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.

There are a few ways a retiree can return to work with a VRS-participating employer, including:

• The retiree can 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 certain positions in a school division, following certain rules.

Returning to work may affect benefits: If employees retire and then decide to return to covered employment, their future benefits may be affected. 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, depending on their circumstances, the next benefit may be less. Any cost-of-living adjustment (COLA) earned prior to returning to covered employment is lost as are any retirement credits provided under the Workforce Transition Act and the Transitional Benefits Program.

Also, inform retirees that when returning to active employment in a full-time, salaried VRS-covered position, they will retire under the currently applicable plan for that position, which may change the benefit calculation for the second retirement.

Know the rules: Retirees may work in a non-covered position with a VRS-participating employer and continue to receive their retirement benefit under certain circumstances. In general, 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.
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 or part time 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 a previous position, disability retirement benefits will end.

Schools have additional options when hiring retirees: Certain school division jobs may be designated as critical shortage positions– teachers, administrators and bus drivers – meaning the position is designated as a critical shortage position by the Department of Education, or 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.