Back payments doled out to retirees

By Tom Philpott: Military Update

A small group of disabled military retirees this month will be the first of 133,000 to receive lump-sum back payments, which are tied to start-up challenges for two “concurrent receipt” programs enacted since 2003. That’s according to officials with the Defense Finance and Accounting Service (DFAS).

The trickle of back payments in September will become a small geyser at the end of October. By then, officials say, another 40,000 retirees will see their catch-up payments deposited electronically in their bank accounts by either the Department of Veterans Affairs (VA), DFAS or by both.

Back payments will vary in size from several hundred dollars up to $10,000 or more. The average payment, by one estimate, will be $3,700.

Almost all retirees in line for the back pay served 20 or more years and all have disabilities that made them eligible for Concurrent Retirement and Disability Pay (CRDP) or Combat-Related Special Compensation (CRSC).

Pat Shine, DFAS’ deputy director for operations, said from Indianapolis that a majority of the back payments will be made within the next six months, with DFAS focusing first on older cases. He said it could take up to six more months to calculate and pay the most complex retro pay file. These involve multiple VA rating adjustments since CRSC and CRDP began, shifts by retirees between these two types of payments, ex-spouse pay entitlements and any other issues that require lengthy record searches.

DFAS officials are calling the $500 million back pay effort the “VA Retro Pay Project.” Retirees don’t need to apply. A “VA Retro Award hotline” has been set up to field questions from CRSC and CRDP recipients who believe they might qualify.
That toll free number is 1-877-327-4457.

By late next week, DFAS officials hope to post a detailed explanation of the back pay program on its Web site at:

Thomas J. Pamperin, assistant director for policy with VA’s Compensation and Pension Service in Washington D.C., said he and his staff have been working with DFAS for almost 18 months. The back pay issue, he said, is “something where neither one of us can do it by ourselves. We need a lot of information exchanged.”

DFAS and VA now are “testing files that have been transferred back and forth between us,” he said. “We are going to have a final test the last week in September to make sure that all the (software) logic is working” to identify eligible retirees and calculate retro payments.

VA figures to pay 80 percent of money owed. Some retirees will receive two checks, one from the VA and another from DFAS. Before payments are deposited, affected retirees will get letters explaining reasons for the back pay and how the amounts were calculated, Pamperin said.

Most of the shortfalls resulted from VA withholding too much disability compensation after CRSC and CRDP began. Traditional VA and DFAS rules on withholding failed to take account of changes to concurrent receipt law.

“What we are talking about here is a situation where people’s entitlement to disability pay had a (start) date prior to the date we actually started paying it,” Shine said.

The pay shortfalls can be blamed in part on the considerable complexity of CRDP and CRSC. Congress designed the programs to alleviate, but only for certain career retirees, a century-old ban on concurrent receipt of both military retirement and VA disability compensation.

Tom Philpott can be contacted at Military Update, P.O. Box 231111, Centreville, Va. 20120-1111, or by e-mail at: