Retention Incentives

  1. There are different types of retention incentives: Individual incentives, group incentives, incentives for employees likely to leave the Federal service, and incentives for employees likely to leave for a different Federal position.
  2. Individual retention incentives.An agency may pay a retention incentive to a current employee when an agency determines that the unusually high or unique qualifications of the employee or a special need of the agency for the employee's services makes it essential to retain the employee, and the employee would be likely to leave Federal service in the absence of an incentive.
  3. Group Retention Incentives. An agency may pay a retention incentive to a group or category of employees when the agency determines that the unusually high or unique qualifications of the group or category of employees or a special need of the agency for the employees' services makes it essential to retain the employees in that group or category, and there is a high risk that a significant number of the employees in the group would be likely to leave the Federal service in the absence of a retention incentive.
  4. (Story) Sometimes Federal agencies compete with local governments to recruit and retain police officers. While special rate tables cover certain General Schedule police officer positions, they tend to provide higher special rates at the lower grade levels to help recruit entry-level police officers. An agency found that it was losing its police officers to local government police stations after the agency had invested in sending the police officers to a training academy and training them on the job. The agency instituted a group retention incentive to cover its police officers at higher grade levels and was able to improve its ability to retain its trained and experienced police officers.
  5. Retention Incentives (likely to leave for a different Federal position). An agency may pay an employee (or group of employees) likely to leave for a different Federal position only in one circumstance: when the agency determines there is a special need for the employee’s (or group of employees') services that makes it essential to retain the employee(s) during a period of time before the closure or relocation of the employee’s office and the employee(s) would be likely to leave for a different position in the Federal service.
  6. The categories of employees who are eligible and ineligible are the same for recruitment, relocation, and retention incentives. (PowerTrain--Repeat, refer back to previous lesson, summarize?)
  1. Most employee positions in Government-wide pay systems, such as General Schedule and prevailing rate positions, are eligible. (Click on “Government-wide pay systems” for a list of those systems.) [Pop-up: Categories of positions that are generally eligible for retention incentives include:
  • General Schedule (GS),
  • Senior-level (SL),
  • Senior Executive Service (SES) and the Federal Bureau of Investigation (FBI) and Drug Enforcement Administration (DEA) SES,
  • Executive Schedule (EX),
  • Scientific and professional (ST),
  • Law enforcement officer, and
  • Prevailing rate system (e.g., Federal Wage System).]
  1. OPM has approved certain categories of employees under single-agency pay systems as eligible. (Hyperlink to
  2. Political positions are excluded from receiving the 3Rs. (Click on “political positions” for a list of excluded political positions.)[Pop-up: Categories of positions that are excluded from receiving retention incentives include:
  • Presidential appointees (unless the individual is serving in a career appointment in the SES),
  • Non-career appointees in the Senior Executive Service,
  • Those in positions excepted from the competitive service because of their confidential, policy-determining, policy-making, or policy-advocating character (e.g., Schedule C employees),
  • Agency heads,
  • Those expected to receive an appointment as an agency head; and
  • SES limited term appointees or SES limited emergency appointees when the appointment must be cleared through the White House Office of Presidential Personnel.]
  1. An agency must consider the following factors, as applicable to the case at hand, in determining whether the unusually high or unique qualifications of the employee(s) or a special need of the agency for an employee's (employees’) services makes it essential to retain the employee(s) and that the employee (or a significant number of employees) would be likely to leave the Federal service in the absence of a retention incentive:
  2. Employment trends and labor market factors
  3. The quality and availability of the potential sources of employees that are identified in any agency succession plan
  4. The success of recent efforts to recruit candidates and retain employees with competencies similar to those possessed by the employee(s) for positions similar to the position(s) held by the employee(s)
  5. Special or unique competencies required for the position(s)
  6. Agency efforts to use non-pay authorities
  7. The desirability of the duties, work or organizational environment, or geographic location of the position(s)
  8. The extent to which the employee's (employees’) departure would affect the agency's ability to carry out an activity, perform a function, or complete a project that the agency deems essential to its mission
  9. The salaries typically paid outside the Federal Government; and
  10. Other supporting factors.

A retention incentive may only be paid when an employee’s rating of record is at least “Fully Successful” or equivalent.

  1. For each retention incentive, an agency must document in writing:
  2. The basis for determining that the unusually high or unique qualifications of the employee (or group of employees) or a special need of the agency for the employee's (or group of employees') services makes it essential to retain the employee(s);
  3. The basis for determining that the employee (or a significant number of employees in a group) would be likely to leave the Federal service in the absence of a retention incentive; and
  4. The basis for establishing the amount and timing of the approved retention incentive payment and the length of the required service period
  5. How much money can an agency pay as a retention incentive?
  6. Up to 25 percent of the employee's rate of basic pay, if authorized for an individual employee.
  7. Up to 10 percent of the employee's rate of basic pay, if authorized for a group or category of employees.
  8. An agency may request that OPM waive these limitations and permit the agency to pay an individual employee or group of employees a retention incentive of up to 50 percent of the employee's basic pay based on a critical agency need.
  9. Agencies have the discretion to pay a retention incentive in three ways: in installments after the completion of specified periods of service, in a single lump-sum payment after completion of the full service period, or biweekly with no service agreement.

An agency may not pay a retention incentive as an initial lump-sum payment at the start of a service period or in advance of fulfilling the service period for which the retention incentive is being paid.

  1. When a service agreement is required, it must contain the beginning and ending dates of the service period, the retention incentive percentage rate, whether the payments will be made in installments (including timing of payments) or a final lump sum, conditions under which the agency must terminate the service agreement and the effect of a termination.
  2. An agency must establish a retention incentive plan before paying a retention incentive. (Click “plan” for the elements to be included in the incentive plan.)[Pop-up: The plan must include the designation of officials with authority to review and approve payment of retention incentives, the categories of employees who are prohibited from receiving retention incentives, the required documentation for determining that an employee would be likely to leave the Federal service, any requirements for determining the amount of a retention incentive, the payment methods that may be authorized, requirements governing service agreements (criteria for determining the length of a service period, the conditions for terminating a service agreement, the obligations of the agency if the agency terminates the agreement, and the conditions for terminating retention incentive payments when no service agreement is required), and documentation and recordkeeping requirements.]
  3. Knowledge Check: True or False: An agency can only pay a retention incentive to an employee (or group of employees) likely to leave the Federal service? (False). Correct! An agency may also pay an employee (or group of employees) likely to leave for a different federal position if the agency determines there is a special need for the employee’s (or group of employees') services that makes it essential to retain the employee(s) during a period of time before the closure or relocation of the employee’s office, and the employee(s) would be likely to leave for a different position in the Federal service.

True. (Sorry, that answer is incorrect. An agency may also pay an employee (or group of employees) likely to leave for a different federal position if the agency determines there is a special need for the employee’s (or group of employees') services that makes it essential to retain the employee(s) during a period of time before the closure or relocation of the employee’s office, and the employee(s) would be likely to leave for a different position in the Federal service.)