DFAS Announces Suspension of Separation Payment Recoupments
May 22 2009
Starting with the 1 June 2009 retirement checks, Voluntary Separation Incentive (VSI), Special Separation Benefit (SSB) and other separation payment deductions will stop for the foreseeable future. The suspension is not a permanent situation. It will stay in effect pending policy and legal reviews at DOD.
These were separation payments made to military members during force draw-down periods. The separated members were required to maintain duty in the Ready Reserves after separation. Those members who went on to retire from the Reserves had to pay back the separation pay upon receipt of retirement pay.
The suspension is part of a financial relief plan during the economic downturn. It also allows the DOD to review legal issues in regards to repayment options.
There are legislative initiatives underway that may change separation pay recoupment efforts in the future. Not that the separation pay repayment will be forgiven or permanently suspended but the repayment formula may change to something less drastic than under the current legal formulas.
A letter from DFAS will be sent to all members affected by the suspension. See this link for a copy of the letter.
Received my letter today—quite a surprise. I received SEP PAY at age 52 after being non-select after 12 years AGR time but 30yrs total reserve time. I took the SEP PAY and invested it until age 60. The SEP PAY is being recouped from my Reserve retirement pay over 24 months. I simply draw on the SEP PAY as needed during the recoupment period. So far, so good. Just wonder what changes they have in mind.