CHARLESTON, W.Va. -- Eliminating current "double-dipping" restrictions on retired state employees would cost the state millions of dollars a year in additional pension payments, Consolidated Public Retirement Board actuary Harry Mandel told legislators Monday.
"We're talking about, potentially, a 5 to 10 percent increase in overall costs," he said of eliminating any restrictions on retired public employees returning to work for the state.
Currently, the employer's share of contributions to the Public Employees Retirement System is more than $60 million a year.
Mandel said elimination of the current restriction, which suspends pension payments to retirees who earn more than $15,000 a year in post-retirement public employment, would encourage more public employees to take early retirement and then return to their state jobs, a practice known as hot-seating.
The discussion before the Joint Committee on Pensions and Retirement was prompted by a legislative audit last month that found that at least 35 retired state employees had earned more than $15,000 in state compensation in 2011, including 31 who had worked for the state as independent contractors.
In the audit, the legislative auditor's office had proposed that the Legislature should either eliminate any restrictions on post-retirement employment, completely ban retired state employees from working for the state, or revise state law to come up with a compromise.
CPRB executive director Jeff Fleck noted that nothing in current law prohibits retired public employees from working for the state as independent contractors.
"We haven't looked at it as a loophole, because it's perfectly legal at this point," he said, citing a 1967 attorney general's opinion that said retired employees cannot have their pensions suspended under the law if they work for the state as independent contractors.
However, legislative manager Aaron Allred said that the state has been too lenient in defining retirees as independent contractors.