Retirement Planning Blog

Believe it nor not, it’s true! It has been observed that it’s quite possible for the school employees to get paid twice! Wondering how it became possible? Well, let’s start with the real-life story of Janice Collette.

It was June 30, 2003 when Janice Collette, the Personnel Director of South-Western Schools received a letter upon her retirement from the service from the district saying, “thanks and appreciation for your past service”. Interestingly, Janice got the letter at a time when the district had already decided to rehire her for future assignments. To be more precise, the district decided to bank upon her service for one more term just the month before her retirement. The end result – Janice, at 58, keeps on working for South-Western schools drawing an annual salary of $107,000 for her present assignment, while getting a pension of almost two-thirds of her $86,000 salary per annum at the same time for her past assignment. So, exciting enough, isn’t it? Well, at least for Janice.

According to the latest reports, in the last school year, the State Teachers Retirement System of Ohio had to disburse more than $741 million in pension benefit to 15,857 faculties and staff members who were still working for the system. It leads to a second retirement plan for thousands of employees. It has been found that, on an average, a retired re-hired professional earns a pension of $46,000 per annum, which is higher than the median household income of Ohio in 2007. To add with this, you include the present salary of the employee and the amount would surpass well ahead of $100,000 per annum in most of the time.

Since the enforcement of the law that allowed employees to rejoin their organization after retirement, a steady rise of the number of retired rehirees could be observed. If the current growth rate of 5 to 12 percent per year is maintained, by next year, the number of retired rehirees would become almost twice the number of 1999. Now the question is, where the number is heading for? Can it de-stable the system? Let’s see what the State Teachers Retirement System has to say on it.

The State Teachers Retirement System believes that rehiring retired personnel neither leads to early retirement of the employees, nor it costs the system more money. According to the rule, in order to retire, an employee either has to be 55 years old or should have served the organization for 30 years. According to the spokeswoman Laura Ecklar, the system is not allowing anybody any special privilege. They are only following the state statute. Moreover, according to her, the majority of retired rehirees get the opportunity to join in jobs that offer $20,000 a year or less, which are more like part-time jobs and hence it saves a lot of money for the system.

Whatever be the amount they earn while rejoining their organization, school employees get the unique opportunity to enhance their earnings by getting paid twice. And it also makes you wondered sometimes, isn’t it?