the most recent actuarial valuation under 
subsection (c); and 
‘‘(ii) the total amount of basic pay ex-
pected to be paid during that fiscal year to 
members of the Coast Guard on active duty 
(other than active duty for training). 
‘‘(B) The product of—
‘‘(i) the current estimate of the value of 
the single level percentage of basic pay and of 
compensation (paid pursuant to section 206 of 
title 37) to be determined under subsection 
(c)(1)(B) at the time of the most recent actu-
arial valuation under subsection (c); and 
‘‘(ii) the total amount of basic pay and 
compensation (paid pursuant to section 206 of 
title 37) expected to be paid during that fiscal 
year to members of the Coast Guard Ready Re-
serve (other than members on full-time Reserve 
duty other than for training) who are not other-
wise described in subparagraph (A)(ii). 
‘‘(2) The amount determined under paragraph (1) for 
any fiscal year is the amount needed to be appropriated 
to the Department of Homeland Security for that fiscal 
year for payments to be made to the Fund during that 
year under section 445(a) of this title. The President shall
184
include not less than the full amount so determined in the 
budget transmitted to Congress for that fiscal year under 
section 1105 of title 31. The President may comment and 
make recommendations concerning any such amount. 
‘‘(c) PERIODIC ACTUARIAL VALUATIONS.—(1) Not 
less often than every four years (or before the effective 
date of any statutory change affecting benefits payable on 
account of retirement, disability, or death to members of 
the Coast Guard or their survivors), the Secretary shall 
carry out an actuarial valuation of the Coast Guard mili-
tary retirement and survivor benefit programs. Each actu-
arial valuation of such programs shall be signed by an en-
rolled actuary and shall include—
‘‘(A) a determination (using the aggregate 
entry-age normal cost method) of a single level per-
centage of basic pay for members of the Coast 
Guard on active duty (other than active duty for 
training); and 
‘‘(B) a determination (using the aggregate 
entry-age normal cost method) of single level per-
centage of basic pay and of compensation (paid pur-
suant to section 206 of title 37) for members of the 
Ready Reserve of the Coast Guard (other than mem-
bers on full-time Reserve duty other than for train-
185
ing) who are not otherwise described in subpara-
graph (A). 
‘‘(2) Such single level percentages shall be used for 
the purposes of subsection (b) and section 445(a) of this 
title. 
‘‘(d) USE
OF GENERALLY ACCEPTED ACTUARIAL 
PRINCIPLES AND PRACTICES.—All determinations under 
this section shall be in accordance with generally accepted 
actuarial principles and practices and, where appropriate, 
shall follow the general pattern of methods and assump-
tions approved by the Department of Defense Retirement 
Board of Actuaries. 
‘‘(e) RECORDS.—The Secretary shall provide for the 
keeping of such records as are necessary for determining 
the actuarial status of the Fund. 
‘‘§ 445. Payments into the Fund 
‘‘(a) MONTHLY ACCRUAL CHARGE FOR CURRENT 
SERVICES.—From amounts appropriated to the Coast 
Guard for salaries and expenses, the Secretary shall pay 
into the Fund at the end of each month as the Department 
of Homeland Security, or Department of Defense, con-
tribution to the Fund for that month the amount that is 
the sum of the following:
‘‘(1) The product of—
186
‘‘(A) the level percentage of basic pay de-
termined using all the methods and assump-
tions approved for the most recent (as of the 
first day of the current fiscal year) actuarial 
valuation under section 444(c)(1)(A) of this 
title (except that any statutory change in the 
military retirement and survivor benefit systems 
that is effective after the date of that valuation 
and on or before the first day of the current fis-
cal year shall be used in such determination); 
and 
‘‘(B) the total amount of basic pay accrued 
for that month by members of the Coast Guard 
on active duty (other than active duty for train-
ing). 
‘‘(2) The product of—
‘‘(A) the level percentage of basic pay and 
compensation (accrued pursuant to section 206 
of title 37) determined using all the methods 
and assumptions approved for the most recent 
(as of the first day of the current fiscal year) 
actuarial valuation under section 444(c)(1)(B) 
of this title (except that any statutory change 
in the military retirement and survivor benefit 
systems that is effective after the date of that