Click here to skip navigationNew User About the Agency | What's New | Quick Index | Operating Status
Link to the United States Office of Personnel Management Home Page
Strategic Management of Human Capital Employment and Benefits Career Opportunities

You are here: Home > asd> htm> 2004

Working for America


Center for Financial Services
Benefits Administration Letter

Number: 04-308
Date: October 22, 2004

Subject: Calendar Year 2005 Interest Rate

 

The Treasury has announced that the calendar year 2005 interest rate applicable to "post-1956" military service credit accounts is 4.375 percent. This is the rate that OPM will also apply to civilian service credit and voluntary contribution accounts.

Employing agencies must assess interest on the unpaid balance in post-1956 military service credit accounts on the employees' "interest accrual date" (IAD). Interest is compounded annually and is assessed at the rate of 3.000 percent through 1984 and thereafter, as follows:

Calendar Year

Interest

Rate (%)

Calendar Year

Interest

Rate (%)

1985

13.000

1996

6.875

1986

11.125

1997

6.875

1987

9.000

1998

6.750

1988

8.375

1999

5.750

1989

9.125

2000

5.875

1990

8.750

2001

6.375

1991

8.625

2002

5.500

1992

8.125

2003

5.000

1993

7.125

2004

3.875

1994

6.250

2005

4.375

1995

7.000

   

The interest rate that is actually applied is a "composite" rate, based on the rates in effect during the 12-month period preceding the IAD. Thus, it has components of both the current and previous year’s interest rates. For instance, the rate that will be applied on October 1, 2005 reflects a composite interest rate of 4.250 % [three months at 3.875% and nine months at 4.375%].

Chapter 23 of the Civil Service Retirement System/Federal Employees Retirement System (CSRS/FERS) Handbook contains guidance for computing interest on military service credit deposits, including the determination of the IAD and the formula for composite interest rates; it is available at http://www.opm.gov/asd/htm/HOD.htm. For your convenience, we have also attached an Excel spreadsheet containing the composite interest rates for each IAD through December 31, 2005.

To reduce the unpaid balance in a military service credit account prior to the assessment of interest, a remittance must be timely received. To be considered timely, remittances must be physically in the possession of the agency official authorized to receive them by the close of business on the last regular business day before the IAD. Thus, for deposits sent by mail, the date on the postmark does not constitute the date of remittance.

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, Manager
Financial Policy Group
Center for Financial Services


Attachment