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MERS board reviewing retire-rehire rules

November 28, 2009
By JOHN PEPIN Journal Staff Writer

MARQUETTE - The Municipal Employees' Retirement System of Michigan's rules governing retire-rehire programs may soon become more restrictive.

Marquette County currently has a rehire program which allows employees to retire - with no promise of re-employment -and then return to their jobs after 30 days, collecting both a paycheck and a pension.

The MERS Board is considering increasing the length of time required between retire and rehire dates to ensure a bona fide termination of employment, as is required by IRS regulations.

Making the change would also reduce the potential for so-called "sham retirements" where employers and employees agree to pre-arranged dates of termination and re-employment. The changes would affect entities across the state, not just Marquette County.

"An individual would now have to be separated from service for at least six months before being re-employed," Thomas Petroni, MERS senior deputy general counsel, said in a Nov. 6 memorandum. "And an elected official could not become re-elected and qualify for a MERS retirement allowance without a minimum one-year break in the term of office."

Members of MERS are currently able to comment on the proposed changes until Feb. 23. At its Nov. 13 meeting, the MERS board decided to invite member comment on the changes for 90 days. The board will then consider acting on the proposed changes at its March meeting.

At a recent meeting of the Marquette County Board, chief civil counsel Cheryl Hill updated the county board on the MERS meeting, based on a discussion with Petroni.

Hill said the MERS board would be soliciting comment on the proposed changes.

"They are having a dialogue with the MERS members," Hill said. "They were particularly focused on the elected officials."

Petroni's Nov. 6 memo to MERS Chief Executive Officer Anne Wagner discussed Marquette County's policy.

"As national attention has turned to alleged abuses in government spending, and anxiety over healthcare and pension costs has increased, the practice of 'double-dipping' by public sector employees has come under greater scrutiny and criticism," Petroni wrote. "Of particular controversy for MERS have been instances of 'double dipping' by elected county officials."

Petroni said MERS Chief General Counsel Michael Moquin has already apprised the board of the circumstances of Marquette County creating its original "opt-out" policy, involving 11 county employees and Marquette County Prosecuting Attorney Gary Walker.

"In that case, the county, in 2004, approved the retirement and immediate rehire of certain employees, including the re-elected county prosecutor, whose substantial salary and combined pension has caused alarm among many citizens," Petroni wrote.

Petroni said that more recently, to comply with the "bona fide" termination rule, re-elected county officials who were eligible for retirement resigned from office 30 days prior to the end of the current term for the sole purpose of qualifying for MERS benefits prior to the start of the new term.

"They then resumed office at the start of the new term with both a retirement allowance and a full salary," Petroni wrote. "The employers in these cases opposed the 'double-dipping,' but the re-employment decision for elected officials is in the hands of the electorate, not the employer."

The MERS website said the proposed wording change on lengthening the severance period is among alterations to the MERS Plan being considered, but the board is not limited to just those revisions.

To see the MERS notice, find where MERS members may offer comment or view Petroni's memo, visit:



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