181 
2002 (title II of Public Law 107–372) is amended by in-
serting after section 246 (33 U.S.C. 3046) the following 
new section: 
‘‘SEC. 246A. (a) ESTABLISHMENT AND PURPOSE OF 
NOAA COMMISSIONED OFFICER CORPS RETIREMENT 
FUND.—(1) There is established on the books of the 
Treasury a fund to be known as the National Oceanic and 
Atmospheric Administration Commissioned Officer Corps 
Retirement Fund (hereinafter in this section referred to 
as the ‘Fund’), which shall be administered by the Sec-
retary. The Fund shall be used for the accumulation of 
funds in order to finance on an actuarially sound basis 
liabilities of the Department of Commerce under military 
retirement and survivor benefit programs for the commis-
sioned officers corps. 
‘‘(2) The term ‘military retirement and survivor ben-
efit program’ means— 
‘‘(A) the provisions of this title and title 10, 
United States Code, creating entitlement to, or de-
termining, the amount of retired pay; 
‘‘(B) the programs under the jurisdiction of the 
Department of Defense providing annuities for sur-
vivors and members and former members of the 
Armed Forces, including chapter 73 of title 10, sec-
tion 4 of Public Law 92–425, and section 5 of Pub-
182 
lic Law 96–202, as made applicable to the commis-
sioned officer corps by section 261. 
‘‘(b) ASSETS OF THE FUND.—There shall be depos-
ited into the Fund the following, which shall constitute 
the assets of the Fund: 
‘‘(1) Amounts paid into the Fund under sub-
section (e). 
‘‘(2) Any return on investment of the assets of 
the Fund. 
‘‘(3) Amounts transferred into the Fund pursu-
ant to section 405(c) of the Family Budget Protec-
tion Act of 2005. 
‘‘(c) PAYMENTS FROM THE FUND.—There shall be 
paid from the Fund benefits payable on account of mili-
tary retirement and survivor benefit programs to commis-
sioned officers of the commissioned officer corps and their 
survivors. 
‘‘(d) DETERMINATION OF CONTRIBUTIONS TO THE 
FUND.—(1)(A) Not later than June 30, 2005, the Sec-
retary shall determine the unfunded liability of the Fund 
attributable to service performed as of September 30, 
2005, which is ‘active service’ for the purpose of this title. 
The Secretary shall establish an amortization schedule, in-
cluding a series of annual installments commencing Octo-
183 
ber 1, 2006, which provides for the liquidation of such 
liability by October 1, 2044. 
‘‘(B) 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, 2005, 
through the fiscal year ending September 30, 2039, and 
shall establish a new amortization schedule, including a 
series of annual installments commencing on September 
30 of the subsequent fiscal year, which provides for the 
liquidation of such liability by October 1, 2044. 
‘‘(C) 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 authorization schedule, including se-
ries of annual installments commencing on October 1 of 
the second subsequent fiscal year, which provides for the 
liquidation of such liability over 5 years. 
‘‘(2) 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 Commerce contributions to be made to the Fund during 
that fiscal year under (e). The amount shall be the product 
of— 
‘‘(A) the current estimate of the value of the 
single level percentage of basic pay to be determined
184 
under subsection (e) at the time of the most recent 
actuarial valuation under paragraph (3); and 
‘‘(B) the total amount of basic pay expected to 
be paid during that fiscal year to commissioned offi-
cers of NOAA on active duty. 
‘‘(3) Not less often then every four years (or by the 
fiscal year end before the effective date of any statutory 
change affecting benefits payable on account of retire-
ment, disability, or death to commissioned officers or their 
survivors), the Secretary shall carry out an actuarial valu-
ation of benefits payable on account of military retirement 
and survivor benefit programs to commissioned officers of 
the Administration and to their survivors. Each such actu-
arial valuation shall be signed by an enrolled Actuary and 
shall include a determination (using the aggregate entry- 
age normal cost method) of a single level percentage of 
basic pay for commissioned officers on active duty. 
‘‘(4) 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 assumptions approved by 
the Department of Defense Retirement Board of Actu-
aries.
185 
‘‘(5) The Secretary shall provide for the keeping of 
such records as are necessary for determining the actu-
arial status of the Fund. 
‘‘(e) PAYMENTS
INTO
THE
FUND.—(1) From 
amounts appropriated to the National Oceanic Atmos-
pheric Administration for salaries and expenses, the Sec-
retary shall pay into the Fund at the end of each month 
the amount that is the product of— 
‘‘(A) the level percentage of basic pay deter-
mined using all the methods and assumptions ap-
proved for the most recent (as of the first day of the 
current fiscal year) actuarial valuation under sub-
section (d) (except that any statutory change affect-
ing benefits payable on account of military retire-
ment and survivor benefit programs to commissioned 
officers of the Administration and to their survivors 
that is effective date after the date of that valuation 
and on or before the first day of the current fiscal 
year shall be used in such determination); and 
‘‘(B) the total amount of basic pay accrued for 
that month by commissioned officers on active duty. 
‘‘(2)(A) At the beginning of each fiscal year, the Sec-
retary shall determine the sum of—
186 
‘‘(i) the amount of the payment for that year 
under the amortization of the original unfunded li-
ability of the Fund; 
‘‘(ii) the amount (including any negative 
amount) for that year under the most recent amorti-
zation schedule determined by the Secretary for the 
amortization of any cumulative actuarial gain or loss 
to the Fund, resulting from changes in benefits; and 
‘‘(iii) the amount (including any negative 
amount) for that year under the most recent amorti-
zation schedule determined by the Secretary for the 
amortization or any cumulative actuarial gain or loss 
to the Fund resulting from changes in actuarial as-
sumptions and from experience different from the 
assumed since the last valuation. 
The Secretary shall promptly certify the amount of the 
sum to the Secretary of the Treasury. 
‘‘(B) Upon receiving the certification pursuant to 
paragraph (1), the Secretary of the Treasury shall 
promptly pay into the Fund from the General Fund of 
the Treasury the amount so certified. Such payment shall 
be the contribution to the Fund for that fiscal year. 
‘‘(f) INVESTMENT OF ASSETS OF THE FUND.—The 
Secretary may request the Secretary of the Treasury to 
invest such portion of the Fund as is not, in the judgment
187 
of the Secretary, required to meet the current needs of 
the Fund. Such investments shall be made by the Sec-
retary of the Treasury in public debt securities with matu-
rities suitable to the needs of the Fund, as determined 
by the Secretary, and bearing interest at rates determined 
by the Secretary of the Treasury, taking into consideration 
current market yields on outstanding marketable obliga-
tions of the United States of comparable maturities. The 
income of such investments shall be credited to and form 
a part of the Fund. 
‘‘(g) IMPLEMENTATION YEAR EXCEPTIONS.—(1) To 
avoid funding shortfalls in the first year should formal ac-
tuarial determinations not be available in time for budget 
preparation, the amounts used in the first year in sub-
section (e)(1)(A) shall be set equal to the estimate in sub-
section (d)(2)(A) if final determinations are not available. 
The original unfunded liability as determined in sub-
section (d)(1) shall include an adjustment to correct for 
this difference between the formal actuarial determina-
tions and the estimates in subsection (d)(2)(A).’’. 
(b) SEQUESTRATION RULE.—Section 256(f) of the 
Balanced Budget and Emergency Deficit Control Act of 
1985 (2 U.S.C. 906(f)) is amended by striking ‘‘National 
Oceanic and Atmospheric Administration retirement (13– 
1450–0–1–306);’’ and inserting ‘‘National Oceanic and
188 
Atmospheric Administration Commissioned Officer Corps 
Retirement Fund;’’. 
(c) TRANSFER OF APPROPRIATIONS.—There shall be 
transferred on October 1, 2007, 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, 2007. 
(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, 
2007. 
SEC. 406. COAST GUARD MILITARY RETIREMENT SYSTEM. 
(a) ACCRUAL FUNDING FOR COAST GUARD RETIRE-
MENT.—
189 
(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
190 
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 2005. 
‘‘§ 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.
191 
‘‘(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, 2006, the Secretary shall determine the un-
funded liability of the Fund attributable to service per-
formed as of September 30, 2005, 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, 2006, 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, 2005, through the fis-
192 
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
193 
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