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What is a Local Market Supplement (LMS)?

April 26, 2017LMS local market supplement

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What is a Local Market Supplement (LMS)?

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• An LMS replaces locality pay and special salary rates under the GS system. • Employees must have a rating of record of Level 2 (Fair) or higher. • At least once a year, DoD reviews each LMS and makes appropriate adjustments. • Factors reviewed in making LMS determinations: Mission requirements Labor-market conditions Availability of funds Allowances and differentials, such as those paid to employees overseas and in Alaska and Hawaii Similar pay adjustments received by employees of other federal agencies Other relevant factors. • LMS is considered basic pay for retirement deductions, contributions, and benefits; life insurance premiums and benefits; premium pay; severance pay; and other payments and adjustments authorized by DoD. • LMS is not included in performance-based payout calculations; only base salary is used for performance-based payout calculations. • For more information on LMS, see the LMS Fact Sheet (Click here).