Bill Summary

S. 727 would allow certain Customs and Border Protection Officers (CBPOs) to retire with a more generous civil service retirement benefit.

Estimated Federal Cost

The estimated budgetary effect of S.727 is shown in Table 1. The costs of the legislation fall within budget function 600 (income security).

Basis of Estimate

For this estimate, CBO assumes that S. 727 will be enacted near the beginning of calendar year 2026.

Background

In 2007, the Consolidated Appropriations Act, 2008, authorized an enhanced retirement benefit for CBPOs similar to the one available to federal law enforcement officers and firefighters. That change took effect on July 6, 2008, but its implementation was different for officers who already were working on that date and those whose service began after that date.

CBPOs who enter duty after July 6, 2008, and who complete 20 years of service, qualify for a retirement benefit that uses a higher multiplier in the annuity calculation: 1.7 percent of an employee’s highest three consecutive years of qualifying pay (or high-3) multiplied by the required 20 years of CBPO service. (For any years of federal service beyond 20, 1 percent of the employee’s high-3 is included in the annuity calculation.) In addition, officers generally cannot begin working after age 36 and must retire by age 57. The age limit for starting employment as a CBPO ensures that they can work the 20 years needed to receive an enhanced retirement before they reach the mandatory retirement age. (In contrast, the federal retirement benefit under standard retirement generally is calculated at 1 percent of an employee’s high-3 for all years of service.)

CBPOs who already were serving on the effective date are eligible for a proportional annuity, which provides a larger benefit without the requirement to complete 20 years of covered CBPO service (covered service is that which occurs on or after July 6, 2008). Upon retirement, their annuities will be prorated, with the enhanced multiplier of 1.7 percent applying to years of CBPO service after July 6, 2008, and the standard multiplier of 1 percent applying to years of service before that date.

Some CBPOs received a tentative offer of employment before July 6, 2008, but did not begin duty until after that date. Customs and Border Protection (CBP) originally informed those officers (a group of about 1,400, based on data provided by the agency) that they would be eligible for the proportional annuity. However, in 2021, the Office of Personnel Management (OPM) determined that the proportional annuity provisions would not apply because those officers had not entered duty by the effective date. As a result, those CBPOs either will need to continue working until they have completed a full 20 years of covered service to be eligible for the enhanced benefit, or they will retire with a smaller than expected annuity (the standard annuity calculation will apply to all their years of service).

S. 727 would, for the purposes of retirement, consider all members of the affected group as having been in their positions on the effective date, thus making them eligible for the proportional annuity calculation.

Direct Spending

S. 727 would increase direct spending relative to current law because it would allow the affected officers to receive enhanced retirement benefits for their years of service as CBPOs. In total, CBO estimates that enacting the bill would increase direct spending by $20 million over the 2025-2035 period.

The largest budgetary effect of S. 727 would stem from providing a proportional annuity to about 120 current CBPOs who are likely to retire before working the number of years required to qualify for the enhanced retirement benefit under current law. Those officers began duty at an age older than 36 (there was no maximum age before enhanced retirement coverage was implemented).Because of the mandatory retirement age, CBO expects that those older officers would not or could not work long enough to qualify for enhanced coverage.

Under current law, those officers will receive a standard retirement benefit. If enacted, S. 727 would allow them to retire with the proportional annuity calculation instead. CBO estimates that the proportional calculation would increase their initial annual retirement benefit by roughly 55 percent, or by about $11,000, on average. Federal retirement benefits are adjusted annually for inflation and thus generally increase over time. On that basis, CBO estimates that the larger benefits for those retirees would increase direct spending by $13 million over the 2025-2035 period.

S. 727 also would direct OPM to retroactively revise the annuities of any affected officer who retires before enactment to use the proportional annuity calculation. CBP indicated that, as of August 2025 (the most recent data available), about 60 retired CBPOs would qualify for the revised benefit. CBO estimates that revising pre-enactment retirement annuities would initially increase annual benefits for the group by about $9,000 each, on average. That amount would increase in future years as annual benefits are adjusted for inflation. Qualifying retirees would receive an adjustment to prior retirement benefits for the proportional annuity calculation. Together, the increase in annual benefits and the retroactive adjustment would increase direct spending by $7 million over the 2025-2035 period, CBO estimates.

Most of the remaining CBPOs who would be affected by the bill were younger than 37 when they were hired and generally would not be eligible to retire before they complete the 20 years of covered service required to qualify for the enhanced retirement. Thus, CBO expects that enacting S. 727 would not lead to significant costs for that group of officers.

Spending Subject to Appropriation

H.R. 727 would direct the Secretary of Homeland Security to identify and notify anyone affected by the bill and to provide necessary information to OPM to facilitate the processing of any required annuity corrections for that group. CBO estimates that the cost would be less than $500,000 over the 2025-2030 period; any spending would be subject to the availability of appropriated funds.

Uncertainty

CBO’s estimate of the budgetary effects of enacting S. 727 is subject to uncertainty. Retirement decisions depend on a wide variety of individual factors. The actual budgetary effects may be larger or smaller than estimated, depending on how CBPOs respond to eligibility for a proportional annuity and other considerations such as personal savings, disability status, or alternative employment opportunities.

Pay-As-You-Go Considerations

The Statutory Pay-As-You-Go Act of 2010 establishes budget-reporting and enforcement procedures for legislation affecting direct spending or revenues. The net changes in outlays that are subject to those pay-as-you-go procedures are shown in Table 1.

Increase in Long-Term Net Direct Spending and Deficits

CBO estimates that enacting S. 727 would not increase net direct spending by more than $2.5 billion in any of the four consecutive 10-year periods beginning in 2036.

CBO estimates that enacting S. 727 would not increase on‑budget deficits by more than $5 billion in any of the four consecutive 10-year periods beginning in 2036.

Mandates

The bill contains no intergovernmental or private-sector mandates as defined in the Unfunded Mandates Reform Act.

Estimate Prepared By

Federal Costs: Breanna Browne-Pike and Amber Marcellino

Mandates: Andrew Laughlin

Estimate Reviewed By

Barry Blom
Chief, Projections Unit

Kathleen FitzGerald
Chief, Public and Private Mandates Unit

Christina Hawley Anthony
Deputy Director of Budget Analysis