Locality pay

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Q. What year was “locality pay” started and used along with “base pay” to figure FERS employees annuities, and will the annuity increase each year if locality pay increases?  Do CSRS retirees have locality pay figured in their annuities as well?

A. The Federal Employees Pay Comparability Act was signed into law in 1990 and the locality pay portion was effective thereafter for CSRS and FERS employees. Locality pay is included only in employee salaries. When an employee retires, his annuity will be computed using his three highest consecutive years of average basic pay, which includes locality pay. Once retired, any increases in his annuity will be based on changes in the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W). There weren’t any cost-of-living increases in 2010 and are unlikely to be any in 2011.

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