Work That Won't Affect Your Pension

There is no limit on your earnings (see disability exception noted below) if you return to work in:

A private sector job outside of a Michigan public school reporting unit

A public school in another state

A college or university in Michigan that's not a part of the Michigan Public School Employees Retirement System


You can earn as much as you want in these situations and still collect your full pension.

Working After Receiving an Approved Disability Pension

Because of the nature of a disability pension, you must gain approval from ORS before you return to work for any employer. Write a letter to ORS before you resume working. The letter should include:

a job description,

complete information regarding the type of work you'll be doing, and

the name of your potential employer.


Failure to gain approval in advance may result in termination of your disability pension.

Read This Before Returning to Work in a Michigan Public School

1. Bona Fide Termination

   You cannot work in a Michigan public school reporting unit or for the state of Michigan during the month of your retirement effective date, even as a volunteer.
   
   If you return to work for (or in) a Michigan public school reporting unit, you must have a bona fide termination of employment. A bona fide termination means there is a complete severing of the employee/employer relationship. You can't have a promise of reemployment or a contract for future employment in place to work in a Michigan public school reporting unit before you terminate employment and begin collecting your pension.  If you are collecting your pension and it's subsequently discovered that a bona fide termination did not exist, you will be required to repay pension payments you erroneously received.
   
   You may be subject to earnings limits even if you work in a Michigan Public Schools Employee Retirement System (MPSERS) reporting unit for a third party or as an independent contractor.

Rules For Those Who Retired Before July 1, 2010:

1. Working After Retirement

   You may be subject to earnings limits or forfeiture of your pension if you return to work after you begin collecting your pension. These rules affect those people who return to work either for or in a Michigan public school reporting unit. You first need to determine whether or not you'll be working either for or in a reporting unit. Working for a Michigan public school reporting unit means you have been hired directly by the school. You can be working in a Michigan public school but hired through a 3rd party or as an independent contractor. (See section 5 of this document for a list of those employers who are reporting units.)
   
   Once we know this, we can then determine whether or not you'll be subject to limits based on the categories that follow.
   
   The rules are different depending on whether you retire before or on or after July 1, 2010.

2. Public School Reporting Units Defined

   The only time you'll need to worry about earnings limits will be if you return to work for (or in) a Michigan public school reporting unit. You don't need to be hired directly by the reporting unit to be affected; you may be hired by a third party but assigned to work in a reporting unit.
   
   Michigan public school reporting units include:
   
   K-12 public school districts
   
   Charter schools/Public School Academies*
   
   Intermediate School Districts
   
   Some public libraries and museums
   
   Tax supported community colleges
   
   Central, Eastern, Northern, and Western Michigan Universities, Ferris State and Lake Superior State Universities, and Michigan Technological University.
   
   
   *Charter/Public School Academies are considered reporting units even if they don't participate with the Michigan Public School Employees Retirement System.
   
   If you return to work in a participating Michigan public school reporting unit, it's your responsibility to inform your employer of your retiree status. Reemployment in a Michigan public school reporting unit does not change the fact you are a retiree. You will not earn service credit.
   

3. Exceeding the Earnings Limit

   Your pension can be either reduced or forfeited if you exceed the earnings limit. Your pension will be reduced dollar for dollar for each dollar you've exceeded the limit, up to your maximum pension amount.

4. Rules for Working After Retirement

   You may return to work directly for a Michigan public school reporting unit and earn the greater of the following limits:
   
   You may earn one-third of your Final Average Compensation without effect on your pension. For this purpose, the salary average is increased by 5 percent (compounded) for each calendar year you're retired, or
   
   You may earn up to the Social Security income limit for that specific year. If one-third of your final average compensation is lower than that year's Social Security income limit, you may make up to the higher amount.
   
   
   The Social Security income limit changes annually. The Social Security income limit for 2013 is $15,120. (Visit the Social Security Administration's website and search for the pamphlet How Work Affects Your Benefits for more information about the Social Security income limit.)
   
   For every dollar you earn above the limit, you must return one dollar to the retirement system, up to your annual pension amount. If payment is not made, your pension will be suspended.
   
   If your pension is suspended because of excess earnings, your insurance will also be suspended. If this happens, you may request a continuation of insurance, but you will be responsible for the full premium. This may be expensive.

5. Temporary Rules for Those Working in a Critical Shortage Discipline

   Regardless of when you retired, you are exempt from earnings limits until July 1, 2014 if you meet all of the following requirements:
   
   You work for a K-12 public school or charter school/public school academy. If your work is for a community college or a university, you cannot use the Critical Shortage provision.
   
   You are retired and have collected your pension for at least 12 months.
   
   You are employed by a reporting unit that has an employment situation that requires the reporting unit to hire you in a critical shortage position*. This does not include employment situations caused by labor disputes.
   
   You are not employed in a critical shortage discipline for any more than three years**.
   
   The reporting unit will be responsible for paying an employer contribution rate to the retirement system on your retiree wages.
   
   
   * A list of Critical Shortage Positions is available on the Department of Education's website. 
   
   **This includes working in a critical shortage position before the previous law expired on June 30, 2011. For example, if you worked in any critical shortage position for 2 ½ years, you may only work for another ½ year in any critical shortage position. For the purpose of calculating time, service will be counted the same way in retirement as how you earned creditable service as an active employee. See the section dealing with earning service credit on michigan.gov/orsschools for more information.

6. Exceptions to Earning Limit Rules for Those Who Retired Before July 1, 2010

   If you retired before July 1, 2010, there are no limitations on earnings:
   
   If you are employed as a former teacher or administrator in a teaching or research capacity in a university that is considered to be a reporting unit. These include Central, Eastern, Northern, and Western Michigan Universities, Ferris State and Lake Superior State Universities, and Michigan Technological University.
   
   If you are eligible for full Social Security benefits, there is no limit on how much you can earn while working for a Michigan public school reporting unit.
   
   If you are working in a reporting unit for a third-party contractor or as an independent contractor, because you retired before July 1, 2010, there will be no earnings limits.
   

Rules For Those Who Retired On or After July 1, 2010:

1. Working After Retirement

   You may be subject to earnings limits or forfeiture of your pension if you return to work after you begin collecting your pension. These rules affect those people who return to work either for or in a Michigan public school reporting unit. You first need to determine whether or not you'll be working either for or in a reporting unit. Working for a Michigan public school reporting unit means you have been hired directly by the school. You can be working in a Michigan public school but hired through a 3rd party or as an independent contractor. (See section 5 of this document for a list of those employers who are reporting units.)
   
   Once we know this, we can then determine whether or not you'll be subject to limits based on the categories that follow.
   
   The rules are different depending on whether you retire before or on or after July 1, 2010.

2. Public School Reporting Units Defined

   The only time you'll need to worry about earnings limits will be if you return to work for (or in) a Michigan public school reporting unit. You don't need to be hired directly by the reporting unit to be affected; you may be hired by a third party but assigned to work in a reporting unit.
   
   Michigan public school reporting units include:
   
   K-12 public school districts
   
   Charter schools/Public School Academies*
   
   Intermediate School Districts
   
   Some public libraries and museums
   
   Tax supported community colleges
   
   Central, Eastern, Northern, and Western Michigan Universities, Ferris State and Lake Superior State Universities, and Michigan Technological University.
   
   
   *Charter/Public School Academies are considered reporting units even if they don't participate with the Michigan Public School Employees Retirement System.
   
   If you return to work in a participating Michigan public school reporting unit, it's your responsibility to inform your employer of your retiree status. Reemployment in a Michigan public school reporting unit does not change the fact you are a retiree. You will not earn service credit.
   

3. Exceeding the Earnings Limit

   You will forfeit your pension and your retiree insurance premium subsidy beginning the month you exceed the limit. The forfeiture of your pension will continue until your employment with the Michigan public school reporting unit ceases.

4. Rules for Working After Retirement

   If you return to work directly for a Michigan public school reporting unit:
   
   Your earnings limit is 1/3rd of your Final Average Compensation (FAC). Example: If your FAC is $60,000, then you may return to work directly for a reporting unit and earn $20,000, (your FAC divided by 3).
   
   If you exceed the earnings limit, you will forfeit both your pension and retiree insurance premium subsidy until your employment ceases. The forfeiture will begin the month you first exceed the limit. You may choose to remain enrolled in the insurance, but you must pay the higher, unsubsidized premium rate. You may resume your pension and be eligible for the insurance premium subsidy after you're no longer working for a public school reporting unit.
   
   
   If you return to work indirectly in a Michigan public school reporting unit as an employee of a 3rd party contractor, or as an independent contractor:
   
   If you perform a core service, you will forfeit your pension and retiree insurance premium subsidy until your employment ceases.
   
   You may continue to collect your pension and receive the insurance premium subsidy if you're not performing a core service.
   
   Simply put, core services include most teaching and administrative roles. A list of core services can be downloaded here.
   
   
   Please see sections 8 and 9 for temporary rules regarding employment of instructional coaches/school improvement facilitators, or substitute teachers.

5. Temporary Rules for Instructional Coaches and School Improvement Facilitators

   You may become employed as an instructional coach or school improvement facilitator until July 1, 2014 if you meet all of the following requirements:
   
   You retired on or after July 1, 2010.
   
   A bona fide termination exists and you have not worked in a public school reporting unit during your retirement effective month.
   
   You become employed as either an instructional coach or a school improvement facilitator by a third-party contractor or as an independent contractor.
   
   You do not make more than one third of your FAC in a calendar year.
   
   The reporting unit will be responsible for paying an employer contribution rate to the retirement system on your retiree wages.
   

6. Temporary Rules for Substitute Teachers

   You may become employed as a substitute teacher until July 1, 2014 if you meet all of the following requirements:
   
   You retired on or after July 1, 2010.
   
   A bona fide termination exists and you have not worked in a public school reporting unit during your retirement effective month.
   
   You become employed as a substitute teacher by a reporting unit, a third-party contractor, or as an independent contractor.
   
   You do not make more than one-third of your FAC in a calendar year.
   
   The reporting unit will be responsible for paying an employer contribution rate to the retirement system on your retiree wages.
   

7. Temporary Rules for Those Working in a Critical Shortage Discipline

   Regardless of when you retired, you are exempt from earnings limits until July 1, 2014 if you meet all of the following requirements:
   
   You work for a K-12 public school or charter school/public school academy. If your work is for a community college or a university, you cannot use the Critical Shortage provision.
   
   You are retired and have collected your pension for at least 12 months.
   
   You are employed by a reporting unit that has an employment situation that requires the reporting unit to hire you in a critical shortage position*. This does not include employment situations caused by labor disputes.
   
   You are not employed in a critical shortage discipline for any more than three years**.
   
   The reporting unit will be responsible for paying an employer contribution rate to the retirement system on your retiree wages.
   
   
   * A list of Critical Shortage Positions is available on the Department of Education's website. 
   
   **This includes working in a critical shortage position before the previous law expired on June 30, 2011. For example, if you worked in any critical shortage position for 2 ½ years, you may only work for another ½ year in any critical shortage position. For the purpose of calculating time, service will be counted the same way in retirement as how you earned creditable service as an active employee. See the section dealing with earning service credit on michigan.gov/orsschools for more information.