Key Interest Rate Set

By: fedweek

The interest rate the government uses for various purposes related to federal retirement programs—including the rate of return on “voluntary contribution” accounts available to CSRS employees—will be 4.75 percent in 2008, down from 4.825 percent in 2007. In addition to serving as the rate of return for voluntary contributions accounts, the figure is used as the rate of interest charged to employees who need to make payments to capture credit for service for which either no retirement deductions were made or for which deductions were withdrawn at a break in service (note: the repayment after withdrawal option is not available under FERS). The rate also applies to any needed payments to capture military service credit time in order to avoid the “catch-62” penalty that otherwise can reduce certain annuity payments for those with military service in their computations.