CPCA Public Safety Annuitants
By : J . Scott Tiedemann , Managing Partner , Liebert Cassidy Whitmore , Jennifer Rosner , Partner , Liebert Cassidy Whitmore , and Lars T . Reed , Associate , Liebert Cassidy Whitmore
The present is a uniquely challenging time for law enforcement agencies . Public discourse , which can tend to be demoralizing , is consistently critical of police . In turn , legislators have set their sights on reform . By the end of the 2020 legislative session , the California Legislature had passed a dozen new bills relating to law enforcement reform or increased public scrutiny over policing , most of which were signed into law by the Governor . On top of all of that , the COVID-19 pandemic has threatened to cause staffing and funding shortages . All of this tumult threatens to lead to a talent drain . Law enforcement faces increasing retirements and reduced recruiting . One strategy law enforcement agencies commonly employ in tackling staffing issues is re-hiring retirees . Caution is advisable .
Many agencies already hire CalPERS retirees for limited postretirement work to help with overflow or special projects . Often times , these retirees are the agency ’ s former employees who are familiar with the agency ’ s operations and inner workings . However , agencies that choose to take this route need to be careful , as postemployment work without reinstatement into active CalPERS membership is only permitted in certain limited circumstances , and with numerous strict requirements that agencies must follow . If these requirements are not followed exactly , then CalPERS may require that the retiree and employer make retroactive pension contributions , and can even require the retiree to give back all the pension payments collected during the post-retirement work for up to three years of retroactive payments . Because of this , seemingly minor violations sometimes result in demands for repayment for hundreds of thousands of dollars !
There are two significant restrictions on postretirement work : First , a CalPERS retiree may only work a combined total of 960 hours for contracting agencies in one fiscal year ( July 1-June 30 ). Second , a retiree must generally have a break in service of at least 180 days before starting postretirement work , although this requirement does not apply where the retiree is a public safety officer or firefighter performing safety-related functions regularly performed by one of those positions . However , if the retiree accepted a retirement incentive on retirement , the 180-day break in service is mandatory .
In addition , for retirees who are below the “ normal retirement age ” – meaning someone who is not yet eligible to retire or has not reached the highest specified age under their pension benefit formula , there must be a “ bona fide separation form service ” before they can resume work for a CalPERS agency . This means that the officer must be separated from their employment for at least 60 days with no predetermined agreement to return to work after retirement .
As an illustration of how this rule works in practice , assume a police officer from a CalPERS agency retires at the age of 52 . The agency he retires from is a city with a retirement benefit formula of 2 % at age 50 . However , the officer had also previously worked for an agency with a retirement benefit formula of 3 % at age 55 . Both formulas are used to calculate the officer ’ s retirement benefits .
Under this scenario , the officer ’ s “ normal retirement age ” is going to be 55 ( the highest age from the two retirement benefit formulas above ). If this officer wants to work for a CalPERS employer as a special events reserve officer , he does not need to meet the 180-day break in service that is normally required because he is a peace officer .
42 CALIFORNIA POLICE CHIEF | www . californiapolicechiefs . org