MSPB: Recent Decision on Catch-62 provisions
On June 20, 2008, the full Merit Systems Protection Board issued a decision that helped to clarify the rights of retired civilian federal employees under what are commonly referred to as “Catch-62″ provisions. Click here to read the decision in its entirety.
Civilian employees of the federal government who have served in the military may, by making a pre-retirement deposit, buy their post-1956 military service into their federal retirement annuity. By paying a percentage of their military earnings to their employing agency before they retire, Federal employees get the benefit of an increased annuity for the duration of their retirement.
However, if a Federal employee fails to make the deposit prior to retirement, their retirement annuity is reduced by OPM if and when they become eligible for Social Security benefits at age 62.
Chris Attig, a lawyer that represents retirees before the MSPB on Catch-62 appeals, says “The reduction is often much more than the retiree expects. In some cases, the retiree’s income is reduced by $1000-$2000 per month. This reduction hits retirees when they are least able to replace the income - particularly in a tight employment market or a recession.”
The biggest problem is that, even today, years after the passage of the Catch-62 provisions, employees are being ill-advised of the need for making this deposit or the failure of making the deposit. MSPB lawyers at the Attig Law Firm, PLLC, have seen situations where HR and retirement personnel have told employees that the age 62 reduction will be less than a hundred dollars a month - the reduction is more likely in the thousands per month.
They have told retirees that they will make up the difference in Social Security payments - a silly point given that the employee is losing thousands of dollars per month that they need not lose.
They have told retirees that they can make the deposit after they retire - this is flat out incorrect.
They have told retirees that nobody at the Agency knows how to calculate the deposit - without telling the employee how to contact individuals that can calculate the deposit. In one fairly egregious case, HR and retirement personnel gave our client retirement forms dating back to 1982 (he was retiring in the early 1990’s), thus giving the employee no notice of the deposit rules, the need for the deposit and the consequences of the deposit.
Since the Federal Circuit Court ruled on the matter in 2006, the rule has been that if an Executive Agency commits “administrative error” and as a result of that “administrative error” the employee does not make the deposit, the MSPB will order OPM to accept a late deposit and reverse the reduction in the annuity. McCrary v. Office of Personnel Management, 459 F.3d 1344, 1349 (Fed. Cir. 2006).
The question has always been what will rise to the level of “administrative error”. The following situations are known to be administrative error: the Agency misrepresents the amount of the deposit, gives an inaccurate amount, or confuses the employee as to the amount of the deposit or the effect of any failure to make the deposit on the annuity recalculation.
The Board’s recent decision in Hendricks, in the view of this Firm, gives a more helpful understanding of the term “administrative error”. The case reaffirmed the fact that military veterans are entitled to expect that the government will provide them with accurate answers to questions concerning their deposit requirements to enable them to make informed decisions on matters that may significantly affect their annuities.
Certainly this is not a ground-breaking decision for lawyers that practice regularly before the MSPB. However, the decision in Hendricks will invariably help pro-se appellants, and attorneys who infrequently practice before the Board, to have a more clear and precise picture of what is required to persuade the MSPB to order OPM to accept a late deposit for post-56 military service.
No post on this website is legal advice, is meant to be legal advice, and certainly does not serve as a substitute for legal advice. Information is power, and we are providing this information to give you, the federal employee, with some power. This information is not widely or easily accessible to Federal Employees.
It is best to consult with a lawyer familiar with Merit Systems Protection Board (MSPB) appeals to discuss the facts and law of your particular case. If you have questions about Catch-62 issues, or OPM’s reduction of your retirement annuity at age 62, contact an MSPB attorney at the Attig Law Firm, PLLC, to schedule a telephone consultation.
