Navy Retirees See Cuts to Monthly Benefits, Must Repay $7m After System Overpayment Error

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More than 1,200 people who retired from the Navy now owe $35 to more than $70,000 after the mistake was caught, officials said.

The federal government is attempting to recoup almost $7 million from more than 1,200 people who retired from the Navy after it discovered a system error had given them larger monthly payments than they were due for almost four years, officials said Monday.

The Navy Times first reported the error, which resulted in incorrect service time calculations for 1,283 retirees from August 2019 to February.

That error created a total debt of about $6.8 million, according to new data obtained by NBC News. The personal debts incurred range from $35 to more than $70,000, the Defense Finance and Accounting Service said Monday.

The agency — which oversees payments to Defense Department personnel and retirees — said it plans to recover the money and that it will issue official debt notifications, containing information on how to pay the debt or request a waiver, to affected retirees this week.

Some retirees are bracing to be billed tens of thousands of dollars. All have seen reductions in their monthly retirement incomes due to the corrected error.

“It’s a double whammy,” said Devin Morrison, 52, who was the executive officer of the Naval Medical Center in San Diego before he retired in 2021.  

His net pay went down by about $762 from March to April. He has not yet received his official debt letter but expects he will have to pay back about $30,000.

Morrison, who took a job in the private sector after his retirement, has since reduced his 401(k) contribution by 10% to increase his monthly disposable income while he reviews his new smaller budget.

“Through no fault of my own, I’m going to be saddled with this pretty significant bill,” he said. “That’s a hard pill to swallow.”

The Navy said the error began when its personnel system sent incorrect data to the DFAS. The retirees’ inactive reserve service time was incorrectly counted as active-duty creditable service, which led to larger monthly paychecks.

“From there, the Navy thoroughly investigated the issue, determined the affected population and decided on corrective actions,” Cmdr. Rick Chernitzer, a Navy Personnel Command spokesperson, said in a statement.

“This process took time and was important to ensure we did not negatively affect someone’s pay without understanding the scope of the issue,” he added.

The DFAS said the median amount of overpayment is $2,700. It said the debt notification letter would detail circumstances in which interest would be charged.

If a retiree does not take any action after receiving the official notification, the agency said it can involuntarily deduct from the person’s monthly benefit at a rate of 15% of net disposable pay. It also said the Defense Department “retains the right to pursue other collection methods, as necessary.”

The system error affecting Navy retirees is the latest administrative oversight to come to light in the last few weeks. 

At least 65 dentists and physicians with the Navy Reserves have been told they owe at least three more years of service after an error was discovered in how their retirement credits had been calculated, NBC News previously reported.

In late April, Army officials said more than 600 aviation officers are being held to another three years of service after they noticed a similar record-keeping error

Source: NBCNews