What is Catch-62?

Federal employees with prior military service are (or should be) acutely familiar with provisions known as the “Catch-62” provision.

Certain civilian employees of the federal government who have prior military service 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

How could it affect me?

If a Federal employee fails to make the deposit prior to retirement, his/her retirement annuity is reduced by OPM if and when he/she become eligible for Social Security benefits at age 62.

Do I have an appeal right?

In most situations, yes.  When OPM reduces your annuity, and claims that the reduction is due to failing to make the military deposit prior to retirement, you will have an opportunity to request that the OPM reconsiders its decision. If OPM still denies your claim and reduces your annuity, the OPM is required to inform you of your right to appeal your Catch-62 claim to the Merit Systems Protection Board (MSPB).

What do I have to prove at the MSPB to prevail?

Typically, the MSPB has found that so long as an retiree is informed of the right to make the deposit and the consequences of not making the deposit, then there is no remedy when the Catch 62 provisions are triggered.

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.

Since 2006, the rule has been that if an Executive Agency (i.e., your employing Agency) commits “administrative error” and as a result of that “administrative error” you do 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).

What constitutes administrative error?

There is no cookie-cutter answer to this question. 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 decision in Hendricks, in the view of this Firm, gives a more helpful understanding of the term “administrative error”.   Hendricks v. OPM, MSPB Docket No. At-0831-07-0995-I-1 at 2008 MSPB 133 (June 20, 2008). The Hendrix 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.

This Firm is of the opinion that a retiree cannot make an informed decision on matters that significantly affect their annuity, in the context of the military service credit deposit, without knowing:

1) How much he/she has to deposit. A CSRS employee deposits 7% of post-1956 military earnings (plus interest). A FERS Employee need only deposit 3% of the post-1956 military earnings. (plus interest). There is a process, however, by which the employee must request this information, and very few Agencies are actually helping employees actually find this information out.

2) What the consequences are to his or her retirement annuity.

While the forms and instructions mentioned above suggest a reduction in annuity is likely at age 62, many Agencies are telling their employees that it “isn’t much of a reduction” or that “social security will make up for the loss” or some other such nonsense. Except in rare situations, the misinformation doesn’t appear malicious – mostly it seems to grow out of ignorance of how Catch-62 works. The reduction can easily be $500 – $2000 a month, depending on how long you served in the military.

3) When and how to make the military service deposit. Many employees aren’t told that they can make this payment – interest free – in the first three (3) years of their federal civil service. Many employees aren’t told that they can make this deposit by having it withheld from their paycheck. This alone will probably not amount to administrative error – but if an employee is standing, holding a check in hand and ready to make the deposit, and nobody tells him or her where or how to make the deposit, this could well be administrative error.

Examples of situations that might be Administrative Error:

1) The retiree testified that he was told, at retirement, that the reduction in his annuity would be about $5 per month. When reality hit this retiree, the actual reduction was approximately $60 per month. (This Firm has seen situations where an annuity was reduced hundreds to thousands of dollars per month).

2) Retiree testified that he was told that he would make up the difference in Social Security payments.  This is a silly point given that the employee is losing thousands of dollars per month that he need not lose in the first place.

3) Retiree is told that he can make the deposit after they retire. This is flat out incorrect.

4) Retieree is told that  nobody at the Agency knows how to calculate the deposit – without telling the employee how to contact individuals that can calculate the deposit.

5) Retiree is provided improper retirement forms that didn't give him notice of the right to make the military service credit deposit before retirement.  In one fairly egregious case, HR and retirement personnel gave one of our client retirement forms dating back to 1982 (he was retiring in the early 1990’s), thus giving him no notice of the deposit rules, the need for the deposit and the consequences of the deposit.

6) Retiree is told that making the military service deposit will indefinitely delay his/her retirement.   This is another untruth.  If the military service credit deposit is handled properly, it shouldn’t delay your retirement at all.

7) Retiree is not retired using the standard retirement application, as he was serving overseas in a highly classified posting at the time of his retirement; the personnel officer in the Agency advised our client that he wouldn’t be entitled to the increased annuity anyway.

8)  An Air Traffic Controller with the FAA was advised - as recently as 2007 - that so long as his total federal time (military and civilian) did not exceed 27 years, he would be entitled to receive an annuity worth 50% of his high-three. Further, he was advised by a benefits specialist that his annuity would not be reduced if he didn’t buy in his military time, as that would push him over the 27 year limit.  This was a gross misinterpretation of the rules surrounding the military service credit.  If the FAA is advising employees of this as recently as 2007, how many FAA employees will be caught at age 62?

How often does the retiree win a Catch 62 appeal at the MSPB?

I computed some raw statistics based on counting up the number of Catch-62 Appeals, for each office of the MSPB between July 1, 2008, and October 17, 2008, in which OPM prevailed.

An OPM ‘victory’ includes those cases that were dismissed as untimely filed, or in which the Appellant voluntarily withdrew his or her appeal after filing.

ATLANTA Regional Office: 73% (pro-OPM)

CHICAGO Regional Office: 57% (pro-OPM)

DALLAS Regional Office : 44% (pro-OPM)

DC Regional Office: 43% (pro-OPM)

DENVER Field Office: 33% (pro-OPM)

NEW YORK Field Office: 33 % (pro-OPM)

NORTHEASTERN Regional Office: 60% (pro-OPM)

WESTERN Regional Office: 58% (pro-OPM)

These statistics generally don’t inform us of anything in a particular case, but they do give you an idea of the odds that you are up against.

How much does it cost for an attorney to represent me?

Attorney fees are discussed in greater detail elsewhere in this website.

The Attig Law Firm has become quite experienced and proficient in handling Catch-62 cases.  In many situations, we can offer you a fixed fee for representation, or a reduced hourly rate.

If you prevail after a hearing on your Catch-62 appeal before the MSPB, you are entitled to recover your attorney fees from OPM.

When do I do something?

Ideally, you should make the military service credit deposit before retirement.  If as a result of administrative error by your employing agency, you do not make the deposit, and you are not yet 62, you should contact an attorney or law firm with experience litigating Catch-62 appeals before the MSPB to discuss how you might preserve evidence in the event that your annuity is reduced.

If you have received notice from OPM that it will reduce your annuity due to Catch-62 provisions, it is best to consult with an attorney about your rights and possible remedies.

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.