Experts allay employee pay angst
December 4, 2009
- Employee take-home to remain virtually unchanged
- Locality pay to phase-in over three years
- High three concerns addressed
- COLA to be phased out
FORT SHAFTER, Hawaii--Speculation over the conversion from cost-of-living allowances (COLA) to locality pay for federal employees in Hawaii, Alaska and the Territories was quieted a bit as a result of town hall style forums held at Fort Shafter's Richardson Theater Dec. 2-3.
The Fort Shafter meetings were just two of more than a dozen being conducted around the region this month to help federal employees understand the implications of the FY 2010 National Defense Authorization Act (NDAA) of which the Non-Foreign Area Retirement Equity Assurance Act, dealing with locality pay, is an integral part.
Two major takeaways from the discussions revealed that employee take-home pay will be relatively unchanged, and unlike COLA payments, locality pay is part of basic pay for retirement, life insurance and government contributions to employee Thrift Savings Plans.
Following the introduction of forum host Brig. Gen. John Y. H. Ma, Deputy Commander, Army Reserve, by Patsy Uyehara, Honolulu-Pacific Federal Executive Board (FEB) Executive Director, the hour-long sessions provided much-anticipated clarification about the Act's Jan. 1 implementation.
Members of U.S. Senator Daniel Kahikina Akaka's staff, along with representatives of both the Office of Personnel Management (OPM) and the FEB focused on plan highpoints.
Lisa Powell, Akaka's Federal Workforce Subcommittee Staff Director said, "We have worked hard to craft this bill, and feel it is a very good one for employees. It certainly will eliminate the need for many employees to move to the mainland to get their 'high three' for retirement purposes."
OPM Deputy Associate Director for Performance and Pay, Chuck Grimes, said that among other things, the Act calls for locality pay to be phased-in over three years beginning in January and for COLA to be reduced by 65 percent of locality pay rates. The legislation specifies that in 2010, the locality rate in all the non-foreign areas will be set at 4.62 percent-one third of the Rest of U.S. locality pay rate which is currently 13.86 percent.
When the law was enacted on Oct. 27, all COLA rates were "frozen" and COLA rates were reduced by 65 percent of the locality pay rate.
Grimes explained, "Following the three-year phase-in period, the full locality pay rate will have been implemented, but a reduced COLA will still be in effect." Each year, the "frozen" COLA rate will be reduced by 65 percent of the applicable locality pay rate. OPM cannot accurately determine how long this will take.
"As Akaka said when the bill passed, "Federal workers in Hawaii, Alaska, and the Territories now finally have equity in their retirement pay,". "For too long, Hawaii federal employees received far less in retirement than employees on the mainland doing the same jobs. Those who wished to receive the full retirement benefits had to leave their families and work on the mainland for several years. That ends with this new law."
For more information about NDAA and Non-Foreign COLA, visit http://www.honolulu-pacific.feb.gov/.