OPM addresses federal workforce’s locality pay concerns

| January 6, 2011 | 1 Comment

Honolulu-Pacific Federal Executive Board
News Release

HONOLULU — The Honolulu-Pacific Federal Executive Board met for a scheduled conference call, Dec. 14, to discuss how the Non-Foreign Area Retirement Equity Assurance Act has impacted personnel’s retained pay, the proposed pay freeze and an explanation of how the 16.51 percent locality pay rate was set.

The Office of Personnel Management believes – with or without the adoption of the Akaka bill (S. 3066, to correct the inequity for retained pay employees) currently being considered by Congress – that they have authority in the NAREAA to set locality pay for these individuals.

Equivalent supplemental payments will be made to the retained pay personnel to make up for the loss of what otherwise would have been their locality pay. Written guidance is expected to be provided shortly to get these retained pay personnel back-pay to Jan. 2010, to make up for the loss in locality pay this past year. In addition, equitable buy-in policies will be established for those retained pay personnel who are retiring before Dec. 31, 2012.

Congress has not acted on the president’s plan to freeze pay for two years, as of yet, but are expected to pass legislation during the lame duck session.

OPM said that the pay freeze will not impact locality pay conversion. The 2011 locality pay has been set at 11.01 percent or two thirds of the 2010 level, which was 16.51 percent. The 2012 locality pay level will be 16.51 percent.

There is a corresponding reduction in cost-of-living allowances when locality pay increases. For Oahu, 2011 COLA is 16.07 percent.

There will be one locality rate statewide in Hawaii, and it is based on Bureau of Labor and Statistics numbers.

Q: How will the current pay freeze affect locality pay for the next two years?

A: Currently, only the 2011 locality pay adjustment has been frozen in the president’s 2011 alternative plan.

The president’s plan kept existing locality pay rates the same as in 2010. It did not freeze locality pay for Hawaii, but rather established 2011 locality pay rates for Hawaii.

Q: What is the impact of the pay freeze going to have on the locality pay conversion? 

A: The applicable rates for 2011 are 16.51 percent for Hawaii. Absent unexpected changes to the phase in provisions of the NAREAA, the payable rates would be 11.01 percent for Hawaii, or two-thirds of 16.51 percent.

Q: Do we know how, or whether, the recently proposed freeze on locality pay will impact Hawaii’s transition from a COLA to locality pay?

A: It is unclear at this time as no pay freeze legislation has been enacted.

Q: Will we continue to receive some COLA up to 25 percent if locality pay doesn’t come up to at least 25 percent?

A: Yes. You will continue to receive COLA as reduced by the provisions of NAREAA.

Q: Is OPM prepared to process buy-back provisions pertaining to the retirement of those federal employees in Hawaii retiring between now and Dec. 31, 2012?

A: Yes, contact your agency’s retirement benefits officer for more information.

Q: Will there be a separate COLA rate for those on retained pay status? 

A: OPM plans to issue future guidance on pay retention in the non-foreign areas to address this issue using authorities in the NAREAA.

Q: Why is Hawaii’s newly established locality pay rate being set at a much lower rate than other locations that have lower costs of living than Hawaii? The locality rate for Hawaii is essentially the same rate as Richmond, Va., and Dayton, Ohio!

A: Locality pay is based on the local cost of labor rather than the local cost of living. The locality pay rates were established in the same manner as for other new locality pay areas.

Visit www.opm.gov/oca/11tables/index.asp for 2011 salary tables. Contact Human Resources Offices for additional information.

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Comments (1)

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  1. CW says:

    This sounds like it is a black and white deal as you read through this webpage. However, if you look at your paycheck (at least for FEDS like me) you will see that you take home LESS money this year than last. So basically, any pay raises I received the last couple of years the GOVT took back in taxes becasue COLA was not TAXABLE and locality IS. Nothing like moving up the ladder right? More responsibility= Less Pay The American Way.

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