Balancing Objectives in Public Employee Post-Retirement Employment Policies: Reassessing Barriers to Continued Work

December 6, 2018

Center for State and Local Government Excellence (SLGE)

D epending on applicable state law or the policies of a particular public retirement system, returning to work with a government agency after retirement can either be permissive or restrictive, and may further depend on the characteristics of individual employers and retirees.
Much of the attitude of policymakers and the public toward such post-retirement employment stems from perceptions that public sector workers, either in general or in certain high-profile cases, have taken advantage of loopholes by being paid a pension benefit as a retiree while still drawing a salary. A common term for cases like these is “double dipping.” Concerns also have been expressed about “revolving door” agreements, wherein an employee approaching retirement may be promised a position post-retirement without first fulfilling an Internal Revenue Service (IRS) or retirement system required break in service. In some cases, the restrictions placed on reemployment apply not only to the direct agency from which an employee retired, but also potentially to other government agencies or government contractors within the state.
While restrictions are rightfully enacted to address potential abuses, other approaches have attempted to balance the need for controls with a targeted policy of waiting periods, income limitations, exempted positions, or other provisions that assist employers in meeting their workforce needs. This can be particularly helpful when highly skilled workers are needed in labor markets where particular skills may be in short supply, such as, but not limited to, in rural areas or inner cities.
To get a better sense of the range of practice, the Center for State and Local Government Excellence (SLGE) and the National Association of State Retirement Administrators (NASRA) researched the post-retirement employment policies of eighty-three of the largest state pension plans in the United States — including those that cover state employees, public safety workers, teachers, and university faculty and staff. Where statewide plans included coverage for local government employees, such as under the public safety umbrella, or in a designated municipal retirement system, those plans were included in the analysis. Plans operated solely by an individual city or county were not considered.
This report presents a review of related research in the field; describes findings from data collected on the post-retirement employment policies of large retirement systems across the United States; and provides case studies on three pension systems that have taken varying approaches to the re-employment question as it affects their stakeholders.
The intent of this report is to provide additional resources for discussion among elected officials, pension plan administrators, labor unions, researchers, the media, the public, and any other interested party about the impacts that decisions around post-retirement employment can have on the ability of public employers to recruit, retain, and retire a talented and effective workforce, and about the approaches that have been and continue to be utilized around the country.

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