The Foreign Service Journal, March 2005

MARCH 2005 • AFSA NEWS 11 I magine settling intoretirementwithcon- fidence that yourpensionwill provide for your old age and that of your spouse. Then you receive a letter from the State Department informing you that a miscal- culationhasbeenmade; yourmonthlypen- sion will be reduced and you will have to returntheoverpayments. Iftheadjustments are modest, you can absorb the costs; but if they involve tens of thousands of dollars, say hello to the poorhouse and good-bye to your retirement security. Retiree after retiree came toAFSAwith this problem during the past year. Most retirees didnot understandhow the errors incalculationhadbeenmade. Others, par- ticularly those elderly in reduced circum- stances and in ill health,were frightenedand unsure about the future. None felt that the department hadgiven themsufficient infor- mation to understand exactly what had happened or how to contest the demand for repayment. AsAFSAbecame involved, wenot only sawthehumandimension, but encountered a dysfunctional system. The matter of overpayment claims raisedques- tions about the department’s processes for making retirement calculations, commu- nicating with retirees and using a trans- parent and fair procedure for granting waivers and compromise of claims. After a recent audit of retirement accounts revealed errors, the department sent out anestimated200 letters to retirees, explaining that they had been overpaid, theirmonthly annuitieswouldbe reduced and they would be required to refund the overpayments. To our knowledge, most errors involved the murky area of Social Securitypaymentsor entitlementswhenthe new retirement systemwent into effect, as well as disabilitybenefits andchild survivor annuities. Most often, retirees explained that they had relied on department calcu- lations and counsel and had expected the department to coordinate with the Social Security Administration. Their reliance was misplaced. The department mademistakes and there was no internal procedure for correctionorperi- odic review. Nevertheless, retireeswereheld strictly accountable. If the department decided a retiree “should have known” of anerror, it heldhimor her accountablenot for a simplemistake, but for a department lapse compoundedby the passage of time, sometimes as much as 15 or 20 years. Many retirees reporteddifficulty getting information fromthe department. (They hadreceivedaperfunctory initial notice and a follow-up letter stating the amount to repay, with limited informationabout how to document financial qualifications and pursue a request for waiver.) In many instances, their letters, e-mails andtelephone calls went unanswered. At times they received contradictory communications. Months elapsed. Retirees toldAFSAabout the stress of the situation, not knowinghow they would be able to get along financial- ly andworrying about the effect of thepro- longed waiver and grievance process on their health and financial planning. In the absence of adequate department guidance, AFSA advised annuitants to use the well- developedOfficeofPersonnelManagement financial qualifications form and waiver guidelines as a basis for requestingwaivers. Indenyingwaiver requests, the depart- ment tookahard line andgave scant expla- nation. Noting that retirees are ultimate- ly responsible for theaccuracyof their retire- ment calculations, it found them at fault, saying they shouldhave knownof anerror, even one the department hadmade years before. It found no financial hardship in instances when a retiree had to use funds put aside toprovide care for a familymem- berwithaprogressive illnessorwhenrepay- ment reduced the amount available for liv- ing expenses to a bare-bones level. The lengthof time thedepartment took toresolve cases also took its toll. By the time some retirees had begun the grievance process and the depart- ment indicated it would consider a compromise, theywere already exhausted by the process and in ill health. Why does the department treat retirees this way? When it saw the results of the retirement accounts audit, why didn’t it work with affected retirees in a humane, timely and transparent manner? Most affectedretirees owedmodest amounts and werewilling tomake the repayments, so the process couldhave been an easy one for all concerned. So why — given its ongoing failure toverify andcorrectmiscalculations — did the department ask a few individ- uals tomake catastrophic repayments? Like Police Inspector Javert in LesMiserables , the department was relentless in its pursuit of these retirees. Responding to members’ concerns, AFSAstaff and labor-management lawyers haveworked in a number of ways to assist retirees, helping themwith financial show- ings, waiver requests, grievances andefforts to compromise claims. AFSAhas sent let- ters on behalf of retirees to State manage- ment, and has had numerous meetings to discuss overpayment with State Department officials, including the direc- tor general, the chief financial officer, the headof theRetirement AccountsDivision in Charleston, staff and the new director of the Retirement Office. What should be done now? As amat- ter of equity and good conscience the department, in the longest-running over- payment cases, should limit its repayment requests to the amount overpaid during the last three years. Second, building on some recent improvementsmade inRAD and HR/RET, the department should commit the personnel, financial resources and information systems needed to cre- ate a retirement system that works for, rather than harasses, its retirees. They deserve no less for their many years of loyal service. ▫ OVERPAYMENTS AND THE DEPARTMENT OF STATE AFSA Urges Better Treatment of Retirees BY BONNIE BROWN, RETIREE ACTIVITIES COORDINATOR