Predicting Agency Contributions for the Federal Employment Retirement System (FERS) Fund
Abstract
The Federal Employment Retirement System is a pension fund for federal employees and is managed by the United States Office of Personnel and Management (OPM). Each year OPM publishes an annual Civil Service Retirement and Disabilities Fund (CSRDF) report that provides information on the health of the fund. The report contains historical cash flows from income provided by contributions to the fund from employees, agencies, and the U.S. Treasury. Additionally, the report shows actuarial valuations of the total liabilities owed to all current employees and annuitants. The actuaries at OPM use their estimates to provide projections needed to maintain the fund. Currently, OPM is forecasting that agency contributions have reached the end of their historic growth, and will contribute a smaller percentage of total payroll in the future. This research shows the economic assumptions OPM is utilizing for their estimates may be infeasible, and fail to account for the low investment returns that the fund is currently receiving through their special bonds. Additionally, the research evaluates how accurately OPM has projected cash flows over the last 15 annual CSRDF reports. Finally, we provide a model that takes into account OPMs prediction error to provide a more accurate prediction of future agency contributions.
Document Details
- Document Type
- Technical Report
- Publication Date
- Mar 23, 2018
- Accession Number
- AD1056522
Entities
People
- Raymond L Mims
Organizations
- Air Force Institute of Technology