Skip to comments.Retired and rehired (Washington state loophole allows a salary while continuing to collect pension)
Posted on 08/01/2010 4:06:45 PM PDT by Libloather
Retired and rehired
by Will Graff & Evan Marczynski
Friday, July 30, 2010
A loophole in state retirement law has allowed retired Western employees to come back to work and earn a salary while continuing to collect pensions.
Seven employees who earned salary in 2009 were able to collect pensions at the same time, according to records obtained from the Washington State Department of Retirement Systems.
Employees who have returned to work after retiring have been able to boost their incomes, in some cases up to 40 percent with the addition of pension benefits.
Western did not violate any state laws when rehiring retired former employees.
A June 26 article in the Seattle Times reported that about 2,000 public employees statewide collected both wages and pensions at the beginning of this year.
David Doughty, assistant director of public safety, is one of three retired employees who returned to Western full time.
He said the state and the university did not lose money by rehiring him while he collected pension. Since his benefits were guaranteed, he would be getting his pension whether he returned to Western or not. If another person had taken his job, the university would still have to pay them.
He said he is simply being paid for the work he has done. In addition, Western has been able to keep a highly experienced employee, he said.
Im not getting paid twice for doing one job. Im getting paid for the 30 years I put in, and Im getting paid for the work Im doing now, Doughty said. I benefited personally, no doubt about it, but the university benefited too.
Human Resources Director Chyerl Wolfe-Lee said Western has its own retirement plan in addition to the state-run plan. Western employees are given a choice of which one to pay into, as long as they meet eligibility requirements.
Once employees retire under the university plan, they cannot be eligible for it later on. However, there is no system in place to track people who retire under the state plan, then come back to work and pay into the university plan, she said.
Specific Western cases
Doughty is one of the highest-paid Western employees who have retired and been rehired since 2001. The other two retirees who returned full time are James Tragesser, a database administrator in the administrative computing department, and Dennis Demorest, who also works in the computing department as a system analyst.
Demorest and Tragesser both retired on March 3, 2002 and were rehired on April 3, 2002. Demorest receives a pension of $34,644.84, and Tragesser collects $41,197.32, according to the DRS. In 2009, Demorests salary was $72,905.04 while Tragesser earned $82,409.04.
Both Demorest and Tragesser declined to be interviewed for this article.
Doughty retired from his full-time position in September 2004. He began receiving an annual pension of $45,107.76 from the state on October 1, 2004. Six weeks after his retirement, Doughty was rehired to the same position. In 2009, his salary was $63,594.
Doughty said when he retired he had been paying into his state retirement plan since he first started working at the university in 1974. After 30 years of work, he was eligible to receive his pension. If he held off retirement he would be unable to continue paying into his pension at the same level as before because his benefits maxed out after 30 years of contributions.
The smart thing for me personally, financially, would be to retire and then go to work [and] have two incomes, Doughty said. Id be getting a paycheck and a retirement check. Itd be a pretty good move for me.
So he retired from Western and began to look for a new job. He was offered a position as chief of police in the town of Union, Ore. University Police began accepting applicants to fill Doughtys vacant spot.
The terms of his former position changed. Instead of working year round, the new assistant police chief would work just nine months out of the year and have the summer off. The required experience for the job was also reduced.
Doughty said he changed his mind about moving and applied for his former job. There were two other applicants for the position. He said he was given no guarantees by any of his superiors or human resources staff that he would be able to get his job back.
They made it real clear to me, Doughty said. [Human Resources] was very good about making sure I understood that there was absolutely no guarantee, and I realized that.
He was rehired to his current position on November 16, 2004.
Retirement legislation history
In 2001, the state legislature decided to allow retirees to return to work in response to a teacher shortage. Public employers were not allowed to attract job applicants with salary increases, so pensions were used to provide financial incentives, according to a 2003 report by a state committee on pension policy.
Employees were able to return to work full time without a suspension of their retirement benefits.Retirees who were rehired could receive a full salary in addition to their retirement allowance.
The report found that the expansion of post-retirement work actually increased the cost to the state retirement system.
Dave Nelsen, legal and legislative services manager for the DRS, said the 2001 legislation was an attempt to keep teachers in state.
Because of the rules in place it was difficult for these folks who were moving out of state, Nelsen said. The purpose of the change in 2001 was to allow folks to come back to work and work more hours before their pensions would be impacted.
Lawmakers also added provisions in 2001 that forbid verbal agreements between employers and employees to return to work after retiring. Another measure, which was voted down, would have forbidden rehiring a retiree if there were four or more applicants for the job.
I need a loophole.
Sounds similar to the NJ “loophole”.
—and one in South Dakota—
With unemployment as high as it is nationwide, they could only find two other applicants? Four would have been against the law for them to rehire.
I would bet they received a 100 resumes.
That is possible in several states. Florida has a version of that, at least for teachers. Many teachers were convinced several years ago to join a scheme to retire and then be rehired at, I believe, a slightly lower pay level. My wife thought about it and we decided it sounded like a scam of some sort because they didn’t have to hire you back. They just promised to. Well along came the recession and all those teachers who took “advantage” of the D.R.O.P. program got left out in the cold with retirement income that is way lower than they were getting paid as teachers years before they thought they would have to live on that and 10-15 years before SS kicks in. Now even SS is looking iffy...
I thought that this was just a New Jersey trick, but apparently wherever you find a Democrat political machine in charge and the state and local level, this system is in operation.
It sounds okay on the surface. An employee retires and the system needs another employee so why not rehire the retiree who is already trained and experienced? The way it works, though, is employees “retire” when they reach the minimum longevity to do that and the state pays extra for a long time.
PA has allowed this for years in both D and R administrations. They are called “annuitants.” I always called them “no lifers” or just greedy.
Unfortunately this is becoming very common for Federal workers.
I have heard otherwise... may not be legal, but it is being done.
Isn’t this fairly common across the local, state, federal and maybe private retirements?....
Yep. Been going on in CA as well for many years.
Florida allows this also.
Just another insider scam from those who see themselves as the Ruling Class with the Royal Right to plunder all they can.
Their attitude: “If the peons don’t like it - tough!”
Politicians and their corrupt alliance with public servants are not our friends. They both benefit from the compact that steals from the taxpayers and gives to public employees and their union goon criminal minders.
A lot of state run retirement systems are like that. In AZ the system encourages “retirement” because if you accrue too many points in the system your payout starts dropping. So people in ASRS “retire” and then take the same job they had only reclassed without benefits (so they stop earning points). Of course if the system wasn’t designed to punish longevity they wouldn’t “retire” in the first place.
I don't know about the government parts but it shouldn't be allowed because tax payers a footing the bill ultimatly and it's ripe for abuse.
In private companies sometimes it does happen at least at several places I've been. Most times it's because of the early retirement programs offered. Many times the companies need the people that had to be offered the early retirements (HR rules). Companies don't like to do it because it's bad for morale of those not offered the plan. IMO a company is very different than a government and as a tax payers we don't need to get hit twice for the same person.
This is common in WI. Sometimes the employee does not even miss a day of work — they come right back and continue working n the same job. I know a couple of City Engineers and a couple of Police Chiefs who are doing that right now. And they collect their accumulated sick leave too. THis limits the opportunities for new hires, and I think it stinks.
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