Who is responsible for the six-month wait to work after retirement? Is this a CalSTRS policy?
The six-month separation from service, or zero dollar earnings limit, is a legally mandated provision found in the California Public Employees’ Pension Reform Act of 2013, (PEPRA) passed by the Legislature and signed by Governor Edmond G. Brown in September of 2012. The law became effective on January 1, 2013.
CalSTRS did not create the policy underlying this law, but CalSTRS must adhere to the laws that govern the administration of the Defined Benefit plan. This provision of the law applies to all new, current and retired members who retire on or after January 1, 2013, regardless of age, for the first 180 days of their most recent retirement, or essentially the first six months following their most recent retirement.
The separation from service requirement seeks to curb the practice of retiring from a position, drawing a pension benefit from that service and then immediately returning to the same or similar position and earning a salary in that position. This practice is often referred to as “double dipping” and was a major concern of the Legislature and the Governor as discussions of pension reform legislation took place.
If you return to work considered CalSTRS-covered employment, whether as an employee of the district, a contractor or an employee of a third-party during the first 180 days, or six months, following your most recent retirement date, CalSTRS will reduce your retirement benefit dollar-for-dollar by the amount you earn up to your benefit amount payable during that period. This requirement also applies to Cash Balance annuitants who are under normal retirement age.