OPM Performance Rating Rules 2026: How Forced Distribution Affects Your Pay

Last Updated: February 25, 2026 Reading Time: 12 min

On February 24, 2026, OPM published a proposed rule that overhauls how federal performance ratings work. The biggest change: agencies could cap how many employees receive top ratings, a practice called forced distribution. Right now 65% of federal employees earn a Level 4 or 5 rating. Under the new system, that drops to 30% or less. That's roughly 740,000 employees losing a top rating.

Here's what that means for your GS pay, step increases, bonuses, and job security.

Key Takeaways

• OPM's proposed rule would allow agencies to cap top performance ratings (Levels 4 and 5) at 30%, matching the SES model already in effect
• Your within-grade step increases are likely safe (they only require Level 3), but Quality Step Increases, bonuses, and RIF retention standing are at high risk
• The rule also eliminates Level 2 ratings, removes grievance rights for unfair ratings, and removes mandatory higher-level review of "Unacceptable" ratings
• The comment period closes March 26, 2026, and OPM intends to apply forced distribution to the current FY2026 rating cycle
• Political appointees under Schedules C and G are exempt from forced distribution

What OPM Is Proposing: Six Major Changes

The proposed rule (RIN 3206-AP06) overhauls 5 CFR Part 430, the regulations governing performance management for GS and prevailing rate employees. OPM hasn't touched these rules since the 1990s.

1. Forced Distribution of Top Ratings

Current rules expressly prohibit agencies from predetermining what percentage of employees receive each rating level. The proposed rule removes that prohibition entirely.

Agencies would be allowed to set quotas capping Levels 4 and 5. The template is the SES system, where only 30% of executives can receive the top two rating levels.

OPM has stated there would be "no requirement for rating a certain percentage of employees below Level 3." In other words, forced distribution caps the top, not the bottom.

2. Elimination of Level 2 ("Minimally Successful")

The current five-level rating system would shrink to four:

Current System (5 levels)	Proposed System (4 levels)
Level 5: Outstanding	Level 5: Outstanding
Level 4: Exceeds Fully Successful	Level 4: Exceeds Fully Successful
Level 3: Fully Successful	Level 3: Fully Successful
Level 2: Minimally Successful	Eliminated
Level 1: Unacceptable	Level 1: Unacceptable

OPM's justification: Level 2 was used for only 0.3% of employees. But this elimination has a counterintuitive consequence we'll cover below.

3. Removal of Grievance Rights

Currently, union-represented employees can challenge performance ratings through negotiated grievance and arbitration. The proposed rule eliminates this right entirely. Only "informal reconsideration" within agencies would remain.

OPM calls grievances "unnecessarily burdensome and expensive." AFGE calls the removal illegal.

4. Removal of Higher-Level Review for Level 1 Ratings

Currently, a higher-level official must review and approve any "Unacceptable" rating before it becomes final. The proposed rule removes this safeguard, allowing supervisors to issue Level 1 ratings without oversight.

5. Biennial OPM Certification

Agencies must get OPM approval of their appraisal systems every two years. If they don't comply, OPM can recommend OMB limit performance award spending.

6. Mandatory Supervisory Critical Element

All supervisors must be evaluated on how they manage performance, including "timely and efficiently addressing poor and mediocre performance." Supervisors who don't enforce stricter ratings may see their own evaluations suffer.

How This Affects Your GS Pay and Career

Not every change hits equally. Here's where the real risk is.

Within-Grade Step Increases: Low Direct Risk

Good news first. Within-grade increases require only a "Fully Successful" (Level 3) rating. Since OPM says forced distribution won't require agencies to rate people below Level 3, most employees' step increases are not directly threatened.

Currently, WGI denials are extremely rare: only 1 in 1,000 employees gets denied. That said, the culture shift toward stricter ratings could nudge that number up, particularly with grievance rights removed.

Use the GS Pay Calculator to see how much your next step increase is worth. For a GS-12 in DC, a single step increase adds roughly $2,568 per year to your salary.

Quality Step Increases: High Risk

This is where forced distribution bites hardest. Quality Step Increases require a Level 5 ("Outstanding") rating. Currently 43% of employees get Level 5. Under a 30% combined cap on Levels 4 and 5, the Level 5 pool could shrink to 10-15%.

That means far fewer employees qualify for a QSI. A GS-13 QSI is worth $3,054 per year, and it compounds over your entire career.

Performance Bonuses: High Risk

OPM explicitly states that "cash bonuses can be more fairly doled out under a forced distribution system." Fewer top ratings means fewer and smaller bonuses.

RIF Retention Standing: Critical Risk

Performance ratings add years of service credit for RIF retention purposes:

Rating Level	Retention Credit Added
Level 5 (Outstanding)	+20 years
Level 4 (Exceeds)	+16 years
Level 3 (Fully Successful)	+12 years

Being downgraded from Level 5 to Level 3 costs you 8 years of retention credit. During active workforce reductions, that could determine whether you keep your job or get RIF'd.

Dollar Impact Summary

Scenario	Grade	Annual Impact
WGI denied (Level 1 instead of Level 3)	GS-12 DC	-$2,568/yr
QSI lost (Level 3 instead of Level 5)	GS-13 DC	-$3,054/yr
Performance bonus lost	GS-14	-$2,000 to -$5,000/yr
RIF'd due to lower retention standing	Any	Total salary loss

The Level 2 Elimination Paradox

Most coverage of this rule focuses on forced distribution. But the Level 2 elimination may matter just as much, and almost nobody is talking about why.

MSPB research shows that agencies with a Level 2 rating were 4 times more likely to deny within-grade increases. Level 2 gave supervisors a middle ground: "You're not meeting expectations, but you're not failing."

Without Level 2, the choice becomes binary. Either you're "Fully Successful" (Level 3, gets WGI) or "Unacceptable" (Level 1, gets a Performance Improvement Plan and potential removal).

This could go two ways:

1. Fewer WGI denials, because supervisors no longer have the "needs improvement" option that triggered denials
2. More Level 1 ratings, because supervisors pressured to differentiate performance have no intermediate option

If forced distribution creates pressure to rate more people below Level 3, but Level 2 no longer exists, the only path is Level 1. That doesn't just threaten a step increase. It triggers removal proceedings.

What Agencies Are Saying

At least seven major departments formally objected to the draft rule:

Department of Defense: "This practice is fundamentally at odds with the Merit Systems Principles" and "decades of management research confirm that forced ranking systems degrade organizational effectiveness."

EEOC: Warned forced distribution risks "turning colleagues into competitors" and discourages "mentoring and collaborative problem-solving."

Treasury, HUD, Energy, Labor, HHS, NASA, and GSA all submitted negative feedback.

Only SSA expressed partial support.

Meanwhile, the National Park Service is already implementing forced distribution: 75-80% at Level 3, maximum 5% at Level 5. This is happening now, not after the rule is finalized.

The Research OPM Is Citing (And What It Actually Says)

OPM references a 2010 Management Science study to support forced distribution. What the study actually found: forced distribution leads to a short-term performance increase followed by a sharp drop in performance.

Major private-sector companies that tried forced ranking, including Microsoft, Yahoo, and GE, have abandoned the practice after finding it destroyed collaboration and innovation.

Timeline: What Happens Next

Date	Event
February 24, 2026	Proposed rule published in Federal Register
March 26, 2026	Comment period closes
Spring 2026 (est.)	Final rule published
September 30, 2026	End of FY2026 rating cycle

OPM Director Scott Kupor has stated forced distribution will be implemented for the current FY2026 rating cycle. That means this could affect your next annual review.

What You Should Do Now

1. Submit a Public Comment by March 26

Go to regulations.gov and search for RIN 3206-AP06. You have until March 26, 2026 to submit comments on the proposed rule.

2. Document Everything

Keep records of your performance throughout the rating period: supervisor feedback, project completions, measurable results, and emails acknowledging your contributions. With grievance rights potentially going away, documentation is your best protection.

3. Understand Your Current GS Pay Progression

Know exactly what your next step increase is worth and when it's due. Use the GS Pay Calculator to see your full step timeline, from Step 1 through Step 10. If your within-grade increase is denied, you'll want to know the dollar amount at stake.

4. Check Your RIF Retention Standing

If your agency is undergoing workforce reductions, your performance rating directly affects your retention standing. Being downgraded from Level 5 to Level 3 costs you 8 years of credit. Review the RIF Survival Guide for details.

5. Talk to Your Union Representative

If you're in a bargaining unit, contact your union representative about the proposed removal of grievance rights. AFGE and other unions are preparing legal challenges.

Calculate Your GS Pay Impact

Use our free GS Pay Calculator to see your exact salary at every step, including locality pay. Understand what a denied step increase or lost QSI would cost you over your career. Check your pay now →

Frequently Asked Questions

Will OPM's new performance rating rules affect my within-grade increase?

Not directly for most employees. Within-grade increases require only a "Fully Successful" (Level 3) rating, and OPM has stated there is no forced requirement to rate employees below Level 3. However, the removal of grievance rights and the broader culture shift toward stricter ratings could make WGI denials slightly more common. Currently only 1 in 1,000 employees are denied a WGI.

How many federal employees could lose their top performance rating?

Currently about 65% of non-SES federal employees receive Level 4 or 5 ratings. If the SES model (30% cap) is applied, approximately 740,000 employees could see their rating downgraded. That's roughly 1 in 3 employees who currently receive a top rating.

When does the new performance rating rule take effect?

The comment period closes March 26, 2026. OPM Director Scott Kupor has stated forced distribution will apply to the FY2026 rating cycle, which ends September 30, 2026. Some agencies like the National Park Service are already implementing forced distribution.

Are political appointees subject to forced distribution?

No. Political appointees under Schedules C and G are explicitly exempted from the forced distribution requirements.

How does my performance rating affect my RIF retention standing?

Performance ratings add years of service credit for RIF retention: Level 5 adds 20 years, Level 4 adds 16, Level 3 adds 12. Being downgraded from Level 5 to Level 3 costs 8 years of retention credit. During active workforce reductions, this could be the difference between keeping your job and being separated.

Related Resources

• GS Pay Calculator: See your exact salary and step increase amounts
• GS Step Increases Timeline 2026: How the 18-year WGI timeline works
• GS Pay Guide 2026: Complete guide to the GS pay system
• RIF Survival Guide 2026: Retention standing, bump-and-retreat rights
• VERA/VSIP Guide 2026: Early retirement options if you're considering leaving
• Severance Pay Calculator: Estimate separation pay if RIF'd

Sources: Federal Register Doc 2026-03619, GovExec, FedWeek, AFGE, MSPB, OPM.gov