Public Service After Retirement

Earnings Cap Raised

JANUARY 2012 VOICE: Of interest to some members in the new Pension Reform law (Chapter 176), Senate leaders agreed to a floor amendment, sponsored by the Mass. Police Association and backed by our Association, that increases the part-time earnings limits for superannuation retirees who return to public service, on part-time basis, within Massachusetts government. Senator Michael Rodriques (D-Westport) carried the amendment on the Senate floor, which was unanimously accepted.

The House opted to include the language directly within the House Ways and Means Pension Reform Proposal, which virtually assured its passage into law. A nearly identical measure was vetoed at the 11th hour in 2005 by then Governor Mitt Romney during his final days in office.

Under the new law, superannuation (retired on regular non disability pension) retirees can now make $15,000 in additional earnings each year from a public sector job. Prior to the change, a retiree was restricted to earning just the difference between the current regular compensation of the position from which they retired and their retirement allowance. The new law adds the additional $15,000 in annual earnings to that amount, except during the first year of retirement during which the old formula still applies.

While the law has increased the earning potential for retirees, they are still limited to working just 960 hours per calendar year in a public sector job within Massachusetts. A “public sector” job is defined as one working either at the state, county, municipal, regional or district level. Federal employment, along with the MBTA, are not subject to earnings and hours restrictions, nor is private sector employment.

Disability retirees face even greater restrictions. While allowed to work on a limited basis, all outside employment earnings of disability retirees are restricted to a preset formula that is based on the difference in pension and salary of the former position, plus an additional $5,000. The new law applies only to superannuation retirees.