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Navy forcing retirees to repay $7M after system ‘error’

USS Laboon (DDG-58) sails into Souda Bay, Greece, during a scheduled port visit. (U.S. Navy photo by Mass Communication Specialist 2nd Class Jeffrey M. Richardson/Released)
May 16, 2023

After a system error resulted in larger monthly payments than were due for almost four years, the U.S. Navy is seeking to recover nearly $7 million from over 1,200 retirees.

During August 2019 to February 2023, 1,283 retirees were impacted by the error, which was first reported by the Navy Times. It is estimated that about $6.8 million worth of debt has been incurred, ranging from $35 to over $70,000.

It plans to recover the money, and this week will send official debt notifications explaining how to pay the debt or request a waiver to affected retirees. The Defense Finance and Accounting Service takes care of payments to staffers, as well as retirees, at the Department of Defense. Due to the corrected error, some retirees will be billed tens of thousands of dollars, and all will see a reduction in their monthly retirement income.

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A Navy personnel system error caused DFAS to incorrectly count retirees’ inactive reserves as active-duty creditable service, resulting in larger monthly paychecks. According to the Navy, it thoroughly investigated the issue, identified the affected population, and took corrective measures.
Financially impacted retirees are bracing for tens of thousands of dollars in repayments. A retired executive officer from the Naval Medical Center in San Diego said his net pay went down by about $762 between March and April, and he expects to have to repay about $30,000.

According to the DFAS, the median overpayment is $2,700, and the debt notification letter will explain in what circumstances interest will be charged. A retiree’s monthly benefit can be involuntarily reduced by 15% of net disposable pay if he or she does not take any action after receiving the official notification. “retains the right to pursue other collection methods, as necessary,” the Department of Defense stated.

It is the latest administrative oversight to affect Navy retirees in recent weeks. In the Navy Reserves, at least 65 dentists and physicians are owed at least three more years of service after an error in how their retirement credits were calculated was discovered. Earlier this month, Army officials announced that 600 aviation officers would have to serve another three years as a result of a similar record-keeping oversight.

This article originally stated “During August 2019 to February 2019” and has been corrected to reflect the proper date: “During August 2019 to February 2023.” American Military News regrets this error.