Hawai'i's federal workers would transition from cost-of-living allowances to a locality pay system used by federal employees in the 48 contiguous states under a bill introduced into the U.S. House and Senate by Hawai'i's Congressional delegation and other legislators.

Currently workers here, Alaska and the U.S. territories receive COLA based on increases in the cost of living compared to those in Washington, D.C. The COLA payments are considered in coming up with retirement pay, unlike locality pay.

Moreover, according to Sen. Daniel Akaka's office, COLA pay has been gradually declining while locality rates have generally been increasing.

"COLA rates are scheduled to go down this year, and in this difficult economy, federal employees in Hawai'i, Alaska and the territories cannot afford a loss of pay," Akaka said in a press statement.

The pending bill would freeze COLA rates at current rates and phase in locality pay over three years. If COLA pay is more than locality pay at the end of three years, employees would continue to receive the difference in COLA and locality pay until parity is achieved.

Akaka said the bill should help address compensation disparities and improve recruitment and retention of federal workers here, Alaska and territories .