Recent media reports concerning the topic of rehired retirees seem to suggest that pension systems such as the Ohio Public Employees Retirement System created the practice.
In truth, it is Ohio law that permits retired public employees to be hired by a public employer and return to work in a public-sector position while receiving a pension.
Once OPERS retirees are rehired, they no longer contribute to the pension already earned and do not earn additional service credit. Instead, they contribute to an annuity that is separately maintained from their original retirement account.
When our members retire, whether they choose to go back to work or not, their benefits are prefunded from monies that include their lifetime contributions. An individual’s established pension benefit cannot lead to a “shortfall” in the system. Thus, taxpayers are never asked to pay more to partially fund the pensions of current retirees. The overwhelming majority of a retiree’s pension is funded by investment returns.
Fewer than 5 percent of our retired members are re-employed in public positions, and more than two out of every three of them earn less than $20,000 annually in salary after they retire. In that respect, they are no different than a private-sector employee retiring, drawing Social Security, and then getting a part-time job for a period of time.
One of the roles of OPERS is to administer the laws governing pensions for public employees. As our members legally make use of these established laws, OPERS is obligated to manage their retirement accounts according to law.