Overview
Title
To exclude locality adjustments from average pay for purposes of computing the amount of retirement annuities of new employees.
ELI5 AI
S. 26 is a plan to change how the U.S. calculates retirement pay for new government workers by not counting extra money given for expensive places like big cities. This means these workers might get less money when they retire if they work in such areas.
Summary AI
S. 26 aims to change how retirement annuities are calculated for new federal employees by removing locality-based pay adjustments from the calculation of their average pay. This means that the additional pay given to employees based on where they live will not be included when figuring out their retirement benefits. The bill amends Section 8401 of Title 5 of the United States Code and applies to employees who start working after this bill is enacted.
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AnalysisAI
General Summary of the Bill
The bill S. 26 aims to change how retirement annuities are calculated for certain new federal employees by excluding locality adjustments from their average pay. Locality adjustments are additional payments given to employees to account for the high cost of living in certain geographic areas. Under this bill, these adjustments would not be considered when determining the retirement benefits for a specific group of employees known as "revised average pay employees."
Summary of Significant Issues
There are several issues and potential concerns raised by the bill:
Impact on Employees in High-Cost Areas: The exclusion of locality-based payments from retirement calculations may negatively affect employees working in areas with high living costs, who depend on these adjustments as part of their compensation. This could lead to lower retirement benefits for these employees.
Understanding 'Revised Average Pay Employee': The term "revised average pay employee" might be confusing to those not familiar with federal employment terminology. The bill defines these employees as individuals not currently covered by certain federal service provisions, who become employed after the bill's enactment.
Complex Legal References: The use of legal references like "section 5304 or 5304a" and "section 8411" can make the bill difficult to understand without background knowledge of these sections, reducing its accessibility for the general public.
Complex Definition Criteria: The definition of a "revised average pay employee" includes several negative conditions, stating who these employees are not. This method may complicate understanding for those unfamiliar with federal employment rules and history.
Potential Impact on the Public
Broad Public Impact
The bill could broadly influence federal employees joining the workforce after its enactment by potentially lowering anticipated retirement benefits for those working in high-cost areas. This might disincentivize federal employment in such areas if prospective employees expect reduced compensation through retirement.
Impact on Specific Stakeholders
New Federal Employees: Individuals entering federal service after the passage of this bill will be directly affected. Without locality adjustments factored into their retirement calculations, those in expensive areas may see reduced retirement benefits, which may alter career decisions and financial planning.
Federal Employment in High-Cost Areas: This legislation might pose recruitment and retention challenges for federal jobs in high-cost locales. Prospective employees might consider the lower prospective retirement benefits when evaluating job offers, leading to potential staffing shortages.
Government Agencies: Federal agencies operating in high-cost areas could face difficulties attracting talent. They might need to find alternative incentives to offset possible reductions in retirement benefits, which could involve budgetary reallocations or new strategic approaches to workforce management.
In summary, while the bill's intent is to streamline and perhaps reduce federal burden in retirement benefit calculations, it could have notable implications for federal employment demographics and individual financial futures. The issues and potential impacts highlighted indicate a need for careful consideration by both policymakers and affected individuals.
Issues
The exclusion of locality-based comparability payments from the calculation of retirement annuities (Section 1) may be seen as unfavorable to employees working in high-cost areas who rely on these payments as part of their compensation. This could result in lower retirement annuities for these employees and is likely to be a significant financial issue for affected individuals.
The phrase 'revised average pay employee' used in Section 1 may create confusion among readers who are not familiar with the context or prior definitions. A clear definition or cross-reference is needed to improve understanding.
The presence of legal references such as 'section 5304 or 5304a' and 'section 8411' in Section 1 makes the document inaccessible to readers not familiar with these sections. This could pose legal comprehension challenges for the general public.
Section 1 contains criteria defining a 'revised average pay employee' with negative conditions like 'is not an employee or Member' and 'is not performing civilian service'. Without additional context, this could complicate the understanding of these conditions and their significance.
Sections
Sections are presented as they are annotated in the original legislative text. Any missing headers, numbers, or non-consecutive order is due to the original text.
1. Exclusion of locality adjustments from retirement annuities Read Opens in new tab
Summary AI
The section amends the United States Code to specify that for certain federal employees, known as "revised average pay employees," their salary calculations for retirement do not include locality-based payments. It also defines what qualifies someone as a "revised average pay employee" based on their employment status and creditable service history at the time and after the enactment of this change.