Comment Number: OL-10506525
Received: 3/11/2005 5:48:36 PM
Subject: Notice of Proposed Rulemaking, Request for Comment
Title: National Security Personnel System
CFR Citation: 5 CFR Chapter XCIX and Part 9901
No Attachments

Comments:

Reference Para 9901.355 Transfer of COLA funds to the incentive pool under NSPS will disproportionately penalize older workers. This will result in an unintended negative incentive for many experienced employees. NSPS implementation plans call for funds currently budgeted for COLA to transfer to the incentive pay pool beginning in 2007. A result is that salaries will become capped without inflation adjustment for employees who are at the top of their new pay band, while the salaries of employees remaining under the GS schedule will continue to be adjusted for inflation. The age of employees who will be pay-capped by the conversion to NSPS will be predominantly above the median age for all government employees. In addition to the relative loss in salary for the NSPS employees is the more significant loss to inflation of retirement credit earned. Under CSRS an employee earns 2% to 2.25% per year of salary for each year of service. Assuming an average inflation rate of 3.5%, under NSPS the pay-capped employee will be losing from 1.25% to 1.5% per year of service past 2006 compounded for each year of retirement. This is a major loss of retention incentive for the experience d employees. For an employee who is eligible for retirement and is highly motivated by pay incentives, the logical decision under NSPS conversion is to retire, collect 56% to 80% of current pay for zero performance, and take another paying position outside of government to get recognized for extra performance in the new position. I propose that negative incentive caused by removing inflation adjustments from pay-capped employees can be mitigated by reserving a portion of the funds previously budgeted for COLA and establishing a separate COLA pool for pay-capped employees. This would serve to retain the most motivated of the senior employees while increasing the credibility of the NSPS conversion effort.