Report gives 'pay retention' issue a careful look

By Joe Davidson
Washington Post Staff Writer
Tuesday, July 20, 2010

Thousands of unhappy Defense Department employees are scheduled to get pay raises that are just half of what their government colleagues will receive because of a tricky thing called "pay retention."

The Congressional Research Service has studied this issue and come up with some legislative and policy options in a new report.

The workers are moving from the ill-fated and much derided National Security Personnel System to the General Schedule, which covers most federal employees. Many system workers are glad to leave it behind, but some of them are upset because they will end up in a situation in which their pay will not increase at the same rate of other employees.

Those workers are keeping their current salaries but moving to a GS grade level with a lower pay scale. As a result, these employees will get raises that are 50 percent of the normal increase until their GS pay scale catches up with them.

With the Pentagon and other major military installations located in Virginia, it's no surprise that it has more system staffers than any other state. Out of a department-wide total of 226,000 system employees, about 75 percent will move to GS. Of those already there, about 20 percent are subject to pay retention, according to congressional researchers. If that percentage holds, then about 34,000 workers would have limited pay increases once the transition is done.

But some members of Congress and the Federal Managers Association, which represents many Pentagon workers, aren't too happy with this pay retention business. A spokeswoman for Sen. George V. Voinovich (Ohio), the top Republican on the Senate's federal workforce subcommittee, said he "remains concerned about the impact retained pay will have on the Defense Department's ability to retain talented workers."

The research service looked at pay retention and came up with some alternatives. Each is a little messy.

"Congress may decide that allocating half of the annual pay increase to those on a retained pay rate violates the spirit" of the law shutting down the system, which says "employees removed from NSPS should not suffer a loss in pay as a result of the transition," the research service wrote.

In that case, Congress could, as the federal managers would like it to, end pay retention and allow everyone the full annual pay increase.

But the research service said that option "would likely cause the retained pay rates to remain above GS pay rates in perpetuity.

"GS employees who performed similar work at similar performance levels may never receive the same pay as an employee who receives both the retained pay rate and a full annual pay increase."

Another legislative possibility: modify the GS system by adding more grades or steps. This would be okay with the federal managers, but it also could be problematic, as the research service acknowledged.

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