A debt notice after you retire
It comes from your agency’s payroll, not OPM.
Don’t ignore it. An unpaid agency debt can go to Treasury, which can take it from your annuity or tax refund.
Jump to a section
1. Why it isn’t your annuity
Your pension comes from OPM. Your paychecks came from your agency’s payroll provider — the National Finance Center, DFAS, the Interior Business Center or GSA’s payroll center, depending on the agency. They’re separate systems.
A payroll office can keep adjusting your final pay periods for weeks after you leave. If one of those adjustments finds you were paid too much, it becomes a debt to the agency — even while your OPM annuity is exactly right.
| Notice comes from… | It’s about… | Where to go |
|---|---|---|
| Your former agency or its payroll office | Final salary, leave payout, deductions | This page |
| OPM | Your annuity | OPM overpayments |
2. Common causes
- The annual leave payout was recalculated — the hourly rate, the hours, or holidays in the projected period. See the leave payout.
- Premiums weren’t fully deducted from final paychecks — FEHB, FEGLI or dental and vision — and payroll caught it later.
- Pay was issued past your separation date, often for part of a pay period.
- A pay or leave adjustment was reversed, such as a retroactive change processed after you left.
- Other deductions were missed, such as a TSP loan payment or union dues.
The notice may say only something like “internal adjustment processed in pay period 17.” That’s not enough to judge whether it’s right — which is why the breakdown comes first. Check it against your final pay statements; Federal Warrior explains how to read an LES.
3. Your rights and the deadlines
Before collecting, the agency must tell you in writing what you owe and why, and what you can do about it. Typically you can:
- Inspect and copy the records behind the debt.
- Dispute the amount through reconsideration or a hearing.
- Propose a repayment plan.
- Request a waiver.
Some windows are as short as a week or two. The dates are on your notice. A request filed on time usually suspends interest, penalties and fees while it’s decided.
4. Waiver or repayment plan
Under 5 U.S.C. 5584, your former agency can waive all or part of an overpayment of pay if collecting it would be against equity and good conscience. The decision is discretionary. Two things matter most:
| Question | Helps a waiver | Hurts a waiver |
|---|---|---|
| Was it your fault? | An agency or payroll error you couldn’t reasonably spot | An overpayment you should have noticed on your pay statement |
| Would repaying be unfair? | Financial hardship, or you relied on the money in good faith | You can repay without hardship |
If you don’t qualify for a waiver, ask for installments that fit your budget. And if money is collected before a waiver is granted, it’s refunded when you apply within two years of the waiver.
Ignoring the notice is the costly option. Unpaid agency debts can be referred to Treasury, which can offset federal payments, including your annuity. Similar rules apply to court-ordered deductions; see garnishment of a federal annuity.
5. Frequently asked questions
Why did I get a debt notice after retiring when my annuity is correct?
Because the debt usually comes from your former agency’s payroll office, not OPM. Payroll providers such as the National Finance Center sometimes correct your final paychecks after you leave, for example a recalculated annual leave payout or insurance premiums that were not deducted. The correction becomes a debt even though your OPM annuity is right.
Can the debt be waived?
Possibly. Under 5 U.S.C. 5584 your former agency can waive an overpayment of pay if collecting it would be against equity and good conscience and not in the best interests of the United States. Waivers are discretionary and are usually denied if you knew, or should have noticed, that you were being overpaid. You request the waiver through the agency, not OPM.
How long do I have to respond?
Check the notice. You generally receive written notice before collection starts, with deadlines to inspect the records, request a hearing or reconsideration, propose a repayment plan, or ask for a waiver. Some deadlines are short, and filing a timely request usually suspends interest and penalties while it is decided.
What happens if I ignore it?
The agency can refer an unpaid debt to the Treasury Department, which can collect it by offsetting other federal payments, including your annuity and tax refunds. Interest, penalties and fees can also be added. Responding early keeps your options open.
Is this the same as an OPM annuity overpayment?
No. An OPM annuity overpayment comes from OPM and has its own reconsideration and waiver process. A salary overpayment comes from your former agency’s payroll and is handled by that agency under different rules.