Date of Award

3-23-2018

Document Type

Thesis

Degree Name

Master of Science in Cost Analysis

Department

Department of Systems Engineering and Management

First Advisor

Brandon M. Lucas, PhD.

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 OPM’s prediction error to provide a more accurate prediction of future agency contributions.

AFIT Designator

AFIT-ENV-MS-18-M-226

DTIC Accession Number

AD1056522

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Economics Commons

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