The government aims to reclaim almost $7 million from 1,200 Navy retirees due to a system error that led to excessive monthly payments for nearly four years.
The Navy Times was the first to report on an error that occurred between August 2019 and February, resulting in incorrect calculations of service time for 1,283 retirees. According to a report, this error has led to a total debt of approximately $6.8 million.
Navy Retirees Experience Reduced Monthly Incomes
The Defense Finance and Accounting Service stated that individual debts range from $35 to over $70,000.
The Military Finance and Accounting Agency, which is in charge of handling payments to Defense Department employees and retirees, has declared its intention to recoup the money. This week, they will send official debt letters with instructions on how to settle the debt or apply for a waiver to the impacted Navy retirees.
Many retirees are now preparing themselves to be billed tens of thousands of dollars. As a consequence of the corrected error, all retirees have experienced reductions in their monthly retirement incomes.
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Potential Consequences for Retirees Who Take No Action
Devin Morrison, a former executive officer of the Naval Medical Center in San Diego, retired in 2021 and has been affected by this issue. He reported a decrease of around $762 in his net pay from March to April.
While he has not received his official debt letter yet, he anticipates having to repay approximately $30,000. To manage his new financial situation, Morrison has reduced his 401(k) contribution by 10% in order to increase his monthly disposable income.
The Navy explained that the error originated from incorrect data sent by its personnel system to the Defense Finance and Accounting Service. The retirees’ inactive reserve service time was mistakenly counted as active-duty creditable service, resulting in higher monthly paychecks.
The Defense Finance and Accounting Service has stated that the median overpayment amount is $2,700. The debt notification letter will specify the circumstances under which interest may be charged.
In cases where a retiree takes no action after receiving the official notification, the agency has the authority to involuntarily deduct 15% of the person’s net disposable pay from their monthly benefits. Additionally, the Defense Department retains the right to employ other collection methods as necessary.
This incident affecting Navy retirees is the latest administrative oversight to be revealed in recent weeks. Over 65 dentists and physicians in the Navy Reserves have been informed that they owe an additional three years of service due to an error in the calculation of their retirement credits.
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