Rehiring Retirees

[Guest jedens]

Our DB plan provides that retirees can be rehired for up to six months as temporary employees. Does you plan provide for rehiring retirees? If so, are there any restrictions regarding how long the rehired retiree can work, either in elapsed time of hours per year?

Thanks in advance.

Jim

[eeyore]

I assume you mean retirees can come back and continue to draw the retirement benefit. Many governmental plans permit them to come back if the benefit is suspended.

Assuming you are interested in cases where the retiree continues to receive the retirement benefit, practice with regard to reemploying retirees varies enormously. There is certainly nothing that can be considered typical. Some plans forbid it entirely, some permit it but only on a part-time or temporary basis. Some plans require the employee to have been retired for some period of time (e.g., a year), to ensure that the original retirement was legitimate. Some plans cap the employee's pay in reemployment. In some cases, the employer must contribute to the plan on behalf of the employee, even though the employee does not earn additional benefits due to the reemployment.

It's also worth noting that this is a political hot potato, with charges of double dipping being made against retirees who do this. Any proposed changes should be studied by an actuary.

[J Simmons]

It's also worth noting that this is a political hot potato, with charges of double dipping being made against retirees who do this. Any proposed changes should be studied by an actuary.

A hot potato, indeed. The CFO for the US Dept of Enegery in 2005, Susan Johnson Grant, tried to curb what she called a triple dip by employees of DoE contractors. The employee would take early retirement (and get the subsidy under the DB plan). Then would hire back on with the contractor and earn a salary, continue the enhanced DB payments, and accrue benefits under beefed up employer contributions to DC plans since many of the DB plans had become closed to new hires (or re-hires).