The following is a question submitted by a Federal Times reader about retirement and other issues facing the federal workforce. It is answered by Reg Jones, a charter member of the senior executive service and a Federal Times columnist since 1995.
Question: I am an 1811 supervisor in Los Angeles and subject to the annual pay cap. Over $200 is deducted from my paycheck each pay period as an overage. As my steps increase or if I promote, that deduction will increase but my take home pay will remain the same. What happens to the money taken from my paycheck, where does it go? Will I receive a reimbursement in retirement? Will my total earned pay be used for my high-3 or just the pay cap amount? Are there any recommendations to mitigate the loss?
Reg’s Response: Your annuity will be based on the average of your highest three consecutive years of basic pay, the amount from which retirement deductions are taken. Amounts for which you would have been eligible but for the pay cap will not be included in that computation, nor will you be entitled to any reimbursement.
While pay cap limits increase as base pay increases, nothing short of legislation will eliminate them.
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Reg Jones is the resident expert on retirement and the federal government at Federal Times. From 1979 until 1995, he served as an assistant director of the U.S. Office of Personnel Management handling recruiting and examining, white and blue collar pay, retirement, insurance and other issues. Opinions expressed are his own.