Last Updated: October 25, 2026 Reading Time: 7 min

If your October 2026 LES shows a smaller agency FERS contribution with no change in your hours or pay, you're not imagining it. OPM lowered the FERS normal cost starting with the first pay period on or after October 1, 2026, and agency FERS contribution rates fell with it.

Your own FERS deduction didn't change. Neither did your pension formula or your TSP match. Below are the new rates, what they mean in dollars and OPM's stated reason.

What Changed on Your LES

OPM published new "normal cost percentages" for FERS in the Federal Register on June 23, 2026 (FR Doc. 2026-12583). They took effect "at the beginning of the first pay period commencing on or after October 1, 2026." OPM then told agency payroll offices the new agency contribution rates in BAL 26-307, "Changes to Agency Contributions for the Federal Employees Retirement System."

The first paycheck under the new rates depends on your agency's pay calendar; on a standard biweekly calendar it landed around October 22 to 23, which is when the change started showing up on LESs.

The new agency rates, from OPM's letter

Category FERS FERS-RAE FERS-FRAE
Regular 18.4% → 17.9% 16.5% → 15.9% 16.5% → 15.9%
Regular, Postal Service 16.1% → 15.7% 14.2% → 13.8% 13.2% → 12.7%
Law enforcement, firefighter, Supreme Court Police 38.2% → 37.6% 36.4% → 35.7% 36.4% → 35.7%
Air traffic controller 39.1% → 38.6% 37.3% → 36.6% 37.3% → 36.6%
Military reserve technician 20.6% → 20.2% 18.7% → 18.3% 18.7% → 18.3%
Customs and Border Protection officer 38.2% → 37.6% 36.4% → 35.7% 36.4% → 35.7%

Rates are a percentage of basic pay, old (October 2023) to new (October 2026). BAL 26-307 also lists lower rates for Members of Congress, congressional employees, Capitol Police and CIA employees serving overseas.

Notice that FERS-RAE and FERS-FRAE share the same agency rate in most categories, even though FRAE employees pay more out of their own checks. The agency rate isn't simply "the normal cost minus your share" for every group, so use OPM's letter rather than doing the subtraction yourself.

How Much Less Your Agency Pays

Here's an illustration for a regular FERS employee with $90,000 in basic pay, using OPM's rates. It's a round number for the math, not a pay table figure.

Old rate (18.4%) New rate (17.9%) Difference
Agency FERS contribution per year $16,560.00 $16,110.00 −$450.00
Per biweekly pay period (26, rounded) $636.92 $619.62 −$17.31

For a FERS-RAE or FERS-FRAE employee at the same pay, 16.5% to 15.9% works out to $14,850.00 a year falling to $14,310.00, or $540.00 less.

That money never reached your paycheck in the first place. It's what your agency pays into the retirement fund on your behalf, and some payroll systems show it on the LES as an information-only line.

Why OPM Lowered It

The normal cost is OPM's actuarial estimate of what the pension benefits you earn each year will cost, expressed as a level percentage of pay. OPM published new percentages after its Board of Actuaries revised its assumptions.

According to the notice, the Board of Actuaries, at its June 16, 2025 meeting, recommended revised demographic assumptions, the ones covering things like mortality, retirement patterns and how long people stay. The long-term economic assumptions, including the 4.0% investment return, stayed "unchanged from what was determined" at the April 2, 2020 meeting.

The notice doesn't point to interest rates, and OPM published the change in the Federal Register about three months before it took effect.

For regular FERS, the normal cost fell from 19.2% to 18.7%. For FERS-RAE it fell from 19.6% to 19.0%, and for FERS-FRAE from 19.9% to 19.2%.

What Didn't Change for You

Your FERS deduction. Employee rates are written into the statute, 5 U.S.C. § 8422(a): an "applicable percentage" minus the Social Security tax rate. For regular employees that works out to:

  • 0.8% under original FERS
  • 3.1% under FERS-RAE
  • 4.4% under FERS-FRAE

Which category you're in depends on when you were first covered and on any earlier federal service, not just your hire year. Your SF-50 retirement coverage code tells you.

OPM's actuaries can't change those numbers; only Congress can.

Your pension. For most FERS employees, the annuity is "1 percent of that individual's average pay" multiplied by total service, or 1.1% if you retire at 62 or older with at least 20 years (5 U.S.C. § 8415). The agency contribution rate isn't part of the formula, so a lower rate doesn't shrink what you earn.

Your TSP agency contributions. The automatic 1% and the matching contributions come from 5 U.S.C. § 8432(c). They come from a different statute than the FERS pension contribution, and the normal cost notice didn't touch them.

Can Anyone Appeal?

Not employees. The notice gives agencies until December 23, 2026 to appeal the normal cost percentages to the Board of Actuaries. The notice states no employee appeal route, and there's nothing to refund because nothing was taken from you.

Check Your Pension Is on Track

The agency rate doesn't affect your annuity, but your high-3 and service do. Our free FERS Retirement Calculator takes your high-3, years of service and retirement age and shows your estimated annuity, including the 1.1% multiplier if you qualify.

Frequently Asked Questions

Why did my agency's FERS contribution go down on my LES?

OPM lowered the FERS normal cost percentages in a Federal Register notice published June 23, 2026, effective the first pay period beginning on or after October 1, 2026. Agency contribution rates are tied to the normal cost, so they dropped too. For regular FERS employees the agency rate went from 18.4% to 17.9% of basic pay.

Did my own FERS deduction change?

No. Employee FERS rates are set by 5 U.S.C. § 8422, not by OPM's actuaries. Regular employees still pay 0.8% under original FERS, 3.1% under FERS-RAE and 4.4% under FERS-FRAE. Prior service can keep you in an earlier category, so check your retirement coverage code.

Does the lower agency contribution reduce my FERS pension?

No. For most FERS employees, the annuity is 1% of your high-3 average pay times your years of service, or 1.1% if you retire at 62 or older with at least 20 years. The agency contribution rate isn't part of that formula.

Did my TSP match change?

No. The agency automatic 1% and matching contributions to the TSP come from 5 U.S.C. § 8432(c), a different provision, and the normal cost notice didn't change them.

Why did OPM lower the FERS normal cost?

OPM's notice says its Board of Actuaries recommended revised demographic assumptions at a June 16, 2025 meeting. The long-term economic assumptions, including the 4.0% investment return, were unchanged from April 2020.

Is the drop 2.8 percentage points?

No. For regular FERS the agency rate fell 0.5 percentage points, from 18.4% to 17.9%. On the same pay, that's about 2.7% fewer agency dollars on that line, which is close to the "about 2.8%" one commenter reported.

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