Legal Corner - September 2014

More on Navigating the Minefield of Working after Retirement 

As Mort indicates, on August 22, 2014, Florence Sheppard, the Acting Director of the Division of Pensions and Benefits, sent a letter to all Certifying Officers for PERS, TPAF, and a few other public retirement systems.  Among other things, that letter directs the Certifying Officers of all public employers with employees in one of the enumerated pension funds, to submit a Notification of Employment after Retirement  form for any individual who is retired from a New Jersey State administered retirement system, to the Divisions of Pensions and Benefits within 15 calendar days of the date of hire.  In addition, the employer is required to notify the Division when the employee’s services are terminated.

This is significant for several reasons.   In the past there has been confusion among some working administrators as to what types of positions they could undertake upon retirement, when they could undertake employment, and for how long.  This confusion has been exacerbated by the disappearing Fact Sheets discussed by Mort, changing interpretations of the existing regulations, and by inconsistent application and investigation by the Division. 

The August 22 directive solves some of those issues by setting forth the timelines that must be followed by retirees who choose to work as administrators after retirement by the TPAF.  It also makes it clear that all retirees who are going to take interim administrator positions in New Jersey public schools will be reported to the Division of Pensions.  For its part, the Division states that it will use the information it receives in these reports “to determine if the returning retiree can continue to receive retirement benefits while re-employed, or if the retirement must be canceled and the employee enrolled in the same or another retirement system.”  It also notes that even taking a position as a volunteer in a school district too soon may result in a finding that the retiree’s retirement is not bona fide.   Recent decisions from the Trustees of the TPAF are consistent in finding a volunteer who begins the volunteer position too soon has not achieved a bona fide retirement.  As a result, NJASA urges that members scrupulously adhere to the timelines set forth by Mort when working after retirement.

It has been the unfortunate experience of some NJASA members recently that taking any position without following the timelines set forth in Mort’s article can indeed result in a finding that a member’s retirement is not bona fide.   In a recent case, the TPAF investigated a member who upon retirement, acted as the mentor for the new superintendent in the district from which the member retired.  The TPAF argued that, because the member began mentoring the individual immediately upon retirement, the member did not have a bona fide retirement.  NJASA argued that in acting as a mentor, the member was not working in a position in the district.  Rather, the mentor was acting under the auspices of the State Board of Examiners to ensure that the new superintendent performed the appropriate duties to become properly certified as a chief school administrator.  The Trustees of the TPAF subsequently ruled that the member did have a bona fide retirement in this instance; however, it hinted that in future instances, it might conclude that there is no bona fide retirement.  For this reason, it is critical that members seek advice before agreeing to mentor their successors, or anyone, immediately upon retirement.

As a result of this information, it is more important than ever that administrators contemplating retirement, as well as current retirees, who are working within public school districts, seek competent advice by a knowledgeable professional, in determining whether they can seek a post-retirement position in a public school district and for how long.