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SGT. SHAFT: Separation pay regulations still in the works

- The Washington Times - Tuesday, August 10, 2010

Dear Sgt. Shaft,

Any word on the pending separation pay review? They have been too quiet. — Bob W. via the Web

Dear Bob,

Although the review is done, the new regulations have not yet been implemented. The Department of Defense issued a press release about it in April. Basically, the most recent information from the Finance Center in Cleveland stated that recoupment of military retirees' Voluntary Separation Incentive, Special Separation Benefit and other separation payments by the Defense Finance and Accounting Service was expected to resume in August:

VSI, SSB and certain other separation payments, such as severance pay, were offered to active duty military members in an effort to reduce manpower in certain career fields, primarily during the 1990s. Because federal law prohibits military members from receiving both separation and retirement payments for the same period of service, provisions of these programs included repayment should an individual join the Ready Reserve or return to active duty and earn status as a military retiree.

On June 1, 2009, in response to retirees' concerns, DFAS temporarily stopped deducting these repayments from retirement pay while the DoD conducted a formal review of the recoupment program. Prior to the review, the federal statutes governing these programs did not allow the Department of Defense or DFAS to alter repayment rates or provide alternative repayment plans regardless of the financial hardships a retiree may be experiencing.

The DoD review is complete, and Congress has amended Sections 1174(h) and 1175(e) of Title 10, United States Code, to help limit the financial strain on military retirees as they repay their outstanding balances. The new statutes allow DFAS more flexibility to accommodate for financial hardship and modify payment plans. As a result, DFAS has reduced the maximum recoupment rate from 90 percent to 40 percent. DFAS also will consider more lenient repayment plans for retirees who are experiencing financial hardship.

Affected retirees will receive notification letters at least 90 days before recoupments resume. If they feel the rate of recoupment will create a financial hardship, they may request a more lenient repayment plan by providing financial information on the Financial Statement of Debtor form enclosed with the notification letter.

This monthly recoupment may also affect former spouses who receive Uniformed Services Former Spouse Protection Act payments from such retirees. Former spouses affected by this recoupment also will receive a notification letter prior to the resumption of recoupments.

Retirees and former spouses who have questions may find more information at www.dfas.mil/rapay.html or by calling Retired and Annuitant Pay Customer Service at 800/321-1080.

Shaft Notes

The House Veterans' Affairs Subcommittee on Economic Opportunity, led by Chairwoman Stephanie Herseth Sandlin, recently held a hearing to examine programs developed by the Departments of Labor, Defense and Veterans Affairs to assist veterans transitioning from a military to civilian career:

"While service members and veterans all have unique career goals, it is critically important that all federal agencies continue to work hand-in-hand to provide the best employment assistance available to our men and women who have answered our Nation's call to duty," said Chairwoman Herseth Sandlin. "Previous hearings have identified barriers encountered by veterans, such as non-transferable military occupational skills, repetitive training and education requirements, inadequate benefits, and a Transition Assistance Program (TAP) that needs improvement. I look forward to continuing to work with the dedicated folks at the different agencies to improve employment opportunities for America's veteran population."

Hearing participants noted that some veterans who have worked in the capacity of a mechanic or electrician during their service in the military have to essentially start from step one when they transfer to the civilian equivalent. This is because the civilian occupation requires a state accredited license, something that the military, as a federal entity, cannot grant. However, DOD has partnered with DOL and public and private organizations in order to address this issue.

The representatives from the veteran service organizations spoke on the existing difficulties with military career and education transition, such as the reluctance of institutions of higher learning to accept military credit and cumbersome state licensing boards. Eric Hilleman of Veterans of Foreign Wars cited that, although the DOD has contracted the American Council on Education (ACE) to evaluate military courses and translate them into applicable civilian credit, only a handful of schools actually accept that credit. This leads to veterans having to enroll in courses that he or she has already passed during his or her time in the military. Veterans of Foreign Wars recommended that the committee fund a comprehensive study of military training by the ACE.

• Send letters to Sgt. Shaft, c/o John Fales, P.O. Box 65900, Washington, DC 20035-5900; fax: 301/622-3330; call: 202/257-5446; or e-mail sgtshaft@bavf.org.

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