A bill to exclude locality adjustments from average pay for purposes of computing the amount of retirement annuities of new employees.

# Summary of S. 26: Federal Retirement Annuity Changes **What the bill would do:** This bill would change how federal employee retirement benefits are calculated for newly hired workers. Specifically, it would exclude "locality adjustments"—extra pay that federal employees receive in certain high-cost areas—from the calculation used to determine their retirement pensions. Currently, these locality payments (which compensate for regional cost-of-living differences) are included in the formula that determines how much a retiring federal employee receives as a pension. **Who it affects:** The bill would only apply to new federal employees hired in the future, not current employees or retirees.

It primarily affects workers in the Federal Employees' Retirement System (FERS), particularly those in geographic areas where federal salaries lag behind private sector jobs by more than 5%. These are typically major metropolitan areas and regions with higher costs of living. **Current status:** The bill was introduced by Senator Bill Cassidy (R-LA) but remains in committee and has not been voted on by the full Senate. While supporters might argue this could reduce long-term government spending on pensions, critics could raise concerns about how it affects federal recruitment and retention in competitive job markets.