CBO Estimates Costs of Veterans’ Pension Legislation

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By on September 24, 2018 in Pay & Benefits with 0 Comments

Calculator displaying the word 'interest' on its screen sitting on a spread of cash

The Congressional Budget Office recently weighed in on the Correcting Miscalculations in Veterans’ Pensions Act (H.R. 4431), legislation that would would allow federal agencies to pay the interest owed by any former federal employees who chose to count their prior military service for civilian retirement benefits, if the interest results from an administrative error. The bill was introduced last year by Congressman Buddy Carter (R-GA).

According to CBO, there wouldn’t be a great deal of cost to implement the bill. It estimates that implementing the provision would cost less than $500,000 over the 2019-2023 period.

CBO based its estimate on a small sampling it conducted of cases and information from the Merit Systems Protection Board. It estimated that only a few federal retirees would be affected by the bill each year and that the average amount of interest accrued in each case would be about $15,000. CBO also noted that any such spending done by agencies would be subject to the availability of appropriated funds.

CBO also stated in its analysis:

Allowing federal agencies to pay the interest costs associated with administrative errors in converting military service could make it more likely that some retirees would pay their deposit (or corrected deposit) and thus receive a higher retirement benefit. (In those cases, the higher benefit payments would be partially offset by the deposit payments, which are recorded as revenues.) However, given the limited number of retirees that could be affected, CBO estimates that the increases in direct spending and revenues would each be less than $500,000 over the 2019-2028 period.

Carter issued the following statement about his proposed legislation:

I introduced this legislation because I have heard from veterans faced with this unacceptable problem. After serving our nation, veterans are moving on to work for federal agencies and these agencies are miscalculating their pensions, accruing thousands of dollars in interest without the veteran ever even knowing about it. Our current system requires these veterans to repay sometimes tens of thousands of dollars in interest due to no fault of their own. My legislation says federal agencies, not our brave veterans, should pay the interest payments when the federal government is responsible for the miscalculation. This is not how our veterans should be treated when they return home and it should not be allowed to continue.

For additional details on the legislation, see Bill Would Require Agencies to Pay Accrued Interest Resulting from Veterans’ Pension Payment Errors.

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Ian Smith is one of the co-founders of FedSmith.com. He enjoys writing about current topics that affect the federal workforce.

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