Q: In Alaska we are transitioning to locality pay from COLA. The transition began in January 2010 and will be fully in effect in 2012 for high-3 calculations. Because of this move from COLA, we are in the process of gaining a substantial amount of high-3 earnings for our retirement calculations. How does OPM handle the average if one retires at the end of June 2012, just two and a half years into the transition period? I can see that one would use all of 2010 and then all of 2011, but that last 12-month period is the question. A mid-2012 retirement date would result in six months of high-3 earnings for 2009 at a rate with no locality pay and six months of high-3 pay in 2012 with full locality pay. Do they take the yearly salary for each of one’s last three years and then prorate each month’s earnings for each of those two six-month periods and add them together for a year’s period for the high-3 calculation?
A: To determine a high-3, OPM uses a retiring employee’s basic pay over 78 consecutive biweekly pay periods.
