October 15, 1999

On October 5, 1999, the President signed the National Defense Authorization Act for Fiscal Year 2000 (P.L.106-65). Section 651 of this law (text below) repeals section 5532 of title 5, United States Code. This action ends the reductions in retired or retainer pay previously required of retired members of a uniformed service who are employed in a civilian office or position of the U.S. Government. This repeal is effective retroactively to October 1, 1999. In response, the U.S. Office of Personnel Management (OPM) will revise title 5, of the Code of Federal Regulations (5 CFR part 553 and subpart F of part 550), update the Vet Guide (www.opm.gov/veterans) and other information on OPMs web site as soon as possible.

The repeal ends two former reductions in military retired pay that applied to some Federal employees:

  1. the pay cap that limited the combined total of Federal civilian basic salary plus military retired pay to $110,700 (Executive Level V) for all Federal employees who are retirees of a uniformed service; and

  2. the partial reduction in retired pay required of retired officers of a regular component of a uniformed service.

As a consequence of the repeal, prior exceptions and waivers to these reductions approved by OPM, or by agencies under delegated authority, are no longer needed effective October 1, 1999.

Under the new law the military departments will reimburse the Department of Defense Military Retirement Fund each fiscal year for the cost to the Fund resulting from the repeal. Until further notice, agencies will continue to follow documentation instructions in the Guide to Processing Personnel Actions including the requirement to send a copy of Official Personnel Actions (SF-50's) for retired members of a uniformed service to the appropriate uniformed service finance center. We will work to eliminate or simplify this requirement.

It is significant to note that the new law does NOT repeal other parts of the Dual Compensation Act of 1964 that will remain in title 5, United States Code (U.S.C.). The 1964 Act removed the absolute barriers to employment of retired military officers and adopted a "fresh start" policy for military retirees. This policy established limits on service credit and veterans preference to ensure that military retirees did not receive unfair advantages in pay and tenure over civilian employees, including other veterans. As a result, the military service of retired members of a uniformed service continues to not count as creditable service for retention (RIF), annual leave accrual, and retirement purposes [see 5 U.S.C. 3501(a), 3502(a), 6303(a) and 8411(c)]. In addition, this repeal has no effect on the reduction in salary required of reemployed civilian annuitants under the Civil Service Retirement System (CSRS) and Federal Employee Retirement Systems (FERS). Agencies may continue to request waivers of these reductions when appropriate under criteria in 5 CFR 553 and 5 U.S.C. 8344 or 8468.

The uniformed services finance centers are responsible for making all adjustments in military retired or retainer pay for current Federal employees. We request that employee questions regarding restoration of retired pay be directed to the appropriate uniformed service finance center. These finance centers are identified in Chapter 8, of the Guide to Processing Personnel Actions, page 8-19, issued February 26, 1999 (copy attached).

Questions from agency headquarters personnel staff regarding the above may be directed to Larry Lorenz at ltlorenz@opm.gov or (202) 606-1143.


The text of section 651 of the National Defense Authorization Act for Fiscal Year 2000 follows.



(a) REPEAL(1) Section 5532 of title 5, United States Code, is repealed.

(2) The table of sections at the beginning of chapter 55 of such title is amended by striking the item relating to section 5532.

(b) CONTRIBUTIONS TO DEPARTMENT OF DEFENSE MILITARY RETIREMENT FUNDSection 1466 of title 10, United States Code, is amended by adding at the end the following new subsection:

(c)(1) The Secretary of Defense shall pay into the Fund at the beginning of each fiscal year such amount as may be necessary to pay the cost to the Fund for that fiscal year resulting from the repeal, as of October 1, 1999, of section 5532 of title 5, including any actuarial loss to the Fund resulting from increased benefits paid from the Fund that are not fully covered by the payments made to the Fund for that fiscal year under subsections (a) and (b).

(2) Amounts paid into the Fund under this subsection shall be paid from funds available for the pay of members of the armed forces under the jurisdiction of the Secretary of a military department.

(3) The Department of Defense Retirement Board of Actuaries shall determine, for each armed force, the amount required under paragraph (1) to be deposited in the Fund each fiscal year.

(c) EFFECTIVE DATE The amendments made by this section shall take effect on October 1, 1999.


Chapter 8. Processing Actions for Civilian Retirees and for Members and Former Members of the Uniformed Services 8-19

Table 8-E. Uniformed Service Finance Centers
If Branch of Service is Then the Finance Center Address is
1 Army, Air Force, Navy, or Marine Corps Defense Finance and Accounting Office
FCE Department
Cleveland Center (DFAS-CL/RO)
PO Box 99191
Cleveland, OH 44199-1126
2 Coast Guard Commanding Officer (RAS)
U.S. Coast Guard
Human Resource Services and Information Center
444 SE Quincy Street
Topeka, KS 66683-3591
3 National Oceanic and Atmospheric Administration
4 Public Health Service Compensation Branch
U.S. Public Health Service
Parklawn Building
5600 Fishers Lane
Rockville, MD 20857

Page 8-20 is blank.

Processing Personnel Actions Update 30
February 26, 1999

Page updated 19 February 2001