Retired Employees Association News

May 2013 Update

The House Standing Committee on Pensions and Benefits ~ Testimony by the Kansas Coalition of Public Retirees

Ernie Claudel, vice-chair

May 8, 2013

Thank you for the opportunity to provide testimony concerning the issue of working after retirement and why it is an issue for the Kansas Public Employees Retirement System (KPERS). As you are aware, KPERS provides rules for working after official retirement. However, these rules differ considerably depending on the pre-retirement employment history of the retiree. Some of these differences will be mentioned in this testimony. It is our position, however, that when an employee elects to retire and has met all the qualifications established for this action, that they should be allowed to do so without further restriction.

Working after retirement has received much attention over recent years. Even with this attention, we will list below just some of the inconsistencies and unfair applications of the policy which still remain, below. The application of exceptions, which seem to be inevitable, are exacerbated because of the several categories of workers and professionals found under the KPERS umbrella. You will note that these concerns are not only found within the application as a whole, but specific within the application as well. Because of the complexity of KPERS, this list is not a finite listing!

KPERS school personnel may work after retirement without income restriction; however, percentages of their salary must be contributed to KPERS. The contributions lead to no further increase in retirement benefit and are assessed as follows:

  1. 6 percent of employee's salary
  2. the actuarial percentage of the employer's contribution
  3. additional 8 percent (This amount was determined by KPERS as an "approximate" amount that seemed reasonable.)

The contributions lead to no further increase in retirement benefits and are assessed as follows:

For example, if a retiring KPERS school employee desires to work after retirement for another school district, the retirement amount for 2013 will be calculated as shown below:

TOTAL ~ 23.12 percent

  1. Percent of employee's salary ~ 6.00
  2. Actuarial employer rate ~ 9.12
  3. Additional assessment ~ 8.00

At the time the 8 percent additional assessment was proposed, there was concern that the early retirement would negatively impact the Unfunded Actuarial Liability (UAL). Calculations were not available to accurately determine the true fiscal impact of this practice so it was estimated that an 8.0 percent assessment should be used. Under these criteria, any KPERS school person working after retirement is a definite positive for the KPERS trust fund since additional funding is received which cannot be paid out in increased retirement benefits.

Working after retirement poses some apparent inconsistencies depending on the prior employment of the retiree. Many of these complexities are illustrated by a visit to the official KPERS website.

For example:

Earnings Limitations — Differing limitations are set forth depending on the prior employment history of the retiree. This depends on whether the retiree is a Kansas Police & Firemen's Retirement System (KP&F) or KPERS retiree, $15,000 for one employee and $20,000 for another.

Employer Definition — The state of Kansas is treated as one employer (regardless of agency or geographical area) while each school district is treated as a different employer.

Occupations — Some occupations are exempt from the earnings limitation (certain nurses at some state facilities).

Judges — Judges are permitted to work for 25 percent of salary for up to 104 days and renew this arrangement for 12 years.

"Certain Legislative Staff" — They are not subject to the earning limitation.

Some additional history involving KPERS illustrates the need to proceed cautiously. Some facts to consider, and this listing is certainly not finite, are as follows:

  1. Not all firefighters qualify for Social Security on their salary.
  2. Not all first responders are under KP&F because the local units of government often choose KPERS because employer contributions are less.
  3. Not all employees who are required to be armed at work are under KP&F. This includes the employees of the Kansas Department of Wildlife, Parks, and Tourism (KDWPT) who are required to carry a weapon.

It is obvious that "working after retirement" is very involved. We suggest that the 2014 Legislature give serious consideration to a full and thoughtful review of the entire issue of "working after retirement" before any changes are proposed to current legislation.

Please hear from all interested parties during the 2014 session before any decisions are made. If the decision was reached to continue the variety of restrictions and requirements for working after retirement, it would seem that an explanation of/for differing rationale would be appropriate.

Ernie Claudel, vice chair, Kansas Coalition of Public Retirees, eclaudel1@comcast.net, 913-481-6923
Dennis Phillips, chair, Kansas Coalition of Public Retirees, djpiaff83@yahoo.com, 785-554-3442
www.ksretirees.org

 

January 2013 Update

Retired Employees Association members Ernie Claudel and Ron Gardner, who are also members of the Kansas Coalition of Public Retirees, provide a list of legislators serving on the House Committee on Pensions and Benefits. Questions may be directed to Claudel at (913) 491-6923 or eclaudel1@comcast.net, and Gardner at (913) 782-8175 or rongardner1811@comcast.net.

Please use the following format when writing to the representatives:

Legislator's Name
Office Number or Office Designation
Kansas State Capitol
300 SW 10th. Ave.
Topeka, KS 66612-3232

Members:

 

October 2012 Update

During the October meeting of the Kansas Coalition of Public Retirees a list of "KPERS Truths" was presented. Retired Employees Association members Ernie Claudel and Ron Gardner, who are also members of the Kansas Coalition of Public Retirees, share these items with their fellow retirees.

Questions may be directed to Claudel at (913) 491-6923 or eclaudel1@comcast.net, and Gardner at (913) 782-8175 or rongardner1811@comcast.net.

KPERS Truths as Presented by the Kansas Coalition of Public Retirees

  1. No KPERS retiree has received a cost-of-living adjustment since the last was granted in 1998. Some long-time KPERS retirees received a one-time bonus of $300 in 2007 and again in 2008.
  2. Less than half of those presently retired have received the last COLA or the two bonuses offered.
  3. The official measure of U.S. inflation is calculated monthly by the Consumer Price Index, (CPI). The cost-of-living as determined by the CPI has increased by 40 percent since the last benefit adjustment was granted in 1998, 14 years ago.
  4. To finance the KPERS retirement program, the employer and the employee make mandatory contributions to the KPERS trust fund as specified in the law. The State of Kansas has not met the statutorily required contribution rate in at least 17 years.
  5. The State of Kansas and approximately 1,500 local employing units of government make regular payments to the KPERS trust fund. All will be affected by the new Cash Balance (Tier 3) changes in KPERS.
  6. The U.S. Social Security program relies heavily on past and current worker contributions to finance the system. The KPERS program, unlike Social Security however, finances the system from pre-funded contributions and interest earnings of the employee and the employer during the work life of the covered employee.
  7. Any rise in the Unfunded Actuarial Liability (UAL), poses a significant risk to the long-term financial security of KPERS. The present KPERS system and the newly approved cash balance system provide that all employer and employee contributions will be made to the KPERS trust fund for the payment of employee benefits. Currently the "pooled KPERS funds" allow for investment earnings which may be used to reduce the UAL. Funds deposited on behalf of each employee (whether by the employee or the employer) in a "defined contribution system" would require separate accounting thereby restricting the earnings potential of the KPERS fund. Attempts to move to a "defined contribution program" such as a 401(k) model severely limit any means to reduce the Unfunded Actuarial Liability.
  8. Every KPERS retiree has paid in every dime they were required, and they have all met the requirements necessary to receive KPERS benefits as outlined by the Kansas KPERS statutes. (These statutes are established by the Kansas Legislature.)
  9. No KPERS retiree receives more in KPERS retirement benefits than they did in wages while working. This would be a mathematical impossibility.
  10. The average current monthly KPERS benefit is approximately $1,100. Under the entire KPERS umbrella, less than 1.2 percent receive over $50,000 annually in KPERS benefits. Nearly one-third of all KPERS retirees receive less than $500 per month. The KPERS benefit retirement formula is designed to provide approximately 50 percent of the retiree's final average salary.
  11. During calendar year 2011, KPERS paid approximately $103.9 million each month to retirees. Nearly 88 percent of all KPERS payments are made to Kansas residents.
  12. For state fiscal year 2013, the Legislature approved $2.75 million from the KPERS Trust Fund to implement a new KPERS cash balance plan.
  13. Under the new cash balance retirement plan, new legislators after Jan. 1, 2015 will be allowed to once again annualize their total pay (legislative compensation, daily expenses and non-session expenses just like under the present system). The only change the Legislature made in their retirement plan was to reduce the annualized days from 372 (31 days x 12 months) to 365.
  14. The KPERS Trust Fund is derived from three sources: employee-required contributions, employer contributions to the KPERS program on behalf of each covered employee, and over the last 20 years, 59 percent of the KPERS trust fund was realized through investment earnings. (KPERS retirement benefits are paid from the total of these three sources as authorized by the statutes which govern KPERS.)
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