Ask Jack Jack Ehnes

Have there been any changes to the postretirement earnings limit or employment requirements since June 30, 2012?

The postretirement earnings limit has changed with the passage of Assembly Bill 178 on July 17, 2012. The new law applies to CalSTRS retired members and sets new conditions for the earnings limit and limited-term appointment exemptions. It also permits a third-party exclusion provision and allows retired members to reinstate and re-retire within the same year.

Beginning July 1, 2012, the limit increases from $31,020 to $40,011 for the 2012-13 fiscal year. The new postretirement earnings limit formula is based on one-half of the median final compensation for recently retiring members, instead of what was approximately one-half of the average annual salaries of all active members.

Retired members employed by a third-party employer contracted to work with, or performing services for, a school district employer are excluded from the postretirement employment requirements, including the earnings limit, provided they meet the following three criteria:

  • The activities performed are on a limited-term basis,
  • The third-party employer does not participate in a California public pension system, and
  • The activities performed are not normally performed by other employees of the school district employer.

One very narrow postretirement earnings limit exemption is also available for one year; 2012 -2013. The exemption is available for specific, statutory appointments made by the State Superintendent for Public Instruction, the State Board of Education, the Board of Governors of the California Community Colleges, or a county superintendent of schools to assist schools that are in financial or academic distress. In addition, statutorily required documentation must be submitted by the appointing authority prior to the performance of service. There are no other exemptions to the earnings limit in place; all the other exemptions sunsetted July 1, 2012 under prior law.

Beginning July 17, 2012, members who terminate their retirement and are reinstated may re-retire within the same year. However, reinstating members must retain the same retirement option and beneficiary for one year.

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