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How the End of NSPS Affects Federal Retirees
May 25, 2010
The 2010 National Defense Authorization Act called for the termination of
National Security Personnel System (NSPS) by January 2012, bringing an end to a
controversial personnel system that's been operational for less than four years.
This spring, Department of Defense (Dod) officials stated they are on track
to transition the majority of its more than 220,000 civilian employees out of
NSPS by Sept. 30.
My Federal Retirement has received many questions recently on
how the elimination of NSPS affects the retirement calcuations for those
soon-to-retire while under NSPS and for those who have already retired
under NSPS.
"Any employee who retired under the NSPS system will not have his or her
retirement annuity (CSRS or FERS) recomputed as a result of the current
elimination of NSPS at most Defense Department civilian agencies," says federal
benefits expert, Ed Zurndorfer.
But for current employees who will transition out of NSPS
back to the General Schedule, there are some unanswered questions
about how it will affect their future salaries. In terms of how it affects
their retirement, the "high three average
salary" is an important component of a federal employee's retirement annuity
calculation.
GovExec.com reported last week: "NSPS and the General Schedule
were not created equal, and many NSPS employees are making more money now than
they did at the grade and step level they occupied under the GS system. So those
employees who convert won't see a decrease in pay, but they could lose out on
full annual pay raises, at least until the GS system catches up with them."
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