The Division of Pensions and Benefits has just released Fact Sheet #86 that spells out in detail the rules governing the return to work of any New Jersey public retiree. This fact sheet, entitled Post-Retirement Employment Restrictions, replaces four previous fact sheets detailing employment after retirement which had been withdrawn from circulation several years ago. Since their withdrawal, it had been extremely difficult to obtain information regarding the rules relating to working after retirement.
The new Fact Sheet #86, which is nine pages long, is an all inclusive document relating to all defined benefit pension plans covering public employees in New Jersey: the Teachers’ Pension and Annuity Fund (TPAF), the Public Employees’ Retirement System (PERS), the Police and Fire System (PFRS), the State Police Retirement System (SPRS) and the Judicial Retirement System (JRS). Previously, there was a fact sheet covering each of the systems individually.
In the absence of information being available through official documents of the Division of Pension and Benefits, I have written several columns about the rules governing working after retirement. In them, I have tried to explain what was generally known about the subject. The new Fact Sheet reiterates the information that was contained in those articles.
What follows is a portion of the August 2014 Financial Corner column, spelling out the rules. The information is identical to the information contained in the new Fact Sheet.
# A retiree may work after retirement without any restrictions in a private sector job;
# A retiree may work after retirement without any restrictions in another State;
# A retired certificated administrator who wishes to return to full-time work after retirement in a public position in New Jersey requiring that certificate may do so under some restricted circumstances:THE MOST IMPORTANT RESTRICTION REQUIRES AN INDIVIDUAL TO BE RETIRED FOR A MINIMUM OF 30 DAYS BEFORE CONSIDERING A NEW PUBLIC POSITION. THAT 30 DAY PERIOD BEGINS JULY 1 FOR TWELVE (12) MONTH EMPLOYEES RETIRING AT THE END OF THE SCHOOL YEAR AND BEGINS SEPTEMBER 1 FOR TEN (10) MONTH EMPLOYEES RETIRING AT THE END OF THE SCHOOL YEAR. (IN THE CASE WHERE RETIREMENT APPROVAL BY THE PENSION FUND BOARD OF TRUSTEES FOR A TWELVE MONTH EMPLOYEE COMES AFTER JULY 1, THE 30 DAY COUNT BEGINS ON THE DATE OF THAT APPROVAL.)
FURTHER, UNDER A NEW INTERPRETATION HIGHLIGHTED IN FACT SHEET #86, “ANY ARRANGEMENTS (MADE) PRIOR TO RETIREMENT TO RETURN TO THE SAME PUBLIC EMPLOYMENT OR SIMILAR PUBLIC EMPLOYMENT AS A REGULAR EMPLOYEE, CONTRACT EMPLOYEE OR AN INDEPENDENT CONTRACTOR” WILL INDICATE THAT AN EMPLOYER/EMPLOYEE RELATIONSHIP EXISTED BEFORE THE 3O DAY PERIOD HAD EXPIRED AND THE RETIREMENT WILL BE CONSIDERED INVALID. (NOTE THAT THIS RESTRICTION APPLIES TO SO-CALLED “INTERIM” POSITIONS.)
Any violation of these rules may result in the cancellation of the pension and continued enrollment in the system. If pension payments have been made before the violation is discovered, the retiree will be required to reimburse the pension system for any pension payments that have been made and to pay back pension contributions for the period of time that the educator held the invalid position.
Assuming that the thirty day period has been established and no prior arrangement had been made, retirees who wish to return to public positions in New Jersey in a district other than the one in which they were employed immediately prior to retirement may do so in the following circumstances:
# A retiree may take a public position in New Jersey without any restrictions if that position is covered by a different pension system than the one from which he/she is retired. (As an example, a TPAF retiree who takes a public position that is covered by PERS may hold that position for as long as he/she wants, but is barred from joining the PERS retirement system.)
# A retiree who is a certificated superintendent or a certificated administrator may return to a full time public position covered by the same pension system from which he/she is retired for a period of one year in a position that requires the superintendent’s or administrator’s certificate. The retiree’s service may also be extended for up to one additional year, as long as the service with any one board of education does not exceed a total of two years. (This special exception is found in Title 18A:66-53.2.b.) Under this special law, certificated superintendents and certificated administrators may move to another school district for a new two year period after the initial two years and accept employment requiring the certificate. There is no limitation to the number of two year assignments. (The two year period starts on the first day of employment in the new position and ends two calendar years later. The number of days worked is immaterial. Whether the retiree works five days a week or two days a week, the employment must end two years from the date of hire.)
Any retiree returning to the district from which he/she was employed immediately prior to retirement must have a break of 180 days before returning to the district and must not have any prior arrangement with the district. The two year limit for certificated administrators begins on the day of return to the district. (While Title 18A:66-53.2b says a break of 120 days must occur before a retiree may return to the same district from which he/she retired, a federal rule for qualified pension plans imposes a 180 day break before a retiree may return to work for the same employer. Since all New Jersey plans covering public employees are qualified plans, the Division of Pensions has had to adopt the federal rule.)
Any retiree who decides to return to full-time work after being retired for a period of time or, if a certificated administrator, decides to stay in a district for more than the two years permitted by law, is subject to additional restrictions. In those cases, the retiree must suspend the original retirement* and enroll in the system and Tier currently enrolling new members (Tier 5), ** and contribute to the system, thereby building a second pension. When the educator retires the second time, he/she receives the second pension plus the original pension, which will be reinstated upon the second retirement. For the remainder of his/her lifetime, the total pension received is a combination of the original and the second pension.
# Any retiree may take a public position in New Jersey if that position is covered by the same pension system from which he/she is retired if the position does not require the retiree to enroll in the pension system as a new employee. (Current law requires that employees who work 32 hours or more per week must join either the TPAF or the PERS.) Therefore, a retired teacher (TPAF retiree) who wants to return to a part-time teaching position that requires fewer than 32 hours per week may do so. A retired custodian (PERS retiree) who wants to return to a part-time position that is covered by PERS which requires fewer than 32 hours per week may do so. (This is not an official position of the Division of Pensions. It is, however, my interpretation of the statute requiring a new employee to join either the TPAF or the PERS systems. Retirees are considered new employees if returning to work after being retired for either the 30 or 180 day period explained in the earlier paragraphs.)*A retiree who suspends the original pension while returning to full-time work should be aware that the original pension will be erased if the administrator dies during this second employment. No option and no life insurance benefit will be paid to the beneficiary of the original pension.
** Tier 5's benefit structure contains the most recent pension law changes (2011). Under Tier 5, the normal retirement age is 65 and the formula is N/60 times the average of the highest five years of service.