Washington, D.C.- Today U.S. Senators Daniel K. Akaka (D-Hawaii), Daniel Inouye (D-Hawaii), Ted Stevens (R-Alaska), and Lisa Murkowski (R-Alaska) introduced the Non-Foreign Area Retirement Equity Assurance Act to continue the discussion of how best to ensure pay and retirement equity for federal employees in Hawaii, Alaska, and the U.S. Territories.  Federal workers in those areas currently receive a non-foreign cost of living allowance (COLA) based on the difference in the cost of living between those areas and the District of Columbia, but, unlike locality pay, this amount does not count for retirement purposes.  Furthermore, while locality rates generally increase, non-foreign COLAs have been gradually declining. 

"For years, federal employees in my home state of Hawaii and in other non-foreign areas have been disadvantaged when it comes to their retirement," Senator Akaka said.  "Extending locality pay to these employees would help address this disparity and could improve efforts to recruit and retain federal workers in those areas.  I hope this bill will lead to further discussion of the pros and cons of making this change." 

"This bill will provide for meaningful discussion on the options federal workers in Hawaii, Alaska, and the Territories will face in converting from a non-foreign cost-of-living allowance to a locality pay system, including a one time opt-out option," Senator Inouye said. "There are many factors to be considered depending on whether you are a relatively new federal employee with a long path ahead, or are fairly near retirement after a productive career." 

Last year, the Administration submitted proposed legislation to Congress which would freeze non-foreign COLA rates at their current levels and phase-in locality pay over the next seven years while non-foreign COLA is phased out.  According to the Office of Personnel Management (OPM), the locality rate for Hawaii is estimated to be 20.38 percent, the rate for Alaska is estimated to be 27.68 percent, and the rate for other non-foreign COLA areas is estimated to be 12.64 percent.  At the end of the seven year period, if the locality pay rate is less than the amount of non-foreign COLA for a particular area, employees would continue to receive the difference in non-foreign COLA and locality pay until the locality rate reaches the COLA amount. Only at that time would employees no longer receive non-foreign COLA. 

However, the proposal did not address the impact such a change would have on postal employees, employees who receive special rates, members of the Senior Executive Service, and others who are in agency specific personnel systems or those who do not receive locality pay, such as employees under the National Security Personnel System at the Department of Defense.   The Non-Foreign Area Retirement Equity Assurance Act seeks to clarify how all civilian employees in the non-foreign areas will be affected by the conversion to locality pay and protect employee's take home pay.

Akaka said: "The legislation we introduce today is the result of the many comments and questions we have received from employees in the non-foreign areas and the collective efforts of Senators Stevens, Inouye, Murkowski, and me to find an equitable solution to a difficult issue that continues to lack a consensus.  This bill is not the last word, only the latest step forward toward retirement equity.  I continue to encourage employees in Alaska, Hawaii, and in the territories to write me or attend our meetings and let me know your questions and concerns.  It is my goal to ensure that federal workers in these areas are not disadvantaged when it comes to their pay and retirement."

Inouye said: "I am pleased that the Hawaii and Alaska delegations are working together as we endeavor to represent the best interests of our federal employees in our respective states.  We thank all our federal employees for their honorable service and will work to do right by you."

Over the Memorial Day recess the Homeland Security and Governmental Affairs Subcommittee on Oversight of Government Management will hold a series of meetings to hear from federal employees in Hawaii on the Administration's proposal and the Non-Foreign Area Retirement Equity Assurance Act.  The Subcommittee will also hold a hearing on these proposals at 1:00 pm at the Oahu Veterans Center in Honolulu on May 29, 2008.

Detailed information on Sen. Akaka's website: LINK

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