House committee passes out WAR bill

The House Committee on Financial Institutions and Insurance today passed out a bill that makes changes to state law for KPERS employees who work after retirement.

House Substitute for SB 21 provides that, under the basic working after retirement rule:

A retiree who reaches $25,000 in earnings must either stop working for that calendar year or have benefits suspended, whether working for the same or a different employer;

The employer will pay a 30 percent contribution on salary earned after $25,000 if the retiree continues working;

If a retiree begins working under the basic rule and then is hired in a “special exemption” position before the end of the calendar year, he or she is no longer subject to the earnings limit for the duration of the exemption, and the employer pays the 30 percent contribution after the special exemption hire date. The employer must also, however, contribute retroactively for the calendar year earnings before the retiree was hired under the special exemption.

Retirees who are not grandfathered but returned to work before July 1, 2017 would remain under the $25,000 earnings limit, but the employer would only pay the 30 percent contribution on earnings past the $25,000 limit. The existing 10.81 percent contribution rate for school employees is eliminated in the amended bill.

For substitute employees, whether licensed or non-licensed:

Once the $25,000 limit is reached, the retiree must either stop working for the remainder of the calendar year or benefits may be suspended and the retiree may return to work, whether for the same or a different employer;

The employer pays a 30 percent contribution after $25,000 if the retiree continues working;

Employers keep enrolled employees “in the system” between periods of employment;

If a retiree begins working under the basic rule and then is hired in a “special exemption” position before the end of the calendar year, he or she is no longer subject to the earnings limit for the duration of the exemption, and the employer pays the 30 percent contribution after the special exemption hire date. However, the employer must retroactively pay the required contribution (currently 10.81 percent) based on the retiree’s compensation earned in that calendar year before the special exemption hire date.

The bill collapses existing exemptions from the earnings limit into a single “emergency” exemption, with a 30 percent employer contribution from the first dollar of compensation. It also requires documentation of continuing efforts to fill positions. The exemption lasts for up to three years, with a single one-year extension allowed.

Regarding “grandfathered” employees, the bill limits the loss of grandfathered status to non-licensed retirees who change employers.

Existing provisions for a 60-day waiting period before returning to work, certification of no pre-arrangements at retirement and rehire and a periodic review of the $25,000 earnings limit and the 30 percent employer surcharge are untouched by the bill passed out by the committee.

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