Why changing password of local users fails with `passwd: Authentication information cannot be recovered`?

Solution Verified - Updated -

Issue

  • Why changing password of local users fails with passwd: Authentication information cannot be recovered?
 ~]$ passwd
Changing password for user user1.
Changing password for user1
(current) UNIX password:
New UNIX password:
Retype new UNIX password:
passwd: Authentication information cannot be recovered    <----------

Environment

  • Red Hat Enterprise Linux 5
  • Red Hat Enterprise Linux 6

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