PUBLIC LAW 104-201—SEPT. 23, 1996
110 STAT. 2743
(2)(A) This paragraph applies to a converted employee who Applicability.
was a prevailing rate employee (as defined under section 5342(2)
of title 5, United States Code) immediately before the employee's
covered separation from Federal service.
(B) For purposes of computing the deferred annuity for a converted employee referred to in subparagraph (A), the average pay
of the converted employee, computed under section 8331(4) of title
5, United States Code, as of the date of the employee's covered
separation from Federal service, shall be adjusted at the same
time and by the same percentage that pay rates for positions
that are in the same area as, and are comparable to, the last
position the converted employee held as a prevailing rate employee,
are increased under section 5343(a) of such title during the period
beginning on that date and ending on the date on which the
converted employee attains early deferred retirement age.
(e) PAYMENT OF UNFUNDED LIABILITY. —(1) The military department concerned shall be liable for that portion of any estimated
increase in the unfunded liability of the Civil Service Retirement
and Disability Fund established under section 8348 of title 5, United
States Code, which is attributable to any benefits payable from
such Fund to a converted employee, and any survivor of a converted
employee, when the increase results from—
(A) an increase in the average pay of the converted
employee under subsection (d) upon which such benefits are
computed; and
(B) the commencement of an early deferred annuity in
accordance with this section before the attainment of 62 years
of age by the converted employee.
(2) The estimated increase in the unfunded liability for each
department referred to in paragraph (1) shall be determined by
the Director of the Office of Personnel Management. In making
the determination, the Director shall consider any savings to the
Fund as a result of a pilot program established under this section.
The Secretary of the military department concerned shall pay the
amount so determined to the Director in 10 equal annual installments with interest computed at the rate used in the most recent
valuation of the Civil Service Retirement System, with the first
payment thereof due at the end of the fiscal year in which an
increase in average pay under subsection (d) becomes effective.
(f) CONTRACTOR SERVICE NOT CREDITABLE. — Service performed
by a converted employee for a defense contractor after the employ-
ee's covered separation from Federal service is not creditable service
for purposes of subchapter III of chapter 83 of title 5, United
States Code.
(g) RECEIPT OF BENEFITS WHILE EMPLOYED BY A DEFENSE
CONTRACTOR.— A converted employee may commence receipt of an
early deferred annuity in accordance with this section while continuing to work for a defense contractor.
(h) LUMP-SUM CREDIT PAYMENT.—I f a converted employee dies
before attaining early deferred retirement age, such employee shall
be treated as a former employee who dies not retired for purposes
of payment of the lump-sum credit under section 8342(d) of title
5, United States Code.
(i) CONTINUED FEDERAL HEALTH BENEFITS COVERAGE.— Notwithstanding section 8905a(e)(l)(A) of title 5, United States Code,
the continued coverage of a converted employee for health benefits
under chapter 89 of such title by reason of the application of
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