Recently mailed newsletter gives work guidance

Retired public employees thinking about going back to work to make up for impending benefit cuts got a reminder from the state recently that it’s not that simple.

The Oregon Public Employees Retirement System has begun implementing a plan to recoup overpayments to some retirees and make delayed payments to others.

The group feeling the biggest impact from the changes are the so-called “window retirees” who left government service between April 2000 and April 2004. An estimated 27,000 retirees will have to repay some benefits to PERS, while another 5,000 will get additional benefits.

Some retirees had been thinking of returning to work for a period of time with an eye to rebuilding their depleted PERS accounts, but a newsletter mailed out last week contains a reminder that it doesn’t work that way.

Although people can go back to work for a government agency after retirement, there are strict limits on how much they can work without having their benefits suspended until they retire again.

For instance, the newsletter points out, PERS retirees getting monthly benefits can go back to work in the public sector for up to 1,039 hours a year (just under six months at full time) without losing benefits.

However, PERS spokesman David Crosley noted, these workers wouldn’t earn any additional retirement benefits toward their PERS accounts.

“Their retirement account stays as it is,” Crosley said. “In effect, they’re working outside the system.”

On the other hand, there are no restrictions on retirees going back to work for an employer not covered by PERS. In addition to getting a paycheck, these workers would have the opportunity to build up a separate retirement account at a new job.

“People can always get a job outside of state service,” Crosley said.

While these rules are not new, the newsletter came as something of a disappointment to some window retirees hoping to restore lost benefits by returning to work with a familiar former employer.

“There’s no way to go back and try to regain some of that lost footing. The system disallows that,” said Irma Delson, a window retiree who worked at Oregon State University for 20 years and now faces a cut in her monthly pension check.

“We thought that might have been an option.”

The PERS plan calls for recovering $75 million in “excessive” payments made to retirement accounts in 1999, when workers enrolled in some PERS plans got a 20 percent investment return. A judge has since ruled the payout should have been 11.33 percent, and overpaid workers will get a bill from PERS next year for the difference. Thanks to a separate court decision, some workers will now get previously withheld 8 percent returns for 2003 and 2004, and suspended cost-of-living adjustments will be restored.

The state pension system is gearing up to recalculate thousands of accounts affected by the recent court decisions, but before that work can begin, a complicated set of formulas have to be worked out.

“We anticipate starting that process in April,” Crosley said. “Because there are thousands of accounts to calculate, it won’t happen for every member in April, but we do hope to get started in April.”

Retirees who receive a bill for excess benefits will have several repayment options, ranging from writing a check for the full amount to getting a reduced monthly pension check calculated to recover the full amount by the time they die. Even those who elect the first option, however, will see some reduction in monthly payments because their account base will be lowered to reflect the corrected 1999 earnings credit.

“It’s just the effect of that one year’s recalculation,” Crosley said. “Your account balance going forward is not as high as it would have been.”

At the same time, he said, restoring the frozen cost-of-living adjustments will lessen the blow.

The PERS board has estimated that retirees who were overpaid in 1999 will wind up losing $800 million in pension benefits over their lifetimes.

Bennett Hall is the business editor for the Gazette-Times. He can be reached at 758-9529 or bennett.hall@lee.net.