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Defense officials suspend separation payment recoupment

  • Published
  • Courtesy of the Defense Finance and Accounting Service
INDIANAPOLIS --  Recoupment of military retirees' Variable Separation Incentive, Special Separation Benefit and separation payments by the Defense Finance and Accounting Service has been temporarily suspended pending a formal policy and legal review by Department of Defense officials.

The suspension of recoupment actions is being taken for military retirees in an active pay status effective for the May 2009 retired pay entitlements, according to DFAS officials. Military retired pay for these people received on June 1 will not be reduced by any recoupment amounts.

VSI, SSB and certain other separation payments, such as severance pay, were offered to active-duty servicemembers in an effort to reduce manpower in certain career fields, primarily during the 1990s. Those receiving these payments were also required to maintain an affiliation with the Ready Reserve of a military Reserve component. Provisions of these programs also included repayment should an individual remain with the Ready Reserve and earn status as a military retiree.

The federal statutes governing these programs do not allow DOD or DFAS officials to alter repayment ratios or provide alternative repayment plans for these military retirees regardless of the financial hardships a retiree many be experiencing. The policy and legal review will allow DOD and DFAS officials to determine what options, if any, may be available to allow DOD to meet its statutory responsibilities while providing relief to military retirees, currently recalled to active duty, who may be impacted by recoupment actions.

Letters to military retirees on active duty in an SSB, VSI and Separation Payment recoupment status will soon be mailed advising them of the suspension of recoupment payments. Upon completion of the review, these members will receive a letter before recommencement of repayment reductions to their retired pay advising them of the review conclusions.