Stranded

Leave it to the Rs in the Oregon Legislature to come up with a do nothing, save nothing bill concerning PERS.  In a particularly mean mood, SB 791 was introduced yesterday.  The bill effectively ends the current 1039 hour per calendar year post-retirement work limit for PERS retirees.  Instead, the bill requires an employee to be fully retired from the employer for 6 months before he or she can be hired back in a part-time capacity.  While this is the SOP for private employer pension plans, it hasn’t been a feature of public employer plans.  I presume the reason for this bill is to “end” what some see as “double dipping” - a misnomer if there ever was one.  In fact, I can’t see employers happy with this bill because it may well cost them more money rather than less.  In common cases, an employee who is hired into a 1039-hour position after retirement possesses some unique skill that either isn’t easy to recruit for, or isn’t easy to train a new person into.  The role of the retiree is to help train a new employee assume the duties of a retiree who possesses a unique skill set.  Under the 1039-hour rule, no benefits are paid, no contributions made to PERS, and usually (though not always) no health care benefits. If employers are required to wait 6 months before they can hire a retiree back, how then are they to train someone is a hard-to-fill, hard-to-learn position that is essential.  Obviously this isn’t always the case; indeed, it may describe only half the cases.  Instead, what is going to happen is that employers are going to have to hire replacements before the essential employee leaves, and do the training simultaneously.  This results in double salary and benefits, certainly not a savings but an added expense.

To add insult to injury, this bill does not have a date certain for a starting date, instead stating that it covers any employee still active after the bill is signed into law.  So, while you’re being distracted by the effects of SB 559 and SB 560, which both would take effect on January 1, 2018, you can end up being stranded by this bill, which serves to prevent you from moving out of an agreed upon retirement plan into a brief period of part time employment with no interruption in payroll.  

The worrisome aspect of this bill is that it appears innocuous on the surface, will have broad public support as appearing to do something that it doesn’t really do, it has a possibility of slipping through the cracks and passing since it is targeted primarily at a relatively small sample of those on the cusp of retirement.   Since it obviously does not prevent reemployment of retirees, just puts a significant delay in their path, the bill will neither save money or will it do anything to address whatever ails  PERS.

One final, curious, note.  This bill completely removes the hour limitations on work for a public employer after retirement, provided that three conditions are met:  1) the employee must have spent a minimum of 6 months retired and off the payroll of any public employer; 2) if you are receiving Social Security prior to reaching normal Social Security age (i.e. between 62 and 66), the earnings limit is constrained by Social Security earnings rule (lesson:  if you plan to go back to work after retirement, don’t start drawing Social Security until you’ve fully stopped working); 3) if you are at least normal Social Security age (i.e. 66 or 67 depending on birth year), you can work as much as you want without any earnings limitation.  The only real change is with 1) as the other limits have been more or less in effect since the 80s.  What this bill does is to remove all of the exceptions now in the statutes that permit certain people to work more than 1039 hours if they live in places with certain demographic characteristics.  But then see 1) above for the important caveat.  The rule does not envision exceptions to 1), which happen to be the reason the original set of exceptions were introduced.