Retirees Back Again
Rhode Isand commissioner of higher education Jack Warner has an op-ed in today’s Providence Journal “Explaining college retirees’ return.” This is the only new, mitigating factor:
The Rhode Island Board of Governors for Higher Education, through its predecessor, the Board of Regents, was given the authority to establish its own retirement plan in 1967 (Rhode Island General Law 16-17.1).
Higher-education employees who participate solely in this plan are not members of the state retirement system.
Under the provisions of this plan (known as a 403(b) plan), the public institutions of higher education can legally bring back any member of the system at any time without any restrictions.
There are restrictions on members of the state retirement system, also known as ERS. While there are some ERS employees who work in higher education, the large majority of higher-education employees have 403(b) plans. The 403(b) plans are defined-contribution plans, which makes them very different from the defined-benefit state pension plan. A 403(b) is more like the private-sector 401(k) plan in that employees contribute a minimum of 5 percent of their salary and the state makes a contribution of 9 percent as an employee benefit (much the same way a private-sector employer contributes to an employee’s 401(k) plan).
So, in essence, a higher-education employee who retires on a 403(b) plan is largely receiving a payout of his or her own money invested over the years of employment, not a continuous payment from the state under a state pension.
Well, his own money plus that 9% public contribution. In any case, the practice of rehiring employees immediately after they’ve retired still leaves a sour, contemptuous of the regular working stiff, taste in the mouth.