While President Trump issued a notice Aug. 30 to freeze both across-the-board pay increases and locality pay increases for 2019 in his alternative pay plan, the Senate passed a 1.9 percent pay increase in their annual spending measure in June. After negotiation between both legislative chambers this fall, if the House agrees to the Senate’s proposed pay raise, this would override the president’s plan for a pay freeze.
If A Pay Freeze Is Implemented, Would It Affect All Forms of GS Salary Increases?
During the General Schedule pay freeze in 2011, 2012 and 2013, the following types of pay increases were not affected:
- Within-Grade Step Increases
The General Schedule includes 15 different pay grades. Each of the 15 pay grades has 10 step rates (steps 1-10). Movement up to the next step (known as “within-grade step increases”) is based on acceptable job performance and varying periods of longevity as follows:
- 1 year at steps 1-3
- 2 years at steps 4-6
- 3 years at steps 7-9
In terms of salary difference, each within-grade step increase is worth about 3% of the federal employee’s salary.
- Salary increases for employees who receive a promotion
- Salary increases for employees who are on temporary assignments in positions at a higher GS grade
- Salary increases for employees who moved to a position in a higher locality pay area (at the same grade and step)
Whether these increases would remain in the event there is a 2019 pay freeze is uncertain, but most believe that they would remain.
How Would A Federal Pay Freeze Affect Federal Employees Planning for Retirement?
For those federal employees planning for retirement, the above increases would count toward their high-3 average salary included in the calculation of CSRS or FERS retirement annuities. They also are included in the agency matching contributions for FERS employees in the Thrift Savings Plan (TSP).
What About the 2019 Federal Retiree Cost-of-Living Adjustments (COLAs)?
Pay increases (or freezes) for active federal employees have no bearing on retiree (CSRS, FERS and Social Security) COLAs. While annual pay adjustments for employees are determined by actions of the president and Congress, COLAs for federal retirees and annuitants are determined by a formula based on the Consumer Price Index for Workers (CPI-W) released by the Bureau of Labor Statistics. See Guide to Federal Retiree COLAs: What Are They and How Are They Calculated?
As federal retirement expert, Chris Kowalik, explains: “Retirees are going to operate under a completely set of different rules, as far as how their check changes each year…. employee pay raises and retirees’ COLAs don’t coincide with one another. Retirees might get a big increase to their pay in their retirement check, but employees don’t get anything that year, and vice-versa.” See Federal Employee Pay Raises vs. Retiree COLAs.
Federal retirees and annuitants should also review the Federal Retiree COLA Watch updated monthly.
When Are the Final Decisions Announced?
Historically, the final federal pay tables are not released by the Office of Personnel Management until late December. The official figure for the 2019 federal retiree COLA will be announced in mid-October 2018.