Retirement Contributions Overpaid and Require Repayment

Federal employees hired in 2014 are subject to paying higher contributions into the FERS system, but many have not been paying at the higher rate because payroll processing systems could not account for the change.

This means these new employees have been overpaid and will owe the excess as a debt to the government.

The Defense Finance and Accounting Service, which handles payroll of some 1.2 million non-postal federal employees in agencies like the DoD, VA, HHS, Energy, EPA and several smaller agencies, has said it will be able to make the change effective with the pay period beginning this Sunday (July 27), with the correct withholdings being reflected in pay issued in mid-August.

At the same time, employees will be notified of the amount they have been overpaid and will be told how they can repay it. The default option will be to have an extra $25 per pay period deducted until the amount is repaid.

DFAS has warned that if affected employees don’t make the repayments, collection actions would begin that could negatively affect their credit rating.

The AFGE union has asked the administration to waive collection of the overpayments but the administration has given no sign of intent to do so, and it may not have the legal authority in any event since the higher contribution coming to a total of 4.4 percent of salary toward FERS, for them  is set by law.

1 Comment

  • Posted August 14, 2014 Brian 7:37 am

    Anyone who read about when the law was past knew this was the case. These employees should have been informed of this at the time the job was offered. This shouldn’t be a surprise to anyone. Although I do think that the law should have allowed for DFAS and other agencies time to program thier systems prior to the effective date of the law. The way it was done forced all affected agencies to purposely over pay and then collect. Congress needs to look at how the laws they pass will affect people BEFORE they vote to pass these laws.

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