During Wednesday’s Mayors’ Day session, Alpine Mayor Paul Tomasko asked State Legislative leaders about a matter that is important to municipalities all around our State. It involves the ability of retired public employees to continue to serve their fellow citizens, in volunteer capacities.
In 2014, the State’s Division of Pension and Benefits issued guidance on post retirement employment restrictions for public employees. The guidance noted that there must be a “bona fide severance of employment”, a complete termination of the employee’s employment relationship with the employer for a period of at least 180 days, in order not to jeopardize the employee’s retirement benefits. The Division considers re-employment by a different unit of the same public entity, whether the position is covered by the same retirement system or a different retirement system, to be employment by the same employer. If an employee holds more than one position with the employer they must separate from all employment in order to retire, even if the positions are covered by different retirement systems, or the second position is not subject to pension contributions.
If an individual returns to public employment with the former employer, even as a volunteer, prior to satisfying the requirements of a bona fide severance from employment, the employee will be required to repay all retirement benefits received from the date of retirement and may be required to re-enroll in the same or different retirement system. As a result, volunteer firefighters and first aid members, and volunteer parade, event or celebration committee members or volunteers serving the PTA, to name a few; who were also public employees, have been required to resign from their volunteer position in order to receive their retirement benefits.
Volunteers are the backbone of communities providing services to the residents at no cost to taxpayers while freely giving of their time and expertise. Employees affected by the Division of Pensions ruling generally are at least 55 years of age. In their volunteer positions, they often serve as mentors to the new and younger members, typically providing guidance and direction.
While well intended the Division of Pensions has created an unintended consequence which, if not changed, will impact every public employee who volunteers in the state and will not only drive up property taxes, but would also reduce the quality and level of essential public services.
In November, 2014, the League of Municipalities adopted a Resolution, urging action to direct the Division of Pension and Benefits to permit retirees and local elected officials to continue as volunteers, without impact to their retirement, and to not require the complete 180 day separation from volunteer service.
In response, two pairs of companion bills have been introduced.
Last year, the State Senate unanimously passed S-2107 (companion to A-536), which would permit a person with a pre-existing volunteer relationship as a firefighter or first aid with their employer to retire from service covered by PERS or PFRS and continue to serve that employer as a volunteer. We support this bill, which would address part of the problem.
Other legislation, however, goes all the way in resolving the problems created by the Division of Pensions’ ruling on ‘bono fide severance.’
A-3223/S-2446 would allow public employees in state-administered retirement systems who continue any preexisting volunteer relationships with employers from whom they retire, to continue to volunteer for their prior employers without jeopardizing their pensions. Legally speaking, this bill would clarify that such a relationship does not vitiate a bona fide retirement.
S-2107, A-536 and A-3223 all await action in the Assembly State and Local Government Committee. S-2446 has been referred to the Senate State Government, Wagering, Tourism and Historic Preservation Committee.
We commend the sponsors of these bills and would urge action to remedy the problem, once and for all.
Contact: Mike Cerra, Asst. Executive Director, email@example.com or 609-695-3481 x120.