Locality pay buyback for retirement


Q. I am retiring and live in Alaska. I want to determine how and when I would be allowed to buy back the locality pay/COLA pay percentage I worked for, since January of 2010. I am suppose to be able to buy back the portion of my locality pay rate that I would be entitled to. The P.L. 111-84 was effective Jan. 1, 2010 and I retire on April 2, 2010. That would amount to three months that I could pay back to obtain the full RUS rate, which is 13.86 percent for this part of the year that I worked before I retired. Since we are currently receiving 4.62 percent, I assume that the difference I would be paying back amounts to 9.24 percent (13.86 percent – 4.62 percent) for the three months of pay I would need to pay back. I don’t know what amount I need to take that 9.24 percent X ??? to determine what amount I need to write a check to, and to whom to write the check to?
I continue to receive conflicting information on how to proceed with this. Neither the CPAC personnel office, the ABC-C nor OPM folks know what to do. They refer me back to the other and no one has been able to help me or to direct me to a solution. Do I need to deal with the Denver payroll office, OPM, the ABC-C Army benefits center or my CPAC personnel office? I seem to be stuck in neutral on this matter.
I am retiring April 2, 2010 and I believe that I need to have this taken care of prior to my retiring. So I’m running out of time. I need to submit my paperwork for retirement this week, so time is of the essence.

A. No, I can’t provide any specific guidance. Until OPM issues such guidance, everyone will have to be patient. What I can give you is a summary of the legislation that OPM provided to agencies in January:
“[The new provisions of law] permit a phased conversion from non-foreign COLA to locality pay over a three-year period beginning in 2010. Individuals who separate from service from 2010 through 2012 will have the right to elect to have non-foreign COLA allowances received during the period count toward retirement credit, to the extent that the non-foreign COLA allowances plus any locality pay received do not equal more that the RUS [Rest-ofU.S.] locality pay. Such election must be filed not later than December 31, 2012. The statute makes provisions for agency and employee payments based upon these elections, which must be made to OPM. OPM will issue regulations to carry out the election and payment process.”


About Author

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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