The plight of 1,283 Navy retirees who were overpaid due to a Navy error and now face hefty repayments somehow got worse and even more confusing in the past week.
Although the Navy announced May 19 that the Defense Finance and Accounting Service had agreed to a three-month pause in recouping the overpayments, those retirees’ latest pay statements, issued last week, indicated they would begin seeing the overpayments, plus interest, deducted from their monthly paychecks starting July 1.
On Wednesday, DFAS officials confirmed that is not the case, and the a three-month delay in repayments is still in effect.
In a nutshell, DFAS lagged in updating the pay statements. Agency spokesman Steve Burghardt called the latest complications “a timing issue” in an email to Navy Times.
“Those individuals who received statements indicating offsets had been initiated should see a new statement showing no collections have been made,” he said Wednesday.
The incorrect statements showing that debt collection would begin with retirees’ July 1 paychecks were generated in advance of pay processing and DFAS agreeing to a Navy request to pause debt collection, Burghardt said.
“Once the agreement was reached, DFAS had to update each record of those impacted by the overpayments,” Burghardt said. “This was a laborious task to make the changes and verify the results.”
Navy Times began asking questions about the statements a week ago. Burghardt did not say whether DFAS was tracking these incorrect statements before Navy Times brought them to agency’s attention.
“Obviously, it misled people,” he said of the bureaucratic lag. “I can see how that is going to cause some confusion.”
Retirees were informed this spring that they had been overpaid, with those impacted owing repayments rannging from $35 to more than $70,000 to the government.
All told, roughly $7 million in overpayments were made to the Navy retirees, and the median overpayment amount is $2,700, according to Burghardt.
Navy officials said on May 19 that retirees would have three months to appeal the debt or submit a waiver before DFAS began clawing back the overpayment in monthly deductions.
The Navy’s errors in calculating time in service has largely affected people who had a mix of active duty and reserve time.
Officials said it was due to an issue with the Navy’s Standard Integrated Personnel System, or NSIPS, which botched some retiree pay calculations from 2019 to February.
DFAS’s delay in ensuring that retiree statements available online via the MyPay portal were accurate has caused further stress and consternation among some impacted retirees in the past week.
Some were particularly bothered by interest charges on the now-obsolete pay statements.
Multiple impacted retirees said they called DFAS for an explanation and were told that the “debts” line was interest on the money they owed back, or that their account wasn’t showing up in any collections databases.
Retired Chief Hospital Corpsman Sheila Hetherington-Smith said last week that she owes nearly $15,000 to the government because of this Navy error and was shocked to see her retiree statement showing that DFAS plans to begin taking back the overpayment on July 1.
“I’m kind of disgusted,” she told Navy Times.
Hetherington-Smith said she has no problem paying back what she owes because “a debt is a debt.”
But like other retirees who have reached out to Navy Times, the retired chief said she is “really pissed off” about how DFAS and the Navy have handled the whole thing.
“They pretty much just incurred me a $15,000 debt that they’re going to charge 1% (interest) on,” Hetherington-Smith said. “It’s total garbage.”
Geoff is a senior staff reporter for Military Times, focusing on the Navy. He covered Iraq and Afghanistan extensively and was most recently a reporter at the Chicago Tribune. He welcomes any and all kinds of tips at email@example.com.