"LOCALITY PAY BILL PROPOSED FOR RETIREES IN ALASKA, HAWAII, AND THE TERRITORIES"
Prior to
locality pay, annual pay raises applied across the board to every federal
worker in the 50 states, in the
Locality Pay only for Contiguous
48 States (1994 – 2009)
But from 1994, the
annual pay raises were no longer across-the-board. Every year, thereafter, about 1% of the
annual pay raise was withheld and re-distributed as locality pay only among the
48 states leaving out all federal employees in
During
this same period, federal employees in the COLA areas brought this concern
before OPM through the Federal Register notices on the COLA survey results and
through the collaborative studies under the COLA program but were told time and
again that the remedy can only come about through legislation.
Lawsuit
sought remedy to locality pay inequity
In
2005, federal employees in
OPM’s
failure to make recommendation to Congress in 1991
As
early as 1991,
before locality pay was implemented, OPM recognized the inherent retirement
inequity problem when excluding
Partial
fix: Non-Foreign Area Retirement Equity Assurance Act of 2009
Since NARFE’s
2006 convention, when NARFE passed Resolutions 06-72 and 06-73, NARFE has
worked to fix the retirement inequity for federal employees in
The importance
of passing the Non-Foreign Area Retirement Equity Assurance Act is that the
great majority of affected employees, that is, the current employees numbering
over 40,000 in the COLA areas are now covered by locality pay for retirement
purposes.
It has
taken 20 years to fix the retirement inequity for current employees.
Additional
Notes:
1. The federal
employees living in the highest cost of living areas were never given the
choice or opportunity to participate in the locality pay program.
2. In 1998, the Defense Department looked at three
possible ways to provide locality pay to its employees working outside the
continental
The Defense Department took no action
in 2001.
3. In or around 2002, the State Department
implemented their own temporary retirement fix for their Foreign Service employees
working overseas by providing a “virtuality locality pay” which provided for increased
retirement benefits based on DC locality pay rates. Employees were required to pay a slightly higher
retirement contribution for this increased retirement benefit.
4. The Central
Intelligence Agency also provided their own retirement fix for their employees
working overseas by converting an allowance amount to a DC locality pay-
equivalent amount.
5. In the Foreign Relations Authorization Act
for FY 2002 and 2003, the State Department implemented a permanent fix by providing
a pay supplement equivalent to DC locality pay to its employees working
overseas to count towards retirement.
6. Around 2005, the Department of Defense began
paying a DC locality pay equivalent- supplement to its employees working for
its intelligence agencies in
NARFE
proposes comprehensive remedy
The retirees
in the COLA areas, through NARFE, now seek a comprehensive legislative remedy
for those who retired during the period 1994 through 2009 without consideration
of locality pay. We ask that locality
pay amounts be established and included in our high-3 years’ pay and that
retirement benefits be recalculated / increased accordingly.
Attachment
A - Draft Legislation. The
main points of this proposed legislation are:
1. Retirees who worked in a COLA area during the
period 1994 through 2009 be allowed to add in locality pay amounts towards
their high-3 years’ pay for recalculating their retirement benefits.
2. Retirees will pay in their retirement
contributions due on the high three year earning period locality pay: 7% for
CSRS, 7.5% for LEO, and 1% for FERS retirees, plus interest[jh4] .
3.
Retirees will forgo retroactive increases to their retirement benefits, that
is, retirees will not seek back pay.
4. This
is a voluntary program. The retiree must
elect this option of re-calculating their retirement benefits.
Number of Affected Retirees.
This
proposal for retirees affects a small group of general schedule employees who
worked in a COLA area and received their high-3 years in the COLA area.
NARFE
members working on this issue were unable to get a good estimate of the number
of affected retirees from OPM’s published statistical sources as some data are
not published each year. Our rough estimate
of affected retirees is about 5,000 for
From
OPM’s Central Personnel Data File and agencies’ own data files, yearly new
retirees in a COLA area can be easily identified. The number of retirees is expected to be
small for agencies that do not report to OPM.
Locality Pay Rates.
In
1996, at the request of our
NARFE recommends
the locality pay rates found in Attachment C.
These rates attempt to transition into the locality pay rates determined
by OPM for 2011. Because the locality
pay rates for
CONTACT
PERSONS:
For
John Priolo (808)
455-7331
Joyce Matsuo (808)
841-0232
For NARFE
Ed Doherty (907)
696 3991
Paul McIntosh (907) 344-0034