Return to Work

The laws that govern retirees returning to work for a PERA affiliate have changed over the years. The following restrictions apply:

Retirees Hired on or Before June 30, 2010

Retirees who were re-employed before July 1, 2010, were grandfathered in under the laws in place when they were re-employed. Re-employed retirees will continue to receive both a pension and a salary. These re-employed retirees will remain grandfathered in for as long as they continue working for the employer who hired them without a break in service. If you terminate employment you will lose "grandfathered" status. If you begin working again you must suspend your pension.

Additionally, re-employed retirees and their employer are required to make contributions during re-employment and these contributions are not refundable to the member.

Retirees Hired on or After July 1, 2010

Effective July 1, 2010, the pension of a retiree who returns to work for a PERA affiliate is suspended. No longer can a retired member collect both a salary and their retirement benefit. If a retired member decides to return to work for a PERA affiliate they have the following options:

  • Become a contributing member to PERA again and resume accruing service credit. Once the member is ready to resume retirement, their monthly benefit amount will be re-calculated. If this option is chosen, PERA must be informed in writing to suspend their benefit and a new Application for Re-Employed PERA Retiree form must be submitted to PERA.
  • If the retired member has completed a 12-month break in service from their last retirement date, the member can begin employment with a PERA affiliate and choose not to make member contributions. In this case the retired member will not accrue service credit. If this option is chosen the Application for a Re-employed PERA Retiree form must be submitted to PERA.

PERA Retirees Re-employed by Employers Covered by the Educational Retirement Board (NMERB)

PERA retirees who become employed with an NMERB related employer will not be required to pay NMERB contributions nor will they accrue service. PERA retirees are also eligible to receive a COLA while employed with a NMERB employer. PERA retirees do have the option to suspend their PERA pension benefit and becoming a contributing member of NMERB. This action would allow the PERA member to accrue service credit tied to the employee contributions being withheld during employment, however the member is not eligible to draw a pension at the same time he/she is accruing service credit and TIER statuses are nontransferable. PERA retirees considering suspending pension benefits should contact NMERB for additional information about possible benefits and applicable conditions relating to potential future employment. As a reminder, members retire from the last system (PERA or NMERB) the member is employed with, which may subject the member to different retirement eligibility requirements. If the PERA retiree does not suspend his/her pension, the member will not accrue NMERB service credit.

Exceptions to Return to Work Provisions for Retired Members

The only retired members who are exempt, or excluded, from the return-to-work provisions are:

  • A retired member employed by Legislature for legislative session work;
  • A retired member employed temporarily as a precinct poll worker for a municipal election, or an election covered by the election code; or
  • A retired member who is elected to serve a term of office and files a timely exclusion form.

Working for a Private Company or Non-PERA Affiliate

There are no limits on the amount of time you may work for an employer not affiliated with PERA. No contributions are due, and your monthly benefit will not be affected.

Providing Services as an Independent Contractor

Retirees may provide services to a PERA-covered employer as an independent contractor. A professional services agreement or contract must be submitted to PERA’s Legal Division at least 15 working days before the effective date of the contract. PERA evaluates the contract to determine whether you are an “employee” or an “independent contractor.” PERA utilizes the common law control test in the Social Security Handbook to determine your status. In this evaluation, PERA considers whether or not the work you are contracting to perform is a continuation of a former employment relationship among many other factors.

A clear scope of work must be established in a professional services agreement. As an independent contractor, you must have your own state tax identification number and bill the employer directly. Compensation must be stated hourly or by a defined project. Independent contractors are not paid through the employer’s payroll system and do not accrue employee benefits such as annual and sick leave or overtime. The professional services agreement must contain a release that holds the employer harmless of any liability or claims arising from the agreement. Renewals, amendments and modifications to a previously approved post-retirement contact must also be submitted to PERA for evaluation at least 15 working days before the effective date of the renewal, amendment or modification.

You will be notified in writing of PERA’s determination of whether you are an employee or an independent contractor. If PERA determines that you are an employee and you disagree with PERA, you have the right to appeal the determination.

Who to Contact

Please contact the PERA Legal Division if you have questions about becoming an independent contractor after you retire at (505) 476-9355.