Locality pay buyback


Q. I work in Honolulu and will be retiring at the end of 2011. Is there a form to fill in to buy back my locality pay so I can get credit for it in my annuity?

A. Public Law 111-84 provided for a phased-in conversion from nonforeign area cost-of-living allowances to locality pay over a three-year period beginning in 2010. If you want to get credit for a portion of your COLA as basic pay, you’ll have to complete either a Standard Form 2803 (Civil Service Retirement System) or 3108 (Federal Employees Retirement System), show the dates of the period for which you want to make a deposit (no earlier than Jan. 3, 2010, and no later than the date you’ve set for retirement), and add the following statement: “I elect to pay the deposit necessary to obtain credit for the full locality pay rate under NAREA in computing my retirement benefits. I understand that the entire deposit must be paid to my agency at separation for retirement and if I do not complete the deposit at that time, the full locality rate will not be used to compute my annuity.” Submit the application to your agency and then pay the deposit when they tell you how much you owe.


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Reg Jones was head of retirement and insurance policy at the Office of Personnel Management. Email your retirement-related questions to fedexperts@federaltimes.com.

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