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Government Pension Benefit Promises – Beware!

Federal employees and their family members find themselves in this situation, which is unfortunately not that uncommon. In retirement planning, the federal employee seeks verification of the amount of money he will receive at retirement. In some cases, a government agent from the Office of Personnel Management (“OPM”) or other agency will notify the employee of a guaranteed amount of monthly pension benefits. There are even cases where the government will make this promise to the employee in writing. However, when the employee retires, the government argues that the promise was made in error and that, in fact, the employee is not entitled to the promised amount.

An equally frustrating situation involves family members of the employee, usually the employee’s spouse, who may be planning for their future after the death of their husband. In some cases, the spouse will consult the OPM to determine her survivor’s benefits upon the death of her husband. OPM can also promise your guaranteed benefits. Indeed, upon the death of the spouse, the government backs out on its promise, claiming that it was made in error and that the promise actually violated a government policy or statute. Therefore, the question arises as to whether there are legal rights for the federal employee or his family members to enforce the botched promise.

In the private sector, people to whom promises have been made are protected by the legal doctrine of promissory estoppel, which means that if that person reasonably relied on the promise to their detriment and the promise was not kept, that person has a cause of action for damages suffered as a result of such reliance. This situation typically occurs during a career change, where the highly recruited employee is promised a much better position, ends up relocating, selling their house, etc., only to find out that the new job didn’t materialize. Even though the employee volunteers, however, the employee has a cause of action against the new employer for promissory estoppel.

Unfortunately, with respect to federal employees and their pensions, this matter was decided against them in the United States Supreme Court decision in Office of Personnel Management v. Richmond, 496 US 414 (1990), where claimant sought the advice of a federal employee and received misinformation about the value of pension benefits. The plaintiff held that unauthorized and erroneous advice should result in an equitable bar against the government, and that the Court should order payment of benefits contrary to legal terms. The United States Court of Appeals for the Federal Circuit agreed with him and entered a promissory bar against the government, entitling him to a monetary payment that would not otherwise be permitted by law. However, the Supreme Court reversed this decision and held that no legal impediment could be applied to grant benefits to the defendant claimant.

The Supreme Court relied primarily on the US Constitution’s Appropriations Clause for its reasoning that “No money shall be taken from the Treasury except as a consequence of statutory appropriations.” Thus, “the payment of Treasury money must be authorized by statute.” Richmond, 496 US at 424. In short, promissory bars, a common law remedy cannot be the basis for collecting a government pension.

If you or a close family member is employed by the federal government, the best thing to do is to have your pension benefits reviewed by an attorney who practices in this area. Don’t trust any promises a government agency makes to you.

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