Working After Retirement Becky West and Rhonda Elliott Employer Services

Transcription

1 Working After Retirement Becky West and Rhonda Elliott Employer Services

2 Agenda Employing Retirees Termination of Employment Part-Time/Temporary Employment Full-time and Critical Shortage Employment Independent Contractors Reporting Requirements Reminders Questions

3 What You Should Know: Employing PSRS/PEERS Retirees Retirees who are not properly terminated are not eligible to work as a retiree at your district. In most cases, retirees cannot work full-time.

4 What You Should Know: Employing PSRS/PEERS Retirees Employers must track working retirees hours and earnings. Retirees who exceed limits on part-time/ temporary-substitute work will lose benefits. You should know how to determine when a retiree nears their limits help them avoid losing benefits and help prevent the need to correct your retirement reporting

5 What You Should Know: Employing PSRS/PEERS Retirees Employers must report payroll for all employees including working retirees. PSRS/PEERS monitors the work of retirees to ensure compliance with the law by both retirees and employers.

6 TERMINATION OF EMPLOYMENT

7 Termination of Employment Proper Termination of Employment Means: No employment in any capacity for one month after PSRS/PEERS retirement date (not necessarily the employment termination date) Cannot execute a contract for employment in any capacity until after receiving first benefit payment

8 Termination Example: Meet Mary Finishes the school year Last day of employment is May 28 Retiring effective July 1 Mary cannot: Work in any capacity for any covered employer during July Be under contract for employment after July 1 until she receives her first benefit payment on July 31

9 WORKING AFTER RETIREMENT

10 Part-Time/Temporary Employment Limits Limits are based on the system from which the retiree retired. Limits are pro-rated during the first school year of retirement if member does not retire in July. Limits include volunteer work if the retiree also performs paid work for the same employer and the duties are essentially the same.

11 PSRS/PEERS Part-Time Hourly Limit A PSRS or PEERS retiree can work no more than 550 hours in a school year, part-time or as a temporary-substitute. If the 550-hour limit is exceeded, benefits stop until the employment ends or a new school year begins.

12 PSRS Part-Time Earnings Limit PSRS retirees earnings are also limited. Within the allowed 550 hours, retirees can earn a maximum of 50% of the full-time annual compensation payable. Under the employer s salary schedule for the position(s) Based on the retiree s experience and education

13 Calculating Earnings Limits To determine when a PSRS retiree s work is approaching the earnings limit, you must do some calculations! Let s look at some examples

14 Calculating PSRS Earnings Limits Example 1: A retiree is employed in one position Determine where the retiree would fall on the full-time (PSRS definition) salary schedule for the position, based on education and experience Multiply that amount by 50% Jane returns to work as a substitute teacher. Jane would earn $40,000 for full-time employment. $40,000 x 50% = $20,000 Jane s earnings limit is $20,000

15 Calculating Limitations Example 2: A retiree is employed in more than one position Determine where the retiree would fall on the full-time salary (PSRS definition) schedule for all of the positions. Determine the highest full-time salary for a position in which the retiree works at least 20% of the time during the school year. Multiply that amount by 50% John returns to work as a bus driver (300 hours per year). He also works as a substitute teacher two days (15 hours) during the year. John would earn $38,000 as a full-time teacher, and $25,000 as a full-time bus driver. $25,000 x 50% = $12,500 John s earnings limit is $12,500

16 Calculating Limitations Example 3: A retiree also receives a stipend Stipends (including employer-paid insurance) should only be included in this calculation if the retiree is actually earning the stipend. Determine where the retiree would fall on the full-time (PSRS definition) salary schedule for the position, based on education and experience Add the amount of the stipend Multiply the total amount by 50% Joe returns to teach three hours per day and is paid $20,000 for teaching. The school also pays $2,000 per year towards Joe s health insurance premiums. Joe would earn $60,000 as a full-time teacher. ($60,000 + $2,000) x 50% = $31,000 Joe s earnings limit is $31,000

17 Monitoring Part-Time Limits Correspondence is sent to both the retiree and the employer each year when the retiree is first reported. Provides individual s limits (full or pro-rated) What to do if/when the retiree exceeds a limit Retiree responsibilities Employer responsibilities The consequences of exceeding the limits We must recover improperly paid benefits Retiree s benefit is placed on hold until employment is terminated or a new school year begins

18 Monitoring Part-Time Limits Working After Retirement Records Maintained by both the retiree and employer Retiree and employer should discuss how hours are tracked Submit to PSRS/PEERS upon request

19 Full-Time Employment In most cases, PSRS retirees can t work full-time for covered employers, since doing so means they are no longer retired. Things To Remember: Employer and member must notify PSRS/PEERS immediately. Retirement benefits are put on hold. Member is required to establish a new membership. Employer and member pay contributions. Member earns service.

20 Critical Shortage Full-Time Employment A way for retirees to work full-time after retirement without losing benefits Things To Remember: Retirees do not contribute, but employers do Limited to a total of two years Employer must meet the following statutory requirements to hire retirees under this provision: Not have offered early retirement incentives for either of the previous two school years, Post the vacancy or vacancies for at least one month, Solicit applications through the local newspaper, other media, or teacher education programs, Make a good faith effort to fill positions with non-retired employees, Determine that there is an insufficient number of eligible applicants for the advertised position(s), and Declare a shortage of certificated or non-certificated employees.

21 Independent Contractors Things To Remember: Not covered by PSRS/PEERS Does not count toward working after retirement limits Work must meet the IRS definitions of independent contractors/consultants Complete IRS form SS-8

22 Reporting Requirements All payroll records for all employees must be reported in EMERS. This includes working retirees Why must retirees be reported? Enables us to find retirees working at multiple districts and help make sure they are tracking all employment Allows us to notify you that you are employing a retiree Helps us know when to send reminders when retirees near employment limits

23 Know the Rules Our Internal Auditor reviews compliance with working after retirement limits and reporting responsibilities. Findings from recent audit: Unreported limit violations Employers not tracking hours, only days Hours worked are being calculated based on pay, not actual hours worked Not all employees are being reported in EMERS Reports of retirees working in the same month that they retired Retiree did not properly terminate Contracts being signed by retirees for post-retirement work prior to the retiree receiving his/her first benefit payment Retiree did not properly terminate

24 Comply with the Rules Notify us when a retiree exceeds either the hourly limit (both systems), or the annual earnings limit (PSRS retirees only), as soon as possible! Track employment of all retirees (actual hours, volunteer work, multiple contracts). Ensure contracts are not signed and retirees are not employed until one month after retirement date. Work with your ESR.

25 Why Comply with the Rules? Minimizes recovery of improperly paid benefits Prevents potential reporting corrections Minimizes cash flow interruptions for both the employer and the member/retiree

26 Questions?