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Recoupment of old separation bonuses halted

May. 21, 2009 - 06:01PM   |   Last Updated: May. 21, 2009 - 06:01PM  |  
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Pentagon pay officials have suspended the recoupment of several bonuses paid out during the post-Cold War effort to trim the ranks, pending a formal policy and legal review, the Defense Finance and Accounting Service said Thursday.

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Pentagon pay officials have suspended the recoupment of several bonuses paid out during the post-Cold War effort to trim the ranks, pending a formal policy and legal review, the Defense Finance and Accounting Service said Thursday.

The bonuses, including Variable Separation Incentive, Special Separation Benefit, severance pay and other payments, were offered to active-duty service members in certain career fields, primarily during the 1990s.

Those receiving the payments were required to maintain an affiliation with a unit of the Ready Reserve. But the payments came with the stipulation that those who eventually earned status as a military retiree would have to pay them back.

The repayments, however, apparently have caused financial difficulties for at least some of the affected veterans, and more than a few contacted their congressional representatives.

"Over the past few months, the department has received numerous congressional inquiries concerning the recoupment," Pentagon Comptroller Robert Hale wrote in a May 18 memo sent to DFAS Director Teresa McKay ordering the recoupment suspension. "The inquiries raise concerns about financial hardship resulting from these reductions in retired pay, particularly during the current economic situation."

According to DFAS, the federal statutes governing the bonus programs do not allow the Pentagon or DFAS to alter repayment ratios or provide alternative repayment plans, regardless of a retiree's finances.

Still, several members of Congress, Hale wrote in the memo, released Thursday by DFAS, asked the Pentagon to identify "any available options to alleviate the financial difficulties that these members are encountering."

The suspension of recoupment efforts affects military retirees in an active pay status effective for May 2009 retired pay entitlements. As such, military retired pay for those members received on June 1, 2009, will not be reduced by any recoupment amounts, DFAS says.

About 1,100 former service members are affected by the suspension, according to DFAS spokesman Tom LaRock nearly 600 of whom were already seeing reductions in their retired pay, and another 600 or so whose cases were under consideration for reductions.

DFAS says letters to military retirees in the affected recoupment statuses will soon be mailed advising them of the suspension of recoupment payments. Those same retirees will be sent a follow-up letter after the review is completed advising them of the review's conclusions.

Retirees with questions can call DFAS's Retired and Annuity Pay Contact Center at 1-800-321-1080 between 7 a.m. and 7:30 p.m., Monday through Friday, according to DFAS. Select options 5, 1, 5, and 0 to speak to a live customer representative.

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