Ohio law permits rehiring retired pension recipients

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.

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20 Responses to Ohio law permits rehiring retired pension recipients

  1. D. Carter says:

    Thank you OPERS for clearing this up for the public and the media and the politicians. Maybe now they will stop chewing this topic over and over and get on to more important matters-like balancing our budget and creating jobs.

    • Jane says:

      While rehiring a retired OPERS individual into another OPERS cover position may not be the norm under OPERS, it is fairly common practice for retired Police and Fire members (who obtain retirement benefits @ an earlier age) to be hired under OPERS or another pubic system, become eligible for retirement and receive a benefits under that system. Thus receiving two Ohio public pensions. And, under STRS it is not uncommon for administrators to retire @ the end of the school term when they become eligible and come back to either the same job or another principle position as a re-hire the following school year and work several more years and draw additional retirement under that system. There are many variations to this practice. So, the discussion is not much to do about nothing; but, instead is a topic which needs to be fully discussed with all of its twists and turns before resolution is reached. One resolution could be that retirees receiving public pensions are not eligible for a second public pension; but, instead contribute to social security. However small 5% might appear to be, there is a cost to the system and every penny saved by the system adds to the overall health of these systems. The sum of small changes can equate to big savings.

      • Deb says:

        They dont get a 2nd pension, they contribute to a money purchase plan. I still dont get the issue of returning to work-then why retire in the first place if you were going to keep working. I never could figure that out.

      • Tony says:

        As I understand it, retirement systems actually “make money” when rehiring retired public employees. The second pension referred to is actually an annuity that is funded by the entire 10% of the employees share of retirement contributions but half of the 14%, (7%) of the employer contribution plus investment earnings while the money is in the retirement systems hands. The other half of the 14% employer share is kept by the retirement system.

  2. Billy Bob says:

    OPERS has nothing to do with this. Like they said, they are just following the laws. OPERS are not the ones who are doing the re-hires… It’s the employer!!! When it comes down to it, it’s the “Good ol’ Boy’s System”. Person A retires and Person B is promoted to Person A’s old job. Person B now hires Person A back and pays him/her a pretty good salary.

    I have no problems with hard working people who retire and draw their benefits then get another job (i.e. Fire Fighters, Police, etc.) As long as they earned their pay and benefits, they should be entitled to it. That’s the way I was raised. If you work hard in life, then you will have more opportunities in life and be rewarded. It’s the “Good ol’ Boy’s System” that I have a problem with!

  3. Steve says:

    Most people opposed to retire/rehire believe the retiree is “double dipping”. What this means is that they continue to receive income as before while also receiving benefits of retirement. I’m glad this topic was addressed because, the real problem with how ‘public’ monies are being spent has come to light. ‘If’ the main reason a retiree is rehired is to save the ‘public’ money – OK, but to avoid hiring anyone else in that capacity just to keep that individual employed (good ol’ boy plan) is wrong. I believe the issue needs more examination as state funding starts to fade away. Talk about a blow to ‘our’ economy, please! Somebody needs to develop a way to squeeze blood-out-of-a-turnip?

  4. Dave says:

    The problem is there is no new monies coming into PERS. If a new hire replaced the person who retired their PERS deduction would go into the PERS investment pool. What we have is someone removing funds from PERS and “NO ONE” replacing them. This practice needs to be stopped or it will doom the system.

    • bob says:

      Not True the monies that the employer contribute for the rehired employee is put directly back into the pension fund The rehired employee does not receive this money it is put back in to refund the system.

      • Michael Pramik says:

        Bob,

        That is true of reemployed retirees who take a refund before age 65. Those who refund after age 65 will receive a portion of the employer contributions in addition to their own contributions plus interest.

        –Ohio PERS

  5. joseph Dittmer says:

    What many do not realize is the rehired retirees most of the time have to start at step 1 of their classification. That alone is a tremendous savings for taxpayers. They get an enormous amount of experience for minimal reimbursement. I find nothing at all wrong with saving money. There is only a small number of people who come back to work so I don’t think it negatively affects the OPERS budget.

    • Deb says:

      Why not hire “new” people anyway-its cheaper in the long run. get the unemployment rate down more. these people will have benefits and get them off of the welfare rolls that we are paying for. so its a win win situation all the way around. I know that the reemployed dont get their HC (usually) with their “new” job. So if they want to still work, then make them take the benefits there and the retirement system wont have to pay the high sum of HC-throw it back on the employer !!!

      • Joseph Dittmer says:

        While not re-hiring a state retiree may allow the hiring of a new person off the street, and maybe affect the unemployment figures,
        there are many situations where to do so would not save any money, cost more in the long run and take on the job training that a rehired employee doesn’t need because he/she has decades of experience doing the job already. Besides, even in today’s market, I seldom find anyone even those without a job who think of working for the state. It just isn’t in their voabulary so to speak.

        Also, many of the jobs are so difficult and pay less than any counterparts in the private sector, that they wouldn’t take the positions anyway. I have seen it happen. Esepcially professional jobs. Over the years when a colleague found out I was working for the state, they did their best to persuade me to go private. Most people who have no family tradition of working for government don’t see the government as a place for them.

  6. Mike Goffee says:

    The problem with this policy is that in most state agencies only management are offered these rehired postions

  7. Na says:

    I believe that a person who retired should be allowed to work in the Opers system again. To me it’s like saying that, a person works 30 plus years, pay into social security and retire can’t work for another company that pays into Social Security because they are receiving their Social Security retirement pay from their previous job. We know that’s now how it works and it shouldn’t with Opers retirees either. The problem that need to be address is the favoritism in the hire/rehire process.

  8. Gale Horsley says:

    I think a person who puts in 30 years should be rehired in State Government. I feel working for a company for 30 years really says something about the person. I did work for the state for 30 years, and it is very hard to find a job.

    • BOB says:

      Is anyone aware of the status of House BIll 388? Can’t find any answers in the state websites Thanks

      • Michael Pramik says:

        Bob,

        The bill was referred to House Health and Aging committee shortly after it was introduced back in December. It has not been scheduled for any hearings yet.

        –Ohio PERS

    • Tom says:

      To Na…..you have to be kidding me. I know people who have worked in OPERS employment and have retired with full benefits at 48 years old. A person on SS can’t recieve SS retirement benefits until at least 62 years of age, and Medicare doesn’t start until 65. Plus your OPERS retirment benefit is based on your highest 3 years of income, not so with SS which divides your total contributions by the number of years you worked, this in itself is a tremendous difference retirement income .

  9. od says:

    I have 35 plus years in the system and would like to retire/rehire in the same position, I offered to return for less money, minus sick leave, lower vacation and no longevity pay saving my employer and the public a substantal amount of money but was told this was not allowed by our current administrator. .My question is ,the Police and Firemen can enter their “drop” program and work up to an additional eight years without even informing their employer they entered the program. I checked with our payroll department and he said they have no idea who is in the drop program! Is this true and if possible can I retire from the OPERS system without leaving my current postion or informing my employer?

  10. Pingback: Double Dipping • The Judge Ben C. Green Law Library • Case Western Reserve University School of Law

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