Washington, D.C. -- The U.S. House of Representatives has approved a change in the way retirement benefits are calculated for 50,000 federal employees in Hawaii, Alaska and the U.S. Territories; a change long sought by Rep. Neil Abercrombie.  Under the legislation, federal employees in those areas will receive locality pay rather than of a cost of living allowance (COLA) as a means of helping them meet higher living expenses. 

It’s been a problem because locality pay counts toward employee salaries when retirement pensions are calculated and cost of living adjustments don’t.  Only federal workers in Hawaii, Alaska and the Territories receive COLAs, which has meant that they’ve received less in retirement benefits than Mainland federal employees in the same pay grade with the same years of service.  This disparity has made it more difficult to recruit and retain federal employees in the disadvantaged areas and has been the basis for several lawsuits.  

“This is great news for a lot of hard working people and their families in Hawaii,” said Abercrombie. “It’s a matter of simple fairness.  Federal employees in Hawaii, Alaska, Puerto Rico and the Pacific Islands should never have had to settle for less financial security in their retirement.”

Along with the change in federal employee pay, the House-passed legislation expands the number of military retirees who can receive both full military retirement pay and VA disability benefits.

In the past, a retiree’s military pension was offset by the amount of his or her VA disability benefit.  In 2007, the Democratic Congressional majority took the first step, allowing military retirees with 100% disability to receive both their full retirement pay and disability, called Concurrent Receipt.  Today’s change expands Concurrent Receipt to include retirees with 90% disability, even if they have less than 20 years of service.

“Many of these retirees had military careers cut short because they were disabled in combat or from other service-connected injuries,” said Abercrombie.  “Congress has been working for a long time to get rid of this disabled veterans tax.”

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