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Shaheen and Shea-Porter repeatedly urged the suspension and filed legislation to provide DOD greater flexibility in pay recoupment schedules

(Washington, D.C.) – U.S. Senator Jeanne Shaheen and U.S. Representative Carol Shea-Porter today applauded the decision by the U.S. Defense Finance and Accounting Service (DFAS) to suspend recoupment of certain separation benefits paid to veterans. Shaheen and Shea-Porter had advocated a suspension of recoupment pending the outcome of the Military Retirement Pay Fairness Act, legislation they introduced in the Senate and House to protect veterans from financial hardship they may face when required to repay separation benefits. The legislation and the request to suspend recoupment was prompted by retired Air Force Sergeant Wayne Merritt of Dover, New Hampshire who lost over half his monthly retirement pension in April due to the unfair repayment formula.


“This is great news for Sergeant Merritt and veterans across the country who may be facing financial disaster because of an unfair and rigid repayment schedule that could cost them their livelihoods, their homes and more,” said Shaheen. “We have worked hand in hand with the Department of Defense throughout this process, and they have been an amazing partner in crafting a solution to this problem. I couldn’t be happier that they have agreed with our recommendation to suspend recoupment, which will allow time for the Military Retirement Pay Fairness Act to move through Congress and permanently provide the flexibility our veterans need.”


“I am pleased that Senator Shaheen and I were able to help Sgt. Merritt and others who have experienced undue financial hardship because of this policy,” said Congresswoman Shea-Porter. “I appreciate the Department of Defense’s willingness to work with us to fix this problem.”


When members of the military accept a separation benefit for early retirement but later reenlist and qualify for a pension, the DFAS is statutorily bound by a rigid formula to recoup the separation benefit by deducting a portion of their pension. After learning of the hardship this rigid formula had caused Sergeant Merritt, Shaheen spoke with Under Secretary of Defense (Comptroller) Robert F. Hale on April 23 and requested a suspension in the recoupment of Merritt’s separation pay. Shaheen, Shea-Porter and the Department of Defense (DOD) also began working together to write the Military Retirement Pay Fairness Act.


The Military Pay Fairness Act would help protect our nation’s veterans by providing the DOD the flexibility it needs to develop manageable monthly payment plans that do not impose undue financial hardship on service members. It also requires the DOD to consult with veterans to determine a fair repayment schedule for separation benefits, taking into account each veteran’s financial situation. Under the legislation, the DOD is allowed to recoup no more than 25% of a veteran’s pension each month, and it requires the DOD to notify service members of impending recoupment no less than 90 days before repayment begins so they can prepare for the reduction in income. Shaheen successfully included the provision giving the DOD flexibility to consider financial hardship in the Supplemental currently before the Senate.


Merritt accepted a separation benefit for early retirement after serving with the Air Force for 14 years in 1992. He later joined the New Hampshire Air National Guard and served his country for an additional 10 years, which qualified him for a pension. In March of this year, the DOD informed Merritt it would be begin recouping his separation benefit in April according to the statutorily required formula, which meant Merritt would lose over half his pension. If enacted, the Military Retirement Pay Fairness Act would protect Merritt from the unfair repayment formula and allow him to negotiate a manageable repayment schedule with the DOD.


The legislation is supported by the Veterans of Foreign Wars and the Military Officers Association of America.