Government promises of retirement benefits - beware!

Government promises of retirement benefits – beware!

Federal employees and their family members face this situation, which unfortunately is not very rare. In planning for retirement, the federal employee seeks to ascertain the amount of money that will be received in retirement. In some cases, a government agent with 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 makes this promise to the employee in writing. However, when the employee retires, the government argues that the promise was made in error and that employee is not actually entitled to the promised amount.

An equally frustrating situation involves an employee’s family members, usually the employee’s spouse, who may plan for her future upon her spouse’s death. In some cases, the husband/wife/wife/husband/wife/wife/husband/wife/wife/wife/wife/wife/wife/wife/wife-in-law (OPM) investigates her surviving benefit upon the death of her spouse. OPM may also promise them guaranteed benefits. Certainly, upon the death of a spouse, the government would retract its promise, claiming that it was made in error and that the promise actually violated government policy or law. So the question arises whether there are any legal rights for the federal employee or his family members to carry out the bad promise.

In the private sector, persons to whom promises are made are protected by the legal doctrine of forfeiture of permission, which means that if that person reasonably relied on the promise to their detriment and the promise was not fulfilled, that person has cause of action for damages sustained as a result of that reliance. This situation usually occurs during a career change, where a highly hired employee is promised a much better position, and ends up moving, selling their home, etc., only to find that the new job did not materialize. Although the employee is in his desire, he has cause to sue his new employer for the promissory note.

Unfortunately, with respect to federal employees and their pensions, the case against them was decided in the U.S. Supreme Court decision in Office of Personnel Management v. Richmond, 496 U.S. 414 (1990), in which the plaintiff sought advice from a federal employee and was misinformed about the value of his benefits the retirement. The plaintiff argued that erroneous and unauthorized advice should result in a just fall against the government, and that the court should order the payment of interest contrary to legal terms. The US Court of Appeals for the Federal Circuit agreed with him and enforced the promissory note order against the government, giving him the right to receive a cash payment not otherwise permitted by law. However, the Supreme Court overturned this decision and held that the lock-up order could not be applied to give the defendant the right to benefits.

The Supreme Court relied primarily on the Appropriations Clause of the United States Constitution in its reasoning which states that “No money shall be drawn from the Treasury, but in consequence of appropriations as may be made by law.” Thus, “the payment of money from the treasury must be authorized by law.” Richmond, US 496 at 424. In short, promissory note, common law remedy cannot be grounds for collecting a state pension.

If you or a close family member works for the federal government, the best thing to do is have your pension benefits reviewed by an attorney who practices in this field. Do not rely on promises made to you by a government agency.

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