By Melissa Chan - NBC News
The federal government is trying to recover nearly $1 million more than 200,<> people who retired from the Navy after discovering it had given them larger monthly payments than their fair share for nearly four years because of a system error, officials said Monday.
The Navy Times first reported on the error, which resulted in incorrect service-time calculations for 1,283 retirees from August 2019 through February.
That mistake created a total debt of about $6.8 million, according to new data obtained by NBC News, Noticias Telemundo's sister network. Personal debts incurred range from $35 million to more than $70,000, the Defense Finance and Accounting Service said Monday.
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The agency — which oversees payments to Defense Department personnel and retirees — said it plans to recover the money and will issue official debt notices, with information on how to pay the debt or apply for a waiver, to affected retirees this week.
Some retirees are bracing for bills of tens of thousands of dollars. All have seen their monthly retirement income reduced due to the corrected error.
"It's a double whammy," said Devin Morrison, 52, who was the executive officer at Naval Medical Center in San Diego before retiring in 2021.
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His take-home pay fell about $762 from March to April. He has not yet received his official debt letter, but expects that he will have to repay about $30,000.
Morrison, who took a job in the private sector after retirement, has since cut his 401(k) contribution by 10% to boost his monthly disposable income while he revises his new, smaller budget.
"Through no fault of my own, I'm going to shoulder this pretty big bill. It's a hard pill to swallow," he said.
According to the Navy, the bug started when its personnel system sent incorrect data to DFAS. Time of inactive service in the retiree reserve was incorrectly accounted for as creditable active duty, resulting in higher monthly payrolls.
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"From there, the Navy thoroughly investigated the problem, determined the affected population and decided on corrective action," Maj. Rick Chernitzer, a spokesman for Navy Personnel Command, said in a statement.
"This process took time and was important to ensure that we did not negatively affect anyone's pay without understanding the scope of the problem," he added.
DFAS said the average overpayment amount is $2,700. He said the debt notification letter would detail the circumstances in which interest would be charged.
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If a retiree does not take any action after receiving official notification, the agency said it can involuntarily deduct from the person's monthly benefit at a rate of 15% of the net pay available. He also said the Defense Department "reserves the right to apply other methods of collection, as necessary."
The system error affecting Navy retirees is the latest administrative oversight to come to light in recent weeks.
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At least 65 Navy Reserve dentists and doctors have been informed they owe at least three more years of service after an error was discovered in the way their retirement credits had been calculated, NBC News previously reported.
In late April, Army officials said more than 600 aviation officers are owed another three years of service after a similar record-keeping error was detected.