This is a reprint of the September 2014 article in entirety.
Want to Work after Retirement?Here are the Current Rules!As newly retired educators become accustomed to a different role, the one question that seems to befuddle them most relates to their ability to work after retirement. The rules for those who are newly retired and for those who have been retired for a period of time are the same. (This subject, one of great confusion to retired administrators, was last explored in the May 2013 issue of On Target.)
While there already is current law which addresses the issue, the Fact Sheets produced by the Division of Pensions and Benefits which explain the rules and regulations are being revised. Anyone trying to access the Fact Sheets entitled Employment After Retirement, will find that they are “Temporarily Unavailable Pending Revision.” (There are supposed to be four fact sheets, one for each of the major pension systems: TPAF, PERS, PFRS, and SPRS.) According to sources, this issue of working after retirement is being reviewed by officials at the Division and by the Attorney General’s office in light of changes in the retirement laws in 2010 and 2011.
In the absence of new Fact Sheets, let me try to explain the rules that were the essence of the previous Fact Sheets and are the essence of the August 22nd letter which apply to all retirees and which are still used as guidelines for those educators planning to work after retirement:
# 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. ACCORDING TO DIVISION OF PENSION AND BENEFIT FORMER FACT SHEET # 28 [EMPLOYMENT AFTER RETIREMENT (TPAF)], 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 COMES AFTER JULY 1, THE 30 DAY COUNT BEGINS ON THE DATE OF THAT APPROVAL.)
FURTHER, UNDER A NEW INTERPRETATION FOUND IN FACT SHEET #28 BEFORE IT BECAME UNAVAILABLE, “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. ”
A violation of either 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.
Assuming that the thirty day period has been established, 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 adopted the federal rule in any instance where a retiree returns to the district from which he/she retired.)
Any retiree who decides to return to full-time work after being retired for a period of time or any certificated administrator who has been working in an interim position 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 re-enroll in the pension 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.
A retiree who wishes to work in less than a full time position in the same pension system from which he/she retired may find that the 2010 pension law changes allows them to return to employment without any consequences. That is because the 2010 law changed the requirement for membership in either the TPAF or the PERS from a salary base of $7,500 to an hourly base of 32 hours. Therefore, a retired administrator or teacher (TPAF retiree) who wants to return to a part-time educational 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.
(Note: On August 22nd, a Certifying Officer Letter was sent to all public entities by the Division of Pensions and Benefits exploring this subject. It was the first official communication from the Division since the withdrawal of the Fact Sheets on Employment After Retirement two years ago. The letter spelled out the responsibilities of every board of education which employs educators after their retirement, and it requires the board’s Certifying Officer and the Certifying Officer’s Supervisor to complete a new form called Notification of Employment after Retirement within 15 calendar days of the date of hire. It further explains the rules for return to work, the consequences of violating the rules, and exceptions to the rules for retirees who are certificated administrators and/or athletic coaches. However, no new Fact Sheets have yet been published.)