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Can a person work after "retiring" and receiving a pension?

For example, in Illinois public workers are eligible to "retire" at age 59 and receive 75% of their salary at the time. So, for example, a school superintendent making $268,000 a year, can "retire" and immediately start drawing a pension of $200,000 for their rest of their life that automatically goes up 3% every year for "inflation" (even if the money supply is deflating).

Can the superintendent then just apply to another school system and become a principal or superintendent somewhere else and then make another $250,000 on top of the $200,000 they are already drawing as a pension?

molnarm
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Five Bagger
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    Possibly more a legal question than personal finance, but this page suggests it's generally OK along the lines of D Stanley's answer. – Peter K. Mar 12 '18 at 14:47
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    I'm voting to close this question as off-topic because It seems like more of a rant against how unfair it is that people get things they don't deserve. It's not a question about the poster's personal finances. – Kate Gregory Mar 12 '18 at 15:35
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    There's nothing inherently wrong with asking questions relating to a politically charged topic, but care should be exercised to keep statements factual. As long as the answers can be applied individually (Can I work another job after I applying for my pension?) this seems to be on-topic for this site. If you feel there are extraneous ranting words in the question, edit them out. The worst case scenario is that the OP rolls your edits back, and we take it to meta. – NL - Apologize to Monica Mar 12 '18 at 16:42
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    From what I've heard, it's common in the military. Serve your 20 years, retire with 60% pay, and switch to the military contractor side and get paid way more +60% for the same work. – Kevin Mar 12 '18 at 18:00
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    @Kevin I've heard of lots of state employees in my region doing this, too. It was typically referred to as "double-dipping." – reirab Mar 12 '18 at 21:13
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    Usually "double-dipping" refers to obtaining the second pension, not a second income from employment, – herb guy Mar 13 '18 at 06:31
  • I am not a native speaker, but as retired people don't need to work I would suppose you can refer to their new salary as 'overtime pay' rather than 'double dipping'. -- Double dipping might apply if a trick was used (for instance 'early retirement' combined with a new job) to gain more money with less work. – Dennis Jaheruddin Mar 13 '18 at 16:12
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    The average superintendent that makes $250,000, is a "CEO" with thousands of employees. Weird how that makes you angrier than the $40,000,000 CEOs. – WakeDemons3 Mar 13 '18 at 22:15
  • It depends entirely on the national, state and local rules, contract and pension terms, which (in the public sector, US and other countries) are typically the result of union bargaining. Double- and triple-dipping are common in the US public sector e.g, police, firefighters, academics. @KateGregory: no the question is perfectly on-topic and is not a rant. Certainly the topic arouses emotions, but is on-topic. – smci Mar 14 '18 at 01:08
  • @smci using sneer quotes, saying you can "just" get a job in another district (leapfrogging those who've been in that district working their way up to those top jobs) and most of all, using figures for someone with 35 years in the system as typical for a 59 year old retiring from a job you need a degree or two to get -- those all add up to a rant. I considered editing it but there would be little or nothing left if I did. – Kate Gregory Mar 14 '18 at 02:17
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    I don't see any ranting or complaining in the question - OP uses quotations a bit liberally, but not in any demeaning way, nor does OP make any comments either way about fairness. Also, @KateGregory there's nothing in the Help Center here that says the personal finances in question have to be the OP's personal finances; the term refers to the general subject of 'finances of a person', e.g. not the finances of a business or government. – TylerH Mar 14 '18 at 05:12
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    @KateGregory: noone is seeing sneering here but you. The quotes simply signify that working after "retiring" is oxymoronic, according to the normal definition of retiring. As to reading sneering into "just [get another top job]", again I don't see any; the reality of the situations in some US public-sector jobs is that is precisely what sometimes happens, esp. with police and firefighters (example: triple-dipping former police chief Heather Fong). If you want to say that's not possible for school superintendents then say so... – smci Mar 14 '18 at 08:20
  • ...(in comments, but not by editing the question). Anyway the title asked in general, where it is possible. What specific edits do you think are justified? "in some (US) public-sector jobs?" – smci Mar 14 '18 at 08:23
  • And as to some public-sector pensions being index-linked to inflation, that's a separate issue and again dependent on national and state bargaining. But you have to articulate what specifically about the question you believe needs editing. Perhaps there is less of this in Ontario than in the US public-sector. – smci Mar 14 '18 at 08:26
  • The title asks the very broad *"Can a person work after "retiring" and receiving a pension?"* to which the answer is "Sometimes, but it depends on the location and contract and pension rules (and presumably, the strength of the union bargaining behind those)", but then the question asks a much more specific *"Can the superintendent then just apply to another school system and become a principal or superintendent somewhere else?"* which is infinitely narrower than a simple "work after retiring and receive a pension". So yeah, perhaps the 2nd question should become another question. – smci Mar 14 '18 at 08:32

4 Answers4

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It will depend on the terms of the pension. There may be non-compete clauses or something similar for superintendents (or even teachers) that prevent them from drawing a pension while working for another school system. But other than that there's generally no restrictions on being able to work in other professions, or perhaps even other schools in a different state (so they're not "double-dipping" from the same budget).

D Stanley
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    Here in Fl when I retire from teh state system (I work at a college) I can't earn anything from the state for a calendar year after I retire. I can work private sector, etc. And after a full year, I can come back to the state system again. – ivanivan Mar 13 '18 at 14:12
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    In Oregon, it's a regular practice for public employees to double-dip after "retirement", and there are no rules to prevent it. The last numbers I saw (from 2012) were 1 in 10 public employees were rehired after retirement, and drew both a pension check and paycheck. – Nick2253 Mar 13 '18 at 15:22
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Yes. The rules will depend on the rules of the pension fund, though. In Illinois,

If you return to state employment on a contractual basis, […] or for the private sector, your SERS benefit will not be affected.

So to continue employment, the superintendent would need to go to a different state, or work in the private sector. In general, this is the same for most states and true of the private sector (there's nothing stopping you from taking out of a retirement fund given you meet all the requirements to draw from it).

In fact, the state of Alabama had a program specifically designed to prevent experienced employees from going to work for the benefit of other states in their early retirement years called DROP that basically mimicked the effect of pension+salary to keep them in Alabama.

Back to your example. In order to retire receiving 75% of one’s salary (based on the formula on the page I linked to), the employee would need to have worked a little over 34 years continuously. If retiring at age 59, there is a reduction of benefits by up to 6% as opposed to age 60 (0.5% per month before age 60), so the full benefits would not be realized.

Note, however, that educators do not pay into (and thus do not receive, barring other employment) Social Security in the state of Illinois. If teachers did (and I'm guessing there are some who did way back when and the law may have changed, else it wouldn't be in the calculation formula), they receive only 1.67% instead of 2.2% per year, which requires 45 years of employment for maximum benefits — impossible for a 59-year-old employee.

user0721090601
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  • Why impossible? Unlikely, perhaps, especially these days, but my now-retired neighbor says he started working at 14. – jamesqf Mar 12 '18 at 17:49
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    @jamesqf for this example, the employee would need to have begun working full-time with the state at age 14, and the would have needed to also go to college for at least 4 (but realistically 8-12 — every superintendent I know has a PhD or EdD) years. – user0721090601 Mar 12 '18 at 18:01
  • @guifa why impossible? ;) – DonQuiKong Mar 12 '18 at 18:59
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    @DonQuiKong because of work restrictions on under-16-year-old employees. I don't know what the restrictions were exactly 40 years ago, but today, for instance, that 14- or 15-year-old cannot legally work full time, as the maximum during school weeks would be 18 hours, thus they would not accumulate their 45 years until age 61. – user0721090601 Mar 12 '18 at 19:30
  • @guifa what if they start at 10? – DonQuiKong Mar 12 '18 at 20:29
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    @DonQuiKong they couldn’t - 10 is less than 14??? – Tim Mar 12 '18 at 23:20
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    @DonQuiKong Under 14 they have extremely few jobs available to them, and none of those that are would be available in the public sector or are full-time. – user0721090601 Mar 13 '18 at 00:16
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    @guifa I love you for actually answering them seriously. – Minix Mar 13 '18 at 08:20
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    If there was a change it would be toward SS not away. Originally SS did not cover state&local government employees because federalism; since 1951 such governments (or component agencies/systems/etc) can elect SS coverage by an agreement under section 218, and if they do so cannot go back. (And since 1991 employees are automatically covered if there is no state/local retirement plan.) https://www.irs.gov/government-entities/federal-state-local-governments/section-218-agreements-and-social-security-coverage has the best summary with links I can find. – dave_thompson_085 Mar 13 '18 at 08:41
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    @dave_thompson_085 thanks for that information. Perhaps then SS coverage goes district-by-district? I admit here I'm not aware at all of how Illinois pays teachers (the two states I've worked in all educators are covered by SS and have pensions). It's just odd that the retirement system in Illinois would contemplate both types. Although come to think of it, it might count service in another part of the government that might indeed contribute. Yay bureaucracy – user0721090601 Mar 13 '18 at 08:57
  • You're thinking that 45 years ago, people weren't working at 14? I was working in a photo-lab when I was 14 (and paying employment taxes) and I'm only 32 now. Things have changed quite a lot, but only very recently. – ggdx Mar 13 '18 at 10:38
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    @ggdx Again, for this to apply to the example given, the person would need to have been working fulltime and* with the state*. Your photolab job was neither full-time (because FLSA 1938 both then and now as amended prohibits it) nor was it with the state (because FLSA prohibits virtually all public employment until age 16). – user0721090601 Mar 13 '18 at 14:56
  • Teachers could get a side job that paid enough during the year to qualify for Social Security. The amount you need to earn is pretty small. With some effort, one could teach and accumulate the minimum amount to see no reduction in social security benefits due to teacher pension. – iheanyi Mar 13 '18 at 23:13
  • @guifa you don't need to work full-time to contribute to social security. A seasonal job 3 months during the year. . .coincidentally, teachers are generally free that much each year, would do nicely. You also don't need 45 years unless you're trying to maximize SS. – iheanyi Mar 13 '18 at 23:16
  • @iethyl please read both my answer and the comments.for the example of a superintendent retiring at full 75% state pension, with social security contributions for that job, he would necessarily need be full-time because otherwise he would not get a full year of service credit in the pension system. (If he got any at all). Also, I'm not aware of any system that allows you to accrue more than 12 mo credit in a year, even if you do double duty (also most administrators like superintendents are 12-mo and not able to work in the summer) – user0721090601 Mar 14 '18 at 00:59
  • The calculations are not affected by any other job, only public jobs that provide benefits (e.g. full time). Summer seasonal employment, even if it continues to social security, would not affect the pension calculation because the extra bit paid out from the high multiplier is intestines by the public employer not sending a percentage of earnings to social security. – user0721090601 Mar 14 '18 at 01:02
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For State Service in California:

A State Retiree/Retired Annuitant is a person retired from California state civil service. The state may rehire this person as a retired annuitant to work up to 960 hours in a fiscal year (July 1 through June 30) without the loss of CalPERS retirement benefits.

PER: https://boomerang.ca.gov/sr_eligible.aspx

Eric W
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tl;dr: It varies wildly depending on your state.

In the Texas teacher retirement system, you have to take a break in service after retirement, or you lose your pension payments for the months you're working.

  • One full calendar year before returning to full-time work*
  • One full calendar month before returning to part-time work*

*Note that these are required breaks for returning to work with any system in the state that uses TRS (not for some random private employment).

Source: https://www.trs.texas.gov/TRS%20Documents/employment_after_retirement.pdf

recoup
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