Washington, DC – Today, the U.S. Senate Homeland Security and Governmental Affairs Committee approved the Non-Foreign Area Retirement Equity Assurance Act of 2009 (S. 507), as amended.  The bill would transition federal employees in Alaska, Hawaii, and the U.S. Territories from non-foreign cost of living allowance (COLA) to locality pay to ensure they receive the same retirement benefit opportunities as mainland federal employees.  The bill is sponsored by Senator Daniel K. Akaka (D-Hawaii) and cosponsored by Senators Daniel K. Inouye (D-Hawaii), Lisa Murkowski (R-Alaska), and Mark Begich (D-Alaska).  

There are approximately 20,000 federal employees in Hawaii that would be affected by this legislation. 

“I am pleased that the Committee has endorsed the Non-Foreign AREA Act again, which will provide much-needed pay and retirement equity to federal employees in Hawaii, Alaska, and the Territories.  Non-foreign COLA rates are scheduled to drop later this year, so we need to act quickly on this bill to protect employees’ take-home pay.  I will work with my colleagues to move the bill through the Senate as soon as possible,” said Senator Akaka, Chairman of the Homeland Security and Governmental Affairs Subcommittee on Oversight of Government Management, the Federal Workforce, and the District of Columbia. 

Senator Inouye said: “I am pleased that the Senate Homeland Security and Governmental Affairs Committee approved S. 507.  We are once again, one step closer in the Senate to addressing the issue of retirement equity for Hawaii’s federal employees.  This is an issue of fairness, and we are committed to ensuring that federal employees in the non-foreign areas are no longer disadvantaged.”

The committee adopted one amendment today to ensure coverage of Senior Level Scientific and Technical professionals and to provide agencies with needed regulatory authority to comply with the provisions in the Act.

The bill now goes to the full Senate for approval.  A similar bill passed the committee and full Senate last year but was not passed by the House. 

Under current law, federal employees in Hawaii, Alaska and the U.S. territories may receive up to 25 percent of their base pay as non-foreign COLA, which is not taxed and does not count toward an employee’s retirement.  The amount of non-foreign COLA is based on the local cost of living compared to the cost of living in DC.  Locality pay is based on labor costs in a particular area.

S. 507 would establish a three-year transition period beginning January 1, 2010, and phase out non-foreign COLA as locality pay is phased in.  The COLA adjustment would use a formula under which, for every dollar of locality pay that the employee receives, the COLA would be reduced by 65 cents, helping to mitigate the new cost burdens associated with locality pay such as federal income tax and additional retirement contributions.

Senator Akaka welcomes continued input from affected workers.  To provide feedback or for more information on S. 507, please visit the Senator’s website at http://akaka.senate.gov and click on the button for “COLA Update,” or click here: LINK