Employer Update

If your prospective new hire previously retired from your organization or a different VRS-participating employer, there are considerations for both you and the retiree before signing the hiring agreement.

By following best practices, you'll avoid liability for any benefit overpayments, and the retiree will be aware of how returning to work impacts their benefits.

Hiring a Retiree

There are three ways a retiree can return to work with a VRS-participating employer:

• The retiree can opt to return to active employment in a VRS-covered position.
• The retiree can return to work in a non-covered position, following specific rules.
• The retiree may be eligible to serve in a critical shortage position in a school division, following certain rules.

Counsel Employees About Returning to Work

If employees retire and then decide to return to covered employment, their future benefits may be impacted. When retiring again, the retiree's benefit calculation will include the additional service credit as well as any increase in average final compensation. In many cases, that means receiving a higher future retirement benefit. However, if the person had been retired several years and received cost-of-living adjustments (COLA) before returning to work, the new retirement benefit may be less as the previous COLAs will not carry over to a second retirement. Also, the retiree needs to be aware that when returning to active employment in a full-time, salaried VRS-covered position, he or she will retire under the currently applicable plan for that position, which may change the benefit calculation for the second retirement.

Know the Five Rules for Return-to-work

Retirees may work in a non-covered position with a VRS-participating employer and continue to receive their retirement benefit under certain circumstances. Here are the rules:

1. A bona fide break in service is required: Before retirees can return to work in any capacity for a VRS-participating employer, they must have a break in service of at least one full calendar month during a period they would normally work. Returning to work in certain full-time VRS covered positions requires a 12-calendar-month break in service during which no work, even on a volunteer basis, is performed for a VRS-participating employer.
2. Make no pre-arrangements: There can be no verbal or written offer of re-employment between you and the employee before retirement. A pre-arrangement will adversely impact the retiree's VRS benefits.
3. Work 80% or fewer hours: If a retiree returns to part-time, non-covered employment, the hours worked must be 80% or less than a full-time position.
4. Reclassifying positions to accommodate retirees is not allowed: You cannot designate a position as non-VRS-covered simply to accommodate a retiree in the position.
5. Disability retirees forfeit benefits if resuming the same or similar duties: If an employee retires on disability and accepts a position with any non-VRS or VRS-participating employer that requires the same or similar duties as the employee performed in his or her previous position, disability retirement benefits will end.

Schools Have Additional Options When Hiring Retirees

Certain school division jobs may be designated as critical shortage – teachers, administrators and bus drivers – meaning a school division received three or fewer qualified applicants when recruiting for the position. Certain other criteria apply to teacher critical shortage positions. The Virginia Department of Education designates critical shortage areas annually.

Additionally, retired sworn law-enforcement officers may be eligible to return to work full time as a retiree school security officer at a Virginia public school. Positions are full-time; and if retirees qualify, they will continue to receive retirement benefits but will not earn additional service credit.

To return to work in critical shortage positions or as school security officers, retirees must have a 12-calendar-month break in service – a key difference from normal return-to-work situations. This break in service means not working in any full-time, part-time or volunteer position with any VRS-participating employer, nor working for a contractor with any VRS-participating employer.