Following is a portion of recent policy guidance from DoD regarding pay retention for employees transitioning out of the NSPS personnel system, some of whom currently are being paid above the maximum rate of the GS grade to which they will be assigned.
C-1. What happens to an employee’s pay if, at the time of transition, his or her NSPS adjusted salary exceeds the statutory and regulatory limits of the GS system?
Answer: Section 1113(c)(1) of the National Defense Authorization Act for Fiscal Year 2010 (NDAA 2010) mandates that no employee will suffer a loss of or decrease in pay upon conversion from NSPS. When the employee’s NSPS adjusted salary exceeds the maximum step (step 10) of his or her GS grade, the employee will be placed on pay retention to comply with Section 1113(c)(1) of NDAA 2010.
C-2. What are the entitlements for employees on GS pay retention?
Answer: Under pay retention, employees continue to receive a retained rate equal to their existing NSPS adjusted salary as of the date of transition when that rate is above step 10 of the grade to which they are assigned. Employees on pay retention will retain this rate until such time as they meet one of the terminating events described in 5 CFR 536.308. During the period of pay retention, the retained rate is subject to adjustment as described in 5 CFR 536.303(b) and 536.305. Specifically, at the time of any general pay increases (e.g., in January), the retained rate is adjusted by 50 percent of the dollar increase in the maximum (step 10) rate of the highest applicable rate range (i.e., a locality range, a special rate range, or base pay range) for the employee’s position. Once the retained rate falls within the rate range (i.e., equals step 10 or less) for his or her grade, pay retention ceases, the employee’s pay is set at step 10, and the employee is eligible to receive 100 percent of each subsequent Government-wide increase to base pay and adjustment to locality pay, as applicable.
C-3. A YC-2 employee transitions to a GS-13 grade. Since the NSPS adjusted salary exceeds the maximum rate of the GS-13, the employee is placed on pay retention. Subsequently, the employee is selected for a GS-13 (Full Performance Level GS-14) position. Does the employee’s pay retention in the new GS-13 position continue? How should pay be set when the employee is promoted to the GS-14 position?
Answer: If the employee’s basic pay in the new GS-13 position exceeds the applicable GS rate range, the employee will remain on pay retention. When an employee under pay retention is promoted, he or she is entitled to the greater of:
(1) basic pay at the lowest rate of the higher grade that exceeds the maximum rate (step 10) of the grade from which promoted by not less than two step increases of that grade, or
(2) his or her existing rate of basic pay.
If the employee’s basic pay exceeds the GS-14 rate range when he/she is promoted, the employee will remain on pay retention.
C-4. An employee transitioned from a YA-2 position to a GS-12 position and is placed on pay retention because his or her NSPS adjusted salary exceeds the maximum rate of the GS-12 rate range. Later, the employee accepts a position at a non-DoD agency at the same grade. Is he or she entitled to remain on pay retention?
Answer: If the employee’s basic rate of pay exceeds the applicable GS rate range for the non-DoD GS-12 position, the employee will remain on pay retention, provided that a terminating event under 5 CFR 536.308(a) does not occur at the time of transfer to the non-DoD agency.
C-5. How long does pay retention last?
Answer: Pay retention under the GS system is indefinite and continues until one of the terminating events under 5 CFR 536.308(a) occurs. Additional information on terminating events can be found at http://www.opm.gov/oca/pay/HTML/pay_retention.asp.
C-6. If an employee moves to another GS position within DoD after he or she transitions from NSPS, will the employee continue on pay retention?
Answer: Yes, unless an employee’s move to another GS position results in a terminating event described in 5 CFR 536.308(a). Additional information on terminating events can be found at http://www.opm.gov/oca/pay/HTML/pay_retention.asp.
C-7. I understand that pay retention rules at 5 CFR part 536 prohibit retaining a rate in excess of the rate payable for Executive Level IV or more than 150 percent above the step 10 of an employee’s assigned grade. Does this mean if an NSPS employee is receiving a rate above those limits upon transition he or she will not be able to retain any excess amount upon transition?
Answer: No. The language in section 1113(c)(1) of the National Defense Authorization Act for Fiscal Year 2010 (NDAA 2010) provides the authority to continue to pay employees at their current rate even though it exceeds the rate normally allowed under the GS statute and regulations.
C-8. Under NSPS, an employee’s pay retention entitlement lasts for two years. Does that same limit apply if the employee’s position is transitioned to the GS system?
Answer: No. After transition to the GS system, employees become subject to the GS pay retention rules (5 U.S.C. 5363 and 5 CFR part 536). Those rules provide for an indefinite period of pay retention subject to the terminating events described in 5 CFR 536.308(a). Additional information on terminating events can be found at http://www.opm.gov/oca/pay/HTML/pay_retention.asp.
C-9. An employee’s NSPS adjusted salary exceeds the maximum rate for the GS grade to which his or her position will transition. Is it true that the employee will be placed on pay retention and will be entitled to only 50 percent of the annual general pay increase (GPI)?
Answer: Generally, yes. Once the employee’s position is transitioned from NSPS, it becomes subject to the rules of the gaining system. Under 5 U.S.C. 5363, as implemented by OPM regulations at 5 CFR 536.305, an employee is limited to an increase equal to 50 percent of the dollar increase in the maximum rate of basic pay (including any locality pay or special rate supplement) of his or her GS grade when the pay schedule applicable to the employee’s position is adjusted. An exception may occur when an employee’s salary is proximate to Level IV of the Executive Schedule (EX-IV) as follows:
* Employees retaining a rate less than EX-IV will receive 50 percent of the GPI; however, this adjustment may not result in an amount exceeding EX-IV.
* Employees retaining a rate equal to EX-IV at the point of transition do not receive 50 percent of the GPI except to maintain EX-IV pay.
* Employees retaining a rate exceeding EX-IV at the point of transition receive 50 percent of the GPI provided the amount does not exceed EX-IV plus 5 percent (the NSPS maximum).
C-10. If, at the time of transition, an employee is on pay retention in his or her NSPS position, will he or she retain eligibility for pay retention when transitioned to a GS position?
Answer: Yes. If the employee’s NSPS adjusted salary exceeds the applicable maximum rate range for the GS grade to which transitioned, the employee will continue to receive pay retention. The 5 U.S.C. 5363 and 5 CFR part 536 pay retention rules will apply to the extent they do not result in a reduction in adjusted NSPS salary upon transition.
C-11. How is an employee who is on a 2-year period of pay retention under NSPS affected when he or she is transitioned to a GS position?
Answer: If the employee’s NSPS adjusted salary exceeds the applicable maximum rate range for the GS grade to which assigned, the employee will be placed on “indefinite” pay retention, subject to the terminating events described in 5 CFR 536.308.