Compliance October 6, 2008

Congressional Measure Reforms Alaska, Hawaii Federal Worker Retirement

October 6, 2008 (PLANSPONSOR.com) - A bill approved by the U.S. Senate would reform the way retirement benefits for federal employees based in Hawaii, Alaska, and U.S. territories are determined.
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An Associated Press report said the measure would do away with non-foreign cost of living allowances and phase in locality pay over a three-year period.

According to the report, because the cost of living payments are not taxable, they are not considered to be included in a worker’s base pay for retirement purposes, while locality pay is taxed and is factored into the retirement benefit determination.

class=”storyreadable”> This means employees in Hawaii, Alaska, and the territories have been retiring with lower pay rates than their counterparts in the contiguous U.S., workers have complained.

class=”storyreadable”> In February 2008, a federal judge threw out a lawsuit by federal workers in Alaska and Hawaii over the retirement benefit determination issue, ruling that the matter rightfully needed to be dealt with in Congress (See   Change to Disputed Federal Comp System Must Come from Congress).

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