Feds that served in the armed forces, Peace Corps and Volunteers in Service to America will no longer be on the hook for agency miscalculations of their retirement deposits under a proposed rule issued by the Office of Personnel Management Nov. 5.
In order for veterans currently working in the federal government to count their time serving in the military toward their retirement under either the Civil Service Retirement System or the Federal Employees Retirement System, those employees must pay a deposit with interest for that time to the government.
A federal employee who served in the Navy for five years, for example, would have to pay a deposit for any of those years they wanted to count toward their federal retirement. That employee could also opt to not count their military service, which would push their eventual federal retirement date back.
That deposit is used to make up the difference in paycheck deductions that would have normally been applied to an employee’s pension, had they been working for a federal agency rather than in the military at the time.
Previously, if an agency had miscalculated the interest on that deposit, it had no other option but to put the employee on the hook for that difference, meaning that a fed could end up owing thousands of dollars down the road through no fault of their own.
The Correcting Miscalculations in Veterans' Pensions Act, signed into law in late 2018, provided the legal basis for agencies to pay the miscalculated amount, and the proposed OPM rule creates the necessary framework for implementing that new policy.
The rule change also applies to Peace Corps and VISTA volunteers who credit their service and experience an administrative error in their payment calculations.
“[The Correcting Miscalculations in Veterans' Pensions Act] specifies that if an employing agency makes an administrative error in processing deposits for post-1956 military service or full-time volunteer service as a volunteer or volunteer leader with the Peace Corps or VISTA that increases the amount of interest owed on the deposit, the employing agency or OPM may pay on behalf of the employee any additional interest assessed due to the administrative error,” the rule states.
“Agencies are responsible for establishing their own guidelines for what constitutes administrative error and whether a payment is made. OPM has no role or authority in the decision.”
Comments on the proposed rule are due via the eRulemaking Portal by Jan. 4.
Jessie Bur covers the federal workforce and the changes most likely to impact government employees.