The below information pertains to retirees working for State of Delaware organizations only. Retirees working in private industry are not under any earnings or hourly limitations.

Retirees working for private companies that contract with State of Delaware organizations see below for specific requirements.

Retirees of pension plans administered by the Delaware Public Employees’ Retirement System (DPERS) are limited in their ability to return to work for an organization while continuing to receive a monthly pension. These limitations are the result of 2012 changes in both the Delaware Code and DPERS rules and regulations to ensure compliance with the regulations of the Internal Revenue Service (IRS) which allows DPERS to maintain its defined benefit plan status.

Retirees who fail to comply with the return to work criteria will have their monthly pension suspended. In addition, the retiree may have to repay any monthly pension benefits paid for any month the retiree did not meet the requirements.

Generally speaking, a retiree cannot receive a monthly pension in any month while working in a pension-covered position for an employer that participates in the retiree’s pension plan. In addition, retirees who are younger than age 65 at retirement must have a six month break from employment before working for any organization that participates in the pension plan from which he/she retired.

The rules also cover the types of work retirees can do when returning to work as casual/seasonal, temporary, or substitute employees.

• Casual/Seasonal employees must work fewer than 30 hours per week
• Temporary employees who are working more than 30 hours per week must work for a period of less than 12 months.
• Substitute employees must be working on a per diem basis.

In addition, under the State Employee’s Pension Plan there are earnings limitations on what a retiree in the Plan can earn while employed by a State of Delaware organization and still receive their full monthly pension. Exceeding the annual earnings limit of $50,000.00 will result in a reduction to the retiree’s monthly pension. The deduction is $1 for every $2 in earning over the $50,000 limit.  For example, If you make $60,000.  You are $10,000 over the limit.  We will then withhold $5,000 from your pension over the 12 months of the fiscal year following the calendar year in which the monies were earned. 

Be aware that if you are working (this includes substituting) through a Temp Agency, the Temp Agencies report your wages to the Pension Office and those wages also accrue toward your $50,000 earnings limit. 

The earnings limit of $50,000 is based on your wages for the calendar year (January – December).  Deductions are then taken the fiscal year (July to June) following those earnings. 

Retirees who contract with an employer participating in his/her pension plan, or who represent any third party employer that has a contract with an employer participating in his/her pension plan, are required to submit either the Direct or Indirect Certification of Post-Retirement Employment Status form.

• Retirees contracting directly with a State organization must complete the Direct Employment form which incorporates the IRS 20 Factor Test to determine whether an individual qualifies as an employee or an independent contractor.

  For individuals submitting the Direct Employment form, DPERS will issue a determination, based on IRS definitions, as to whether the individual is an employee or a contractor.

  Individuals who meet the definition of employee must then decide whether to continue working or to continue receiving their pension benefits as he/she will be unable to do both.

• Retirees working through a third party employer which contracts its services to a State organization must complete the Indirect Employment form which will place the responsibility of determining the retiree’s status as a contractor on the three parties involved – the retiree, the contracting State organization, and the third party employer.

  For individuals submitting the Indirect Employment form, DPERS will not issue a determination as by submitting the form, the parties involved are accepting responsibility for any claims, penalties, or fines that arise from the employment either through Delaware False Claims and Reporting Act and/or the IRS.

The Office of Pensions’ Return to Work rules and regulations ensure compliance with the regulations of the Internal Revenue Service and allow our retirement system to maintain its tax qualified exempt status. The Public Integrity Commission (PIC) oversees the State’s post-employment restriction which may affect your ability to return to work. In some instances you may not contract with the State or work for a State contractor, for 2 years after your separation date. If you have questions about the post-employment restriction, you should contract Deborah Moreau, Esq. for further information at (302) 739-2399. Be aware that having a determination from the Public Integrity Commission does not exempt a retiree from adhering to the DPERS return to work criteria. Whether or not a retiree can ethically return to work and whether or not a retiree can return to work without compromising his/her pension eligibility are separate and distinct issues.

Additional information is included with the description of each pension plan on this website, as well as the retiree and active employee newsletters filed under the Latest News/Newsroom Archives.

Disclaimer: If there is any conflict in interpretations between this summary and existing law, the law governs.

Take the Return to work quiz here.

Virtual
SEPP Pre-Retirement Workshop