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Working After You Retire

This summary highlights the rules regarding returning to work as a retiree to any employer. It outlines the effect, if any, on your public school pension. Click on any of the subjects below to view the details or use the Expand All | Collapse All feature below to scan the entire list.

For more information, you can review the full law here.


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Work That Won't Affect Your Pension

There is no limit on your earnings (see disability exception noted below) if you return to work in:

bullet A private sector job outside of a Michigan public school reporting unit

bullet A public school in another state

bullet A college or university in Michigan that's not a part of the Michigan Public School Employees Retirement System


You can earn as much as you want in these situations and still collect your full pension.

Working After Receiving an Approved 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:

bullet a job description,

bullet complete information regarding the type of work you'll be doing, and

bullet the name of your potential employer.


Failure to gain approval in advance may result in termination of your disability pension.

Public School or State Employment

  1. Bona Fide Termination for Public School and State Employment

    You cannot work in a Michigan public school reporting unit or for the State of Michigan during the month of your retirement effective date, even as a volunteer.

    You can't have a promise of reemployment or a contract for future employment in place to work in a Michigan public school reporting unit before you terminate employment and begin collecting your pension. A bona fide termination means there is a complete severing of the employee/employer relationship. If you are collecting your pension and it's subsequently discovered that a bona fide termination did not exist, you will be required to repay pension payments you erroneously received.

    In addition, your insurance will be retroactively disenrolled back to your retirement effective date. Any medical costs you incurred during this time will be your responsibility.

  2. Public School Employment

    You may be subject to earnings limits or forfeiture of your pension if you return to work either for or in a Michigan public school reporting unit. Working for a Michigan public school reporting unit means you have been hired directly by the school. You can also be working in a Michigan public school, but hired through a third party or as an independent contractor. (See the next section of this document for a list of those employers who are reporting units.)

    Once we know this, we can then determine whether or not you'll be subject to limits based on the categories that follow.

    The rules are different depending on whether you retire before or on or after July 1, 2010.

  3. Earnings Limits Rules for Public School Employment

    1. If you retired before July 1, 2010

      You may return to work directly for a Michigan public school reporting unit and earn the greater of the following limits:

      bullet One-third of your FAC without affecting your pension. For this purpose, the salary average is increased by 5 percent (compounded) for each calendar year you're retired, or

      bullet Up to the Social Security income limit for that specific year. If one-third of your FAC 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 2013 is $15,120. (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.)

      For every dollar you earn above the limit, you must return one dollar to the retirement system, up to your annual pension amount. If payment is not made, your pension will be suspended.

      If your pension is suspended because of excess earnings, your insurance subsidy will also be forfeited. If this happens, you will be sent insurance billing coupons for the insurance premiums. If you wish to terminate your insurance, you must do so in writing. To cancel your insurance, we must receive written confirmation ahead of the month in which you wish to remove your coverage. If your insurance is cancelled, you'll have a six-month wait upon re-enrollment.

      There are no earnings limitations if you are:

      bullet A former teacher or administrator employed in a teaching or research capacity in a university that is considered to be a reporting unit. These include Central, Eastern, Northern, and Western Michigan Universities, Ferris State and Lake Superior State Universities, and Michigan Technological University.

      bullet Eligible for full Social Security benefits. There is no limit on how much you can earn while working for a Michigan public school reporting unit.

      bullet Working in a reporting unit for a third-party contractor or as an independent contractor. Because you retired before July 1, 2010, there will be no earnings limits.

      bullet Working in a critical shortage discipline. You are exempt from the earnings limits until July 1, 2014, if you meet the requirements outlined above.

      Exceptions for critical shortage positions. If you become employed in a critical shortage position (see below), you may be exempt from earnings limitations.

    2. If you retired on or after July 1, 2010

      If you return to work directly for a Michigan public school reporting unit:

      bullet Your earnings limit is 1/3rd of your Final Average Compensation (FAC). Example: If your FAC is $60,000, then you may return to work directly for a reporting unit and earn $20,000, (your FAC divided by 3). You can find your FAC under Pension Payments in miAccount.

      bullet If you exceed the earnings limit, you will forfeit both your pension and retiree insurance premium subsidy until your employment ceases. The forfeiture will begin the month you first exceed the limit. You may choose to remain enrolled in the insurance, but you must pay the higher, unsubsidized premium rate. To cancel your insurance, we must receive written confirmation ahead of the month in which you wish to remove your coverage. If your insurance is cancelled, you'll have a six-month wait upon re-enrollment. You may resume your pension and be eligible for the insurance premium subsidy after you stop working for a public school reporting unit. For example, if you stop working for a reporting unit on June 10, your pension and eligibility for the insurance premium subsidy will resume on July 1.

      If you return to work indirectly in a Michigan public school reporting unit as an employee of a third party, or as an independent contractor:

      bullet If you perform a core service, you will forfeit your pension and retiree insurance premium subsidy until your employment ceases.

      bullet You may continue to collect your pension and receive the insurance premium subsidy if you're not performing a core service.

      Simply put, core services include most teaching and administrative roles. A list of core services can be downloaded here.

      Temporary Exception for Instructional Coaches or School Improvement Facilitators

      You may become employed as an instructional coach or school improvement facilitator until July 1, 2014 if you meet all of the following requirements:

      bullet You retired on or after July 1, 2010.

      bullet A bona fide termination exists and you have not worked in a public school reporting unit during your retirement effective month.

      bullet You become employed as either an instructional coach or a school improvement facilitator by a third-party contractor or as an independent contractor.

      bullet You do not make more than one third of your FAC in a calendar year.

      The reporting unit will be responsible for paying an employer contribution rate to the retirement system on your retiree wages.

      Temporary Exception for Substitute Teachers

      You may become employed as a substitute teacher until July 1, 2014, without affecting your pension or insurance premium subsidy if you meet all of the following requirements:

      bullet You retired on or after July 1, 2010.

      bullet A bona fide termination exists and you have not worked in a public school reporting unit during your retirement effective month.

      bullet You become employed as a substitute teacher by a reporting unit, a third-party contractor, or as an independent contractor.

      bullet You do not make more than one-third of your FAC in a calendar year.

      The reporting unit will be responsible for paying an employer contribution rate to the retirement system on your retiree wages.

      Exceptions for critical shortage positions. If you become employed in a critical shortage position (see below), you may be exempt from earnings limitations.

  4. Critical Shortage Positions for Public School Employment

    Regardless of when you retired, you may become employed in a critical shortage position and be exempt from earnings limits until July 1, 2014, if you meet all of the following requirements:

    bullet You work directly for a K-12 public school or charter school/public school academy. If your work is for a community college or a university, you cannot use the Critical Shortage provision.

    bullet You are retired and have collected your pension for at least 12 months.

    bullet You are employed by a reporting unit that has an employment situation that requires the reporting unit to hire you in a critical shortage position. This does not include employment situations caused by labor disputes. A list of Critical Shortage Positions is available on the Department of Education's website.

    bullet You are not employed in a critical shortage discipline for any more than three years. This includes working in a critical shortage position before the previous law expired on June 30, 2011. For example, if you worked in any critical shortage position for 2 years, you may only work for another year in any critical shortage position. For the purpose of calculating time, service will be counted the same way in retirement as how you earned creditable service as an active employee. Learn more about earning service credit here.

    If, as an active employee, you chose the Defined Contribution (DC) Plan and/or the Personal Healthcare Fund, the rules for working after retirement remain in effect. Your contributions to the 457 plan will automatically begin at the level necessary for the maximum employer match based on your benefit structure. The employer contribution to your 401(k) account will also resume. The reporting unit will be responsible for paying contributions to the retirement system on your retiree wages. The employer contributions to your 401(k) would count toward your earnings limitation for your pension.

    However, IRS rules prohibit someone from both being employed and taking a distribution from 401(k) and 457 accounts, unless you are age 59 or above (401(k)) or age 70 (457). If you are under the respective age and receiving a distribution when you return to work with an entity under the 401(k) or 457 (including any Michigan public school reporting unit, the Educational Achievement Authority, or the State of Michigan), the distributions would stop while you remain working.

Michigan public school reporting units include:

  • K-12 public school districts
  • Charter schools/Public School Academies*
  • Intermediate school districts
  • Some public libraries and museums
  • Tax supported community colleges
  • Central, Eastern, Northern, and Western Michigan Universities, Ferris State and Lake Superior State Universities, and Michigan Technological University

 *Charter/Public School Academies are considered reporting units even if they don't participate with the Michigan Public School Employees Retirement System.

 






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The retirement plan information that appears on this website is intended to summarize basic provisions of Public Act 300 of 1980, as amended.
Current laws, rates, and factors are subject to change. Should there be discrepancies between the information reflected here and the actual law,
the provisions of the law govern.



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