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State government retirees who return to work after July 1 could temporarily lose their pensions under legislation headed to the Senate floor.
The state also would stop paying the employer’s contribution to the retiree’s pension, as is the current practice.
The legislation (SB207), which passed the Senate Finance Committee on Tuesday, is a proposed solution to the practice of double dipping. That’s when state retirees return to work, collecting both a pension and a paycheck.
Critics have pointed out that the state can’t afford double dipping during such bad financial times. Some estimates are that it costs the state several million dollars a year at a time that New Mexico confronts a budget shortfall of several hundred million dollars next year.
Under present rules, in many cases the state continues to contribute to the pension accounts of double dippers, and those contributions eat out of the state’s main account, the general fund.
Other critics say that double dipping keeps younger workers from moving up the job ranks because retirees inhabit them.
The legislation sponsored by Sen. David Ulibarri, D-Grants, wouldn’t affect the roughly 800 double dippers already collecting a pension and a paycheck, officials said. But it would set out new rules for state government retirees who return to work after July 1.
Many of those state government retirees would face a choice if they return to work, particularly if they haven’t retired with a full pension.
The individual retiree could opt to temporarily stop receiving his or her pension while they collect a paycheck. Or the individual could opt to re-enter the pension system, meaning they would in effect un-retire, and earn more service credit toward qualifying for a full pension.
In most cases, a state worker qualifies for a full pension after working 26 years and eight months.
Ulibarri’s bill would exempt certain retirees who return to work from temporarily giving up their pensions. Public safety officers and firefighters who retired with a full pension wouldn’t have to give them up, Ulibarri told lawmakers.
Several state lawmakers expressed unease with Ulibarri’s bill, particularly because it wouldn’t stop those retirees currently double dipping.
Sen. Gerald Ortiz y Pino, D-Albuquerque, also worried that it would provoke a surge in state workers who would retire to take advantage of the current rules, which require a retiree only to wait 90 days before returning to work. Ulibarri’s bill would extend that sit-out period to a year.
“Won’t we experience a surge in retirements?” Ortiz y Pino asked.
Ortiz y Pino also pointed out that current retirees would fall under the more lenient rules if they were to return to work prior to July 1 – they wouldn’t have to temporarily give up their pension.
Paul Ritzma of Gov. Bill Richardson’s office told lawmakers that the governor had contemplated changing the rules on those already collecting a pension and a paycheck. But to “retroactively take that away would result in a lawsuit,” Ritzma said.
Richardson vetoed a bill that passed the Legislature last year that would have affected current double dippers. It would have capped how much retirees returning to work could earn at $30,000. It also required retirees to sit out 12 months after retiring before returning to work.
Sen. Sue Wilson Beffort, R-Sandia Park, said Tuesday she would support Ulibarri’s bill this year, but wanted legislation to take care of those already double dipping.
“We’ve got to have another bill,” Beffort said.
Sen. John Arthur Smith, D-Deming, told Ulibarri “I don’t think the bill does a whole lot to solve the problems.”
“You have no guarantees that the people who voted for this will vote” for this on the Senate floor, Smith told Ulibarri.
