DRSN e07-012, New Legislation – Retirees Returning To Work

DRS E-MAIL

  • E-mail No.: E07-012
  • To: Public Education Employers
  • Sent: June 26, 2007
  • Subject: New Legislation – Retirees Returning To Work

Substitute House Bill 1262 affects employers and Plan 1 retirees of both the Teachers' Retirement System (TRS) and the Public Employees' Retirement System (PERS). This bill does not change any rules for retirees of other systems.

Hiring Retirees

Employers can still hire retirees, but your organization's hiring process has a direct impact on how many hours can be worked by retirees before their pensions are suspended.

To prevent pensions for Plan 1 retirees from being suspended after working 867 hours, several criteria must be met by employers – they include:

  • Having a written policy relating to hiring retirees
  • Hiring a retiree through an established process for the position with the approval of the school board or other highest decision making authority
  • Documenting the need to hire a retiree, the process used and the decisions made during that process, retaining that documentation and making it available in the event of an audit

Choosing to follow these processes allows your eligible Plan 1 retirees to work up to 1,500 hours before their pension is suspended. Most of the criteria above have been law since 2003 for employers who hire PERS Plan 1 retirees, but the legislature added pursuant to a written policy to PERS statute effective July 22, 2007. All the requirements for TRS Plan 1 are also effective on that date. Note: For eligible retirees that work for more than one employer, each employer must follow the process described above or the retiree's pension will be suspended after 867 hours.

Break In Service for Retirees

In addition to an employer's hiring process, retirees are required to have a specific break in service in order to work up to 1,500 hours and still receive their pension. Details by system are listed below:

  • TRS Plan 1 members who retire on or after July 22, 2007 must remain unemployed for at least 45 calendar days after their effective retirement date
  • TRS Plan 1 members who retired prior to July 22, 2007, can continue to work up to 1,500 hours per fiscal year (July 1 - June 30) without affecting the benefit, provided the retiree waited at least 30 calendar days from their retirement effective date before returning to work.
  • PERS Plan 1 members who retire on or after August 1, 2003 must remain unemployed for at least 90 calendar days after their effective retirement date
  • PERS Plan 1 members who retired prior to August 1, 2003, can continue to work up to 1,500 hours per calendar year without affecting the benefit, provided the retiree waited at least 30 calendar days from their retirement effective date before returning to work.

Normally, the effective retirement date is the first of the month following the month the employee stops work. For example, if a teacher terminates employment in June and applies for retirement, the retirement effective date would usually be July 1.

Lifetime Limit

TRS Plan 1 retirees are now subject to a lifetime limit of 1,900 hours. This lifetime limit is prospective and applies to any retiree who can work beyond 867 hours without their pension being suspended. Hours worked beyond 867 up to 1,500 within a fiscal year are the only hours that count toward this lifetime limit. Once the 1,900-hour limit is reached, the benefit will be suspended for work beyond 867 hours within each fiscal year.

A similar lifetime limit has been in place for several years for PERS Plan 1 retirees.

Communication

To manage the yearly hourly limits (867 or 1,500), DRS will communicate with both retirees and employers. When retirees approach the 867 hour limit for the year, DRS will send them a letter to let them know their pension will be suspended unless they;

  • Terminate employment prior to reaching the 867 hour limit, or
  • They qualify to work up to 1,500 hours under the rules described above.

At the same time, employers will be sent an email to ask for confirmation that the hiring requirements were met to allow the retiree to work up to 1,500 hours, or to verify the date the retiree will exceed the hourly limit or cease employment.

In addition, DRS will provide information to PERS Plan 1 retirees and TRS Plan 1 retirees each year to inform them of the cumulative hours worked that have been applied toward their 1,900 hour limit.

Other Changes

The bill changes the TRS definition of " separation from service " to specify that a retiree cannot have a verbal or written agreement to resume employment with the same employer following termination.

PERS and TRS separation definitions also have been updated to clarify that, " mere expressions or inquires about post-retirement employment by an employer or employee that do not constitute a commitment to reemploy the employee after retirement are not an agreement under this subsection ".

Resources

We have updated our TRS Plan 1 Retiree Return to Work Chart and are providing frequently asked questions for employers and members to assist you with hiring and reporting retirees. View the documents:

Questions?

Should you have questions, please reply to this message or call Employer Support Services at 360-664-7200 (press option 2) or l-800-547-6657 (press option 6 then option 2).

Communications