[Congressional Record Volume 155, Number 70 (Thursday, May 7, 2009)]
[Senate]
[Pages S5292-S5293]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

      By Mrs. SHAHEEN (for herself, Mr. Gregg, and Mr. Kohl):
  S. 1008. A bill to amend title 10, United States Code, to limit 
requirements of separation pay, special separation benefits, and 
voluntary separation incentive from members of the Armed Forces 
subsequently receiving retired or retainer pay; to the Committee on 
Armed Services.
  Mrs. SHAHEEN. Mr. President, I rise today to introduce the Military 
Retirement Pay Fairness Act of 2009. I want to thank my colleague, 
Senator Gregg, for cosponsoring this important legislation.
  The Military Retirement Pay Fairness Act addresses a critical issue 
that impacts our nation's veterans. Certain service members who receive 
special separation pay must have that benefit recouped if they later 
re-enlist and become eligible for a pension. Under current law, the 
Department of Defense, DOD, is bound by a statutory formula for 
recouping that benefit and cannot change the amount it recoups each 
month, even if it results in severe financial hardship for our nation's 
veterans. In fact, many veterans are currently in dire financial 
straits because of this unnecessarily harsh formula. This legislation 
will fix the formula and provide these veterans with much needed 
financial relief.
  I would like to talk about one particular veteran who brought this 
issue to my attention. Sgt. Wayne Merritt of Dover, New Hampshire 
served in the Air Force for nearly 14 years until the end of the Cold 
War, when the Defense Department began to draw down its forces. At 
DOD's encouragement, Mr. Merritt took a one-time Special Separation 
Benefit, and then started working in the private sector.
  But in 1996, Sgt. Merritt decided to serve his country once again, 
joining the New Hampshire Air National Guard. When Sgt. Merritt retired 
in 2006, he became eligible for a pension that provided him and his 
family with enough to help pay the bills, especially his monthly 
mortgage payments.
  However, just a couple of months ago, Sgt. Merritt had his life 
turned upside down when he got a letter in the mail from the Defense 
Department. The letter said that, within a few weeks, DOD would begin 
recouping his separation benefit by withholding more than half of his 
pension each month until the full amount is paid back.
  Sgt. Merritt was shocked. He planned his family budget around a 
pension payment he had been receiving each month for nearly 2 years, 
only to get a letter saying that, in a few weeks, it would be reduced 
by more than half. Sgt. Merritt suddenly found himself in a position 
where he couldn't make ends meet and make his mortgage payments. In 
fact, he was so concerned that he contacted a real estate agent to talk 
about selling his home.
  Sgt. Merritt contacted DOD, asking if there was anything that could 
be done to work out a manageable monthly payment plan. Sgt. Merritt did 
not ask for the amount to be forgiven, but simply asked DOD to be 
flexible and work out a payment plan that he could afford. DOD told him 
that there was nothing it could do to help, citing a statute that tied 
its hands.
  On behalf of Sgt. Merritt, I contacted DOD and spoke to 
Undersecretary Robert Hale. He told me that DOD doesn't have a choice--
it must recoup over half of his income because the formula in the 
statute dictates the rate. The result is that Sgt. Merritt, and over 
1,000 veterans in similar situations across the country, face financial 
hardship as a result of an unfair rule. As each month goes by, DOD has 
to garnish over half of Sgt. Merritt's pension payments.
  I do not believe that Congress intends to treat our Nation's veterans 
this way. That is why I am introducing legislation today that would 
provide a simple and straightforward solution. Instead of an 
unnecessarily harsh formula, our bill will provide DOD with the 
flexibility it needs to develop manageable monthly payment plans that 
do not impose undue financial hardship on service members. In addition, 
DOD would be required to consult with the service member to create a 
monthly payment plan, taking into account a veteran's financial 
situation when determining how much should be recouped each month. To 
make sure these payment plans are manageable, DOD would only be able to 
recoup, at the most, 25 percent of the veteran's monthly pension check 
until the benefit is repaid.
  This legislation would also address other problems with pension 
recoupment.
  It would provide service members with adequate notice of the 
recoupment so that they have time to prepare for the loss of income. 
Sgt. Merritt received his letter just weeks before DOD garnished over 
half of his pension pay. This legislation ensures that service members 
have at least 90 days notice before recoupment begins.
  Finally, the legislation would also give the Secretary of Defense the 
flexibility to ensure that no veteran will be left destitute from this 
recoupment. We need to recognize that financial circumstances change 
over time. If recouping the benefit would cause a severe financial 
hardship, the Secretary of Defense should be able to waive that amount.
  This legislation is critical. Each month, over 1,000 veterans face 
circumstances similar to Sgt. Merritt's. Undersecretary Robert Hale 
told me that while he sympathizes with these veterans, he has no legal 
recourse to change the amount it recoups every month. This legislation 
provides DOD with the flexibility it needs to ensure that we do not 
punish veterans who have made the courageous decision to serve their 
country again.
  I'm glad that this effort has the support of DOD, as well as veterans 
organizations like the Veterans of Foreign Wars, VFW, and the Military 
Officers Association of America, MOAA.
  I want to thank Senator Gregg for his support of this important, 
common sense legislation. I also want to thank my fellow New Hampshire 
delegation member, Carol Shea-Porter, for introducing companion 
legislation in the House. I urge my colleagues to join me in addressing 
these important issues.
  Mr. President, I ask unanimous consent that the text of the bill be 
printed in the Record.
  There being no objection, the text of the bill was ordered to be 
printed in the Record, as follows:

                                S. 1008

       Be it enacted by the Senate and House of Representatives of 
     the United States of America in Congress assembled,

     SECTION 1. SHORT TITLE.

       This Act may be cited as the ``Military Retired Pay 
     Fairness Act of 2009''.

     SEC. 2. LIMITATIONS ON RECOUPMENT OF SEPARATION PAY, SPECIAL 
                   SEPARATION BENEFITS, AND VOLUNTARY SEPARATION 
                   INCENTIVE FROM MEMBERS SUBSEQUENTLY RECEIVING 
                   RETIRED OR RETAINER PAY.

       (a) Separation Pay and Special Separation Benefits.--
     Section 1174(h)(1) of title 10, United States Code, is 
     amended--
       (1) by inserting ``(A)'' after ``(1)'';
       (2) in subparagraph (A), as so designated, by striking ``so 
     much of such pay as is based on the service for which he 
     received separation pay under this section or separation pay, 
     severance pay, or readjustment pay under any other provision 
     of law'' and inserting ``an amount, in such schedule of 
     monthly installments as the Secretary of Defense shall 
     specify taking into account the financial ability of the 
     member to pay and avoiding the imposition of undue financial 
     hardship on the member and member's dependents,''; and
       (3) by adding at the end the following new subparagraphs:
       ``(B) The amount deducted under subparagraph (A) from a 
     payment of retired or retainer pay may not exceed 25 percent 
     of the amount of the member's retired or retainer pay for 
     that month unless the member requests or consents to 
     deductions at an accelerated rate. The Secretary concerned 
     shall consult with the member regarding the repayment rate to 
     be imposed, taking into account the financial ability of the 
     member to pay and avoiding the imposition of an undue 
     hardship on the member and the member's dependents.
       ``(C) The deduction of amounts from the retired or retainer 
     pay of a member under this paragraph may not commence until 
     the date that is 90 days after the date on which the 
     Secretary concerned notifies the member of the deduction of 
     such amounts under this paragraph. Any notice under this 
     subparagraph shall be designed to provide clear and 
     comprehensive information on the deduction of amounts under 
     this paragraph, including information on the determination of 
     the amount and period of installments under this paragraph.
       ``(D) The Secretary concerned may waive the deduction of 
     amounts from the retired or retainer pay of a member under 
     this paragraph if the Secretary determines that deduction of 
     such amounts would result in a financial hardship for the 
     member.''.
       (b) Voluntary Separation Incentive.--Section 1175(e)(3) of 
     such title is amended--
       (1) in subparagraph (A), by striking ``so much of such pay 
     as is based on the service

[[Page S5293]]

     for which he received the voluntary separation incentive'' 
     and inserting ``an amount, in such schedule of monthly 
     installments as the Secretary of Defense shall specify taking 
     into account the financial ability of the member to pay and 
     avoiding the imposition of undue financial hardship on the 
     member and member's dependents,'';
       (2) by redesignating subparagraph (B) as subparagraph (C);
       (3) by inserting after subparagraph (A) the following new 
     subparagraph:
       ``(B) The amount deducted under subparagraph (A) from a 
     payment of retired or retainer pay may not exceed 25 percent 
     of the amount of the member's retired or retainer pay for 
     that month unless the member requests or consents to 
     deductions at an accelerated rate. The Secretary concerned 
     shall consult with the member regarding the repayment rate to 
     be imposed, taking into account the financial ability of the 
     member to pay and avoiding the imposition of an undue 
     hardship on the member and the member's dependents.''; and
       (4) by adding at the end the following new subparagraphs:
       ``(D) The deduction of amounts from the retired or retainer 
     pay of a member under this paragraph may not commence until 
     the date that is 90 days after the date on which the 
     Secretary concerned notifies the member of the deduction of 
     such amounts under this paragraph. Any notice under this 
     subparagraph shall be designed to provide clear and 
     comprehensive information on the deduction of amounts under 
     this paragraph, including information on the determination of 
     the amount and period of installments under this paragraph.
       ``(E) The Secretary concerned may waive the deduction of 
     amounts from the retired or retainer pay of a member under 
     this paragraph if the Secretary determines that deduction of 
     such amounts would result in a financial hardship for the 
     member.''.
       (c) Effective Date.--The amendments made by this section 
     shall take effect on the first day of the first month 
     beginning on or after the date of the enactment of this Act 
     and apply to deductions made from the retired or retainer pay 
     of members of the uniformed services for that month and 
     subsequent months.
                                 ______