Last week, the Senate Committee on Homeland Security and Government Affairs approved the Non-Foreign Area Retirement Equity Assurance Act (Non-Foreign AREA Act), S.507, a bill that will extend locality pay to federal employees located outside of the 48 contiguous states.
Under current law, federal employees working in Alaska, Hawaii, and the U.S. Territories receive a yearly COLA payment in lieu of the locality pay received by their mainland counterparts. Whereas locality pay is factored in when calculating one’s retirement annuity, COLA payments are left out of the equation.
The result of this discrepancy is a significantly lower ‘high 3,’ and thus, retirement annuity, for employees working in Alaska, Hawaii, or a U.S. territory, than that enjoyed by employees in identical positions working within the contiguous 48 states.
A companion bill in the House, HR.1266, is currently under review by the House Committee on Oversight and Government Reform.