S. 26 — A bill to exclude locality adjustments from average pay for purposes of computing the amount of retirement annuities of new employees.

This section revises the definition of "average pay" under the Federal Employees Retirement System (FERS)—used to calculate employee annuities—to exclude locality-based comparability payments under 5 U.S.C. §§5304 or 5304a for "revised average pay employees." It defines a revised average pay employee as an individual who, on the date of enactment, is not a FERS-covered employee or Member, is not performing FERS-creditable civilian service under 5 U.S.C. 8411, and has no prior such service, but who thereafter becomes a FERS-covered employee or Member performing creditable service. (Thus, annuities for these future retirees will reflect lower average pay by excluding locality pay adjustments, which increase base salaries by 15%-35% or more depending on location.)