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Employment

Employment

If you go to work after you retire, your earnings usually won't affect your pension, with the following exceptions:

Disability retirement pension

Because of the nature of a disability pension, you must gain approval from the Michigan Office of Retirement Services (ORS) before you return to work for any employer. Write a letter to ORS before you resume working. The letter should include an official job description and 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.

State of Michigan employment

If you return to work for the state as an employee, independent contractor, or through a contractual arrangement with another party, you must forfeit your state pension for the duration of the reemployment.

You should complete the Retiree Rehire Certification (R0792G) form at the time of hire.

If you are rehired as a state employee, you will be enrolled in the Defined Contribution (DC) Plan.

Who must forfeit their pension?

•           Retirees employed directly by the state

Retirees must forfeit their pensions when returning to work for the State of Michigan. This includes retirees hired on an ad hoc, infrequent or advisory basis, contractors, and retirees who transferred from the Defined Benefit (DB) Plan to the DC Plan as active members. Payouts from any DC accounts would not be affected.

•           Independent contractors

Retirees must forfeit their pensions if returning to work for the State of Michigan as an independent contractor after Oct. 1, 2010. This includes independent contractors who may have had an existing contract on or before Oct. 1, 2010, and the contract was extended or amended after Oct. 1, 2010.

•           Retirees employed by a third party

Retirees who are hired by a third party (e.g., temporary hiring agency or as an employee of a third-party contractor) and are performing work for the State of Michigan must forfeit their pensions, regardless of who pays the wages.

Who does not need to forfeit their pension?

  • Retirees rehired before Oct. 2, 2007
    Retirees who began reemployment with the state before Oct. 2, 2007, as long as they remain continuously employed by the state, do not need to forfeit their pensions.
  • Independent contractors
    Retirees who are rehired on or before Oct. 1, 2010, and meet the criteria of independent contractors do not need to forfeit their pensions. IRS Publication 15-A and the Economic Reality Test set forth in McKissic v. Bodine, 42 Mich App 203 (1972) are used to determine if a retiree meets the criteria. ORS will rely on each individual hiring agency to ensure that any independent contract it puts in place, meets the criteria of an independent contractor. However, if a contract is extended or amended after Oct. 1, 2010, the retiree must forfeit his or her pension. Hiring agencies should consult their legal counsel for assistance with these contracts.
  • Retirees who are rehired by the Department of Corrections (DOC)
    Retirees who are rehired by the DOC to provide healthcare services do not need to forfeit their pensions as long as all of the following conditions are met:
    • The DOC must first endeavor to recruit a person through the normal hiring process to fill the position. If unsuccessful, the DOC must provide written notice to the State Budget Office and ORS of the need to rehire a State of Michigan retiree.
    • Within 30 days of rehire the DOC must provide in writing to the State Budget Office and ORS the retiree’s name, employment capacity, and total payable compensation.
    • The retiree must be in a limited-term position with no benefits paid and paid on a per diem basis.
    • The retiree retired after a bona fide termination. (This simply means that you terminated employment in good faith, with honesty, and without any intent to return to State of Michigan employment.)
  • Retirees who are rehired indirectly by the DOC

DOC retirees who are hired indirectly by the state through a contractual arrangement with another party providing telecommunications services to the DOC for the primary purpose of collecting or analyzing intelligence generated in the DOC do not forfeit their pension if all of the following conditions are met:

  • The DOC determines that, as a result of the retiree’s previous state employment, he or she had specialized expertise and experience necessary to complete those tasks.
  • The DOC reports the employment of a retiree to the State Budget Office and ORS within 30 days after employment and within 30 days after termination of employment.
  • The report should be completed using the DOC Retiree Certification (R3471G) form, which includes the retiree’s name, address, date of indirect hire with the state, contract company’s name, and the capacity in which he or she is employed.
  • Retirees who are rehired by the Department of Natural Resources (DNR) for active wildfire suppression
    Retirees who are rehired by the DNR to suppress active wildfires do not need to forfeit their pensions as long as all of the following conditions are met: 
    • There is an immediate continual need for pre-qualified, skilled, and trained personnel to address wildfire suppression.
    • The retiree works no more than 600 hours in a fiscal year.
    • The DNR must first endeavor to recruit a person through the normal hiring process to fill the position. If unsuccessful, the DNR must provide written notice to the State Budget Office and ORS of the need to rehire a State of Michigan retiree.
    • The retiree must be in a limited-term position with no benefits paid and pay is not more than 70% of the maximum hourly wage granted to classified Civil Service employees employed by the DNR to perform the same duties as the retiree per fiscal year.
    • Within 30 days of rehire the DNR must provide in writing to the State Budget Office and ORS the retiree’s name, employment capacity, equivalent Civil Service position, total hourly compensation, and total hours of service.
    • Within 30 days of termination the DNR must provide in writing to the State Budget Office and ORS the retiree’s name, employment capacity, and total payable compensation.
  • Retirees who are rehired by the Department of Health and Human Services (DHHS) as a psychiatrist.
    Retirees who are rehired by the DHHS to provide mental health services as a psychiatrist to individuals in psychiatric hospitals operated by DHHS do not need to forfeit their pensions as long as all of the following conditions are met: 
    • DHHS determines that, as a result of the retiree’s previous employment with the state, the retiree possesses specialized expertise necessary for the hiring of the retiree and that the hiring of the retiree is the most cost-effective option for the state.
    • The retiree retired before Oct. 1, 2015, and after a bona fide termination of employment.
    • Within 30 days of rehire DHHS must provide in writing to the State Budget Office and ORS the retiree’s name, employment capacity, equivalent Civil Service position, total hourly compensation, and total hours of service.
    • Within 30 days of termination DHHS must provide in writing to the State Budget Office and ORS the retiree’s name, employment capacity, total payable compensation, and the total hours of service provided by the retiree for the fiscal year.
  • Until Sept. 30, 2023 - Retirees who are rehired by the DHHS as a mental health professional.
    Retirees who are rehired by the DHHS to provide mental health services as a mental health professional to individuals in psychiatric hospitals operated by DHHS do not need to forfeit their pensions as long as all of the following conditions are met: 
    • DHHS determines that, as a result of the retiree’s previous employment with the state, the retiree possesses specialized expertise necessary for the hiring of the retiree and that the hiring of the retiree is the most cost-effective option for the state.
    • The retiree retired before Oct. 1, 2015, and after a bona fide termination of employment.
    • Within 30 days of rehire DHHS must provide in writing to the State Budget Office and ORS the retiree’s name, employment capacity, equivalent Civil Service position, total hourly compensation, and total hours of service.
    • Within 30 days of termination DHHS must provide in writing to the State Budget Office and ORS the retiree’s name, employment capacity, total payable compensation, and the total hours of service provided by the retiree for the fiscal year.
    • This exemption sunsets Sept. 30, 2023.
  • Retirees who are rehired by the Legislative Service Bureau as legal counsel through a contractual arrangement.
    Retirees who are rehired by the Legislative Service Bureau as legal counsel through a contractual arrangement do not need to forfeit their pensions as long as all of the following conditions are met: 
    • The legislative council administrator determines that, as a result of the retiree’s previous employment with the state, the retiree possesses specialized expertise necessary for the hiring of the retiree and that the hiring of the retiree is the most cost-effective option for the state.
    • The legislative service bureau reports to ORS the employment of the retiree under this subsection within 30 days after employment and within 30 days after termination of employment.
  • Defined Contribution (DC) Plan participants
    Participants in the DC Plan who are not receiving a pension are subject to federal rules regarding distributions. DC Plan participants cannot continue a distribution from a 401(k) if they return to work at the State of Michigan if they are under the age of 59 1/2. DC Plan participants cannot continue to take a distribution from the 457 Plan while working for the State of Michigan no matter their age. If stopped, distributions can resume after employment with the State of Michigan ends.
  • Appointment to, or contracting with, the attorney general's office
    There are certain circumstances where a retiree who retired after a bona fide termination can return to work for the attorney general's office without forfeiting their pension. If you are a retiree who has been appointed as a special assistant attorney general or you are a retiree who has been asked to contract with the attorney general's office to act as a witness, expert, or consultant for litigation involving this state, please contact ORS for more information.
  • Until March 31, 2021, retirees rehired after March 15, 2020, by the Michigan Unemployment Insurance Agency

Until March 31, 2021, state retirees who have been hired after March 15, 2020, by the Michigan Unemployment Insurance Agency do not have to forfeit their state pension or pension benefits, if both of the following conditions are met: 

  • The Department of Labor and Economic Opportunity (LEO) determines that, because of his or her previous employment with the state, the retiree has specialized expertise and experience necessary for his or her hiring and that hiring him or her is the most cost-effective option for the state. 
  • LEO reports to the State Budget Office and the Department of Technology, Management and Budget as to the hiring of the retiree within 30 days after his or her employment or 30 days after the bill takes effect, whichever is earlier, and within 30 days after his or her employment ends or 30 days after the end of each fiscal year, whichever is earlier. This report must include the retiree’s name, the capacity in which he or she is employed, the equivalent Civil Service position in which he or she is employed, his or her hourly wage, and the total hours of service provided by the retiree for the fiscal year.

Effects on insurances

You will have a choice of active or retiree insurances. If you choose to keep your retiree insurances and your pension is suspended, we will bill you for the normal insurance amount which would be deducted from your pension. If you choose not to keep your retiree insurances, please submit an Insurance Enrollment/Change Request (R0452G) form to cancel your retiree coverage.

Upon termination of employment

Upon terminating employment with the state, you should notify ORS in writing so pension payments can be restarted. Your pension will become effective again the month after employment with the state has ceased. You will not be eligible for a pension recalculation.