Can You Retire from CalPERS and Still Work?
In California, the California Public Employees’ Retirement System (CalPERS) is one of the largest public pension funds in the United States. It provides retirement benefits to millions of California public employees, including teachers, police officers, and firefighters. A common question among these employees is whether they can retire from CalPERS and still work. The answer to this question is complex and depends on several factors.
Firstly, it is important to understand that CalPERS offers two types of retirement benefits: normal retirement and deferred retirement. Normal retirement is available to employees who have reached the age and service requirements set by the CalPERS board. Deferred retirement, on the other hand, allows employees to continue working while receiving a portion of their retirement benefits.
Normal Retirement and Working After Retirement
If an employee is eligible for normal retirement and decides to retire from CalPERS, they can still work, but there are certain restrictions. According to CalPERS rules, retirees who earn more than $45,000 per year (adjusted for cost of living) may have their CalPERS benefits reduced. This is known as the “windfall elimination provision” (WEP) and the “government pension offset” (GPO). The WEP and GPO are designed to prevent individuals from receiving an excessive benefit from both their CalPERS retirement and any other public pension they may be eligible for.
However, there are exceptions to these restrictions. For example, retirees can work for a government agency or a non-profit organization without any income limit, as long as the position is not a “substituted service” job. A substituted service job is one that would have qualified the retiree for CalPERS benefits if they had not already retired.
Deferred Retirement and Working
Employees who choose deferred retirement can continue working while receiving a portion of their CalPERS benefits. In this case, there are no income limits on the amount they can earn. However, the amount of benefits they receive will be reduced based on the amount of money they earn. The reduction is calculated by dividing the earned income by the average monthly benefit amount.
It is important to note that deferred retirees must work for a CalPERS-covered employer to receive their benefits. If they work for a non-covered employer, they will not be eligible for any CalPERS benefits until they retire.
Conclusion
In conclusion, the answer to whether you can retire from CalPERS and still work depends on your specific situation. Normal retirees may have their benefits reduced if they earn more than $45,000 per year, but there are exceptions for certain types of work. Deferred retirees can work without any income limits, but their benefits will be reduced based on their earned income. It is essential for CalPERS members to consult with a CalPERS representative or a financial advisor to understand the specific rules and regulations that apply to their situation.
