New Law Allows Agencies to Pay Interest for Mistakes on Military Service Deposits

A new law would authorize agencies to pay interest to federal employees on mistakes made in calculating military service deposits.

A bill that was recently signed into law by President Trump authorizes federal agencies that make a mistake in calculating military service deposits and pensions to pay the incorrectly accrued interest on behalf of veteran federal employees.

The Correcting Miscalculations in Veterans’ Pensions Act (H.R. 4431) was introduced by Congressman Buddy Carter (R-GA).

According to information provided by Carter, American veterans working at a federal agency are required to pay a military service deposit in order to receive their military service pension while working for the federal agency. Due to a misclassification in the type of the employee’s status, the federal agency will therefore charge different interest rates on those military service deposits, often leading to miscalculations.

Once the federal agency becomes aware of the miscalculation, they will contact the veteran/employee and notify him or her of the need to pay back the balance with accrued interest. In some scenarios, that interest can be tens of thousands of dollars that the veteran would be required to pay.

Carter said there was not any recourse for veterans to mediate that payment and there is no authority for the federal agency to wipe away the incorrectly accrued interest, but that will change under this new law.

“I introduced this legislation because I have heard from veterans faced with this unacceptable problem,” Carter said.

“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.”

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Ian Smith is one of the co-founders of He has over 20 years of combined experience in media and government services, having worked at two government contracting firms and an online news and web development company prior to his current role at FedSmith.