Like some others I am getting this error when I run rake db:migrate in my project or even try most database tasks for my Ruby on Rails 3.2 applications.
for what it's worth, I experienced this same error when I had a typo (md4 instead of md5) in my pg_hba.conf file (/etc/postgresql/9.5/main/pg_hba.conf)
If you got here as I did, double-check that file once to make sure there isn't anything ridiculous in there.