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.