Most federal retirees assume that once OPM calculates their annuity and starts sending monthly payments, the number is settled. Usually, it is.
But a recent federal retirement case is a reminder that OPM annuity errors can sometimes go undetected for years. And if the agency eventually discovers that it paid too much, retirees may have more options than simply writing a check.
How Can a Retirement Payment Be Wrong?
Federal retirement calculations can involve a surprising number of moving parts. Your service history, high-3 salary, retirement system, survivor elections, former-spouse benefits, military service, and other factors can all affect the amount you receive.
An error in any one of those calculations can carry forward into every monthly payment that follows. The longer the mistake goes unnoticed, the larger the potential overpayment can become.
That’s what makes these cases particularly difficult. Federal retirees may reasonably assume that a payment they’ve received for years has been reviewed and approved by the government. That assumption isn’t always enough to protect them.
What If OPM Says You Were Overpaid?
An OPM overpayment notice can be alarming, particularly when the amount is large. But federal law provides a process for requesting a waiver in certain circumstances.
One of the important questions is whether the retiree was at fault. If the overpayment resulted entirely from an agency error and the retiree had no reason to know the payments were incorrect, that can matter.
The other major consideration is whether requiring repayment would be against equity and good conscience.
That doesn’t mean every government error gets forgiven. It means the circumstances surrounding the overpayment matter.
A recent case involving a federal retiree illustrates just how significant that distinction can be. After an error remained undiscovered for many years, the Merit Systems Protection Board ultimately found that repayment would be unconscionable under the circumstances and waived the debt.
The decision was based on the specific facts of that case. It wasn’t a blanket ruling that retirees don’t have to repay OPM overpayments. But it does demonstrate why receiving an overpayment notice isn’t necessarily the end of the story.
Don’t Ignore an Unexpected Change in Your Annuity
For most retirees, the first sign of a potential problem may not be a six-figure repayment demand. It could be a letter from OPM explaining that your monthly payment is changing. It could be a correction to your survivor benefit. It could be a request for additional documentation. Or it could simply be a payment that doesn’t match what you expected.
Those are good reasons to stop and ask questions.
Keep copies of your retirement paperwork, retirement calculations, survivor elections, court orders affecting your benefits, and correspondence with OPM. Having those records can make it much easier to determine what changed and why.
What If You Receive an Overpayment Notice?
Don’t automatically assume the amount is correct. Start by asking OPM to explain how the overpayment was calculated. Compare the calculation with your own retirement records and determine when the alleged overpayment began.
Then look at the circumstances surrounding the error. Were you aware that something was wrong? Did you provide OPM with accurate information? Did the agency continue paying the same amount for years without notifying you of a problem?
Those details can become important if you request a waiver. And if the amount is substantial, consider getting professional or legal advice before agreeing to a repayment schedule.
A repayment notice tells you what OPM believes you owe. It doesn’t necessarily answer whether you have grounds to challenge the debt.
The Lesson for Federal Retirees
No one should retire assuming OPM will make a mistake. But retirees also shouldn’t assume that every number OPM sends them is automatically beyond question.
Your annuity is one of the most important sources of income you’ll have in retirement. If something changes unexpectedly or OPM says you’ve been overpaid, it’s worth understanding what happened before taking action.
The good news is that federal retirees have legal rights and procedures available when retirement benefits are miscalculated. You may never need them. But knowing they exist could make a significant difference if an OPM error ever affects your retirement income.
Frequently Asked Questions
Can OPM make mistakes when calculating retirement benefits?
Yes. Federal retirement calculations involve numerous factors, including service history, salary, survivor benefits, and other elections. Errors can occur and may sometimes go undiscovered for an extended period.
What happens if OPM overpays my retirement annuity?
OPM can seek repayment of an overpayment, but in certain circumstances a retiree may request a waiver. The circumstances of the error, whether the retiree was at fault, and whether repayment would be against equity and good conscience can all be relevant.
Can an OPM overpayment be waived?
Yes, in some circumstances. A waiver is not automatic, however. Each case depends on its facts and whether the applicable legal requirements are satisfied.
What should I do if OPM says I owe money?
Don’t ignore the notice or immediately agree to a repayment schedule. Review how OPM calculated the debt, gather your retirement records, and consider getting professional or legal advice if the amount is significant.
Should federal retirees review their annuity payments?
It’s a good idea to periodically review your retirement statements and keep your supporting records. Pay particular attention when a life event or change in circumstances could affect your benefits.
