In the past, Voluntary Separation Incentive (VSI), Special Separation Benefit (SSB) and other separation payments such as severance pay, have been offered to Active Duty military service members in an effort to urge members to depart from active service and ultimately reduce a surplus of manpower in certain career fields. Those receiving these payments were required to maintain an affiliation with the Ready Reserve of a military Reserve component. In circumstances where these service members would go on to attain status as military retirees and begin to receive Retired Pay, it would then become necessary to repay the VSI, SSB or severance pay that was previously received.

Federal statutes governing these programs have normally not allowed the Department of Defense (DoD) or its Defense Finance and Accounting Service (DFAS) to alter repayment ratios or provide alternative repayment plans for these military retirees regardless of the financial hardships a retiree may be experiencing. However, the Department of Defense has announced that recoupment of military retirees' VSI, SSB and certain other separation payments by DFAS has been temporarily suspended for military retirees in an active pay status effective for the May 2009 retired pay entitlements pending a formal policy and legal review by the DoD. Military Retired pay for these members received on June 1, 2009 was not reduced by any recoupment amounts.

The policy and legal review will allow DoD and DFAS to determine what options, if any, may be available to allow DoD to meet its statutory responsibilities while providing relief to military retirees impacted by recoupment actions.

Letters have been sent to all affected military retirees. To view a sample, click here. Whatever the outcome of the review, members will continue to receive correspondence before any further action is taken on their accounts.

Further information, including a list of Frequently Asked Questions, is available at our website - www.dfas.mil/retiredpay.html - and by contacting our customer service representatives at 1-800-321-1080.