Working After You Retire

If you return to work after retiring from the Michigan Public School Employees Retirement System, you may be subject to employment restrictions or earnings limitations. Follow these two steps to see how the rules apply to you.

Working in a job with no direct affiliation to a Michigan public School reporting unit.

If you're not working for a Michigan public school reporting unit either directly or indirectly, you don't have any reporting requirements to the Office of Retirement Services.

Example: You return to work as a security guard at a Ford manufacturing plant, a company in the private sector. This has no impact on your retirement pension or insurances.
Example: You return to work as a teacher in a non-participating school, like Michigan State University, or for a public school in another state. This has no impact on your retirement pension or insurances.

Returning to work while collecting a disability pension.

Because of the nature of a disability pension, you must gain approval from ORS before you return to work for any employer. Write a letter to ORS before you resume working. The letter should include a job description or complete information regarding the type of work you'll be doing, the hours you're expected to work, and the name of your potential employer. Failure to gain advanced approval may result in suspension of your disability pension.

Working in a job affiliated with a Michigan public school reporting unit.

If you return to work in a participating Michigan public school reporting unit, it's your responsibility to inform your employer of your retiree status. Reemployment in a Michigan public school reporting unit does not change the fact you are a retiree. You will not earn service credit nor will you, or your employer, continue to make contributions to the retirement system.

You may not work within the month of your retirement effective date in a participating Michigan public school reporting unit. This includes volunteering in a Michigan public school reporting unit, as an employee of a third-party contractor, or as an independent contractor. You may not work for the state of Michigan during the month of your retirement effective date; you may, however, work for the state of Michigan after that month has passed.

Example: You're retiring with a July 1 retirement effective date. You must wait until August 1 before you can work for a participating Michigan public school. After August 1, you may return to work for that school, but earnings limits and restrictions may affect your pension and insurances.

You must have a bona fide termination of employment before your retirement effective date. A bona fide termination is a complete severing of the employee/employer relationship. You cannot have in place a promise of reemployment or a contract for future employment before you terminate Michigan public school employment.

When your retirement effective date is on or after July 1, 2010.

Working in and paid directly by a reporting unit.

If you work in and are paid directly by the Michigan public school reporting unit, you may earn up to one-third of your final average compensation in a calendar year and still draw your pension. If you exceed this amount, you'll forfeit your pension and retiree insurance subsidy for the month you exceed the earnings limit. The forfeiture will continue until the employment ceases.

Example: You begin working for a public school or a charter school anywhere in Michigan.

Returning to work in a Michigan public school reporting unit, but paid by a third party.

If you perform any core services for a participating Michigan public school (including any charter school), and are employed by an entity other than the Michigan public school, you'll immediately forfeit your pension and retiree health care subsidy until the employment ceases.

You need to determine whether or not you'll be performing a core service.

Example: You begin working as a bus driver in a Grand Rapids area school and are being paid by a contracted firm and will not be performing a supervisory or managerial function. This is not a core service and your retirement benefits will not be affected.
Example: You begin working as a substitute teacher in a Detroit area school or charter school, and are paid by a management company. This is a core service and your retirement pension and insurances are affected.

Working in a reporting unit as an independent contractor.

If you return to work in a Michigan public school as an independent contractor and you perform a core service, you will forfeit your pension and retiree insurance subsidy. You may remain enrolled in the insurance, however your cost would be at the higher, unsubsidized rate.

Example: Refer to the examples above, under Returning to work in a Michigan public school reporting unit, but paid by a third party.

Earnings limitations for those with a retirement effective date before July 1, 2010.

You may return to work directly in a participating Michigan public school and earn the greater of the following limits:

• One-third of your final average compensation. For this purpose, the salary average is increased by 5 percent (compounded) for each calendar year you are retired.
• The Social Security income limit for that specific year. If one-third of your final average compensation is lower than that year's Social Security income limit, you may make up to the higher amount. The Social Security income limit changes annually. The Social Security income limit for 2011 is $14,160. (Visit the Social Security Administration's website and search for the pamphlet How Work Affects Your Benefits for more information about the Social Security income limit.)
• Your eligibility for the group health and dental/vision insurance is not affected by your earnings. However, if your pension is suspended because your earnings exceed the limit, your insurance will also be suspended. If this happens, you may request a continuation of insurance, but you will be responsible for the portion of the premiums previously withheld from your pension. This may be expensive.
• For every dollar you earn above the limit, you must return one dollar to the retirement system.