State's federal workers get smaller pensions than others

Employees in Alaska, Hawaii file lawsuit against U.S. government

Posted: Thursday, July 21, 2005

Federal workers in Alaska and Hawaii have filed a class action lawsuit against the U.S. government over lower retirement benefits.

Federal employees in those two states do not receive an extra percentage on their paychecks, known as locality pay, that the government provides in the Lower 48 to be competitive with private companies.

Locality pay is figured by comparing federal salaries with those of private-sector jobs. It also plays a role in determining the size of a worker's pension.

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According to a law set in 1990, all federal workers in the contiguous states receive at least a 10 percent higher retirement pension than Alaska and Hawaii employees. Federal employees in San Francisco receive 25 percent more.

Instead of locality pay, Alaskans and Hawaiians receive a cost of living allowance set by the U.S. Office of Personnel Management. It is currently 25 percent for Alaskans. But the amount is not calculated into pension benefits.

"When you're talking about locality pay vs. COLA, you're comparing apples to oranges," said John Kato, a U.S. Forest Service assistant director of mineral and geology programs in Juneau.

Federal workers in Alaska, Hawaii, the Caribbean and Guam were excluded from the Federal Employees Pay Comparability Act of 1990, which established locality pay.

The lawsuit, filed by a Hawaiian legal firm in a U.S. District Court in Honolulu last month, asks the court to declare the exclusion "unconstitutional and invalid" and provoke the OPM to include COLA in the calculation of pension funds or give workers locality pay.

The lawsuit also seeks 15 years of back pay for all federal workers excluded from the law, and "damages resulting from the violations of the class members' constitutional rights."

"Unfortunately, we have had to initiate this class action suit against the U.S. government in order to focus our congressional delegations' attention on the retirement inequity issue," Kato said.

About three years ago, the OPM devised a solution in the form of conceptual legislation. Kato said that according to the plan, Alaskans and Hawaiians would start to receive locality pay increases over the years as the COLA would decrease. COLA would be phased out in about eight years.

Courtney Boone, a spokeswoman for Sen. Ted Stevens' office, said he supports Alaskans receiving COLA.

"It's an either/or situation," Boone said.

Stevens' office has not drafted legislation to change the law.

The OPM declined to comment on the litigation.

Kato said some Alaskans have moved to other states to boost their pension. The lawsuit said Hawaiians also are leaving the state for better pensions.

"You'd think (the congressional delegation) would want to provide us parity with retirees in the Lower 48, rather than retaining an inequitable retirement system that is detrimental to Alaskan employees wishing to reside in Alaska after retirement," Kato said.

The locality-pay issue affects federal workers in Alaska and Hawaii who do not have military or Postal Service jobs.

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