Pension and Paycheck? How Its Possible

10:54 PM, Jun 20, 2013   |    comments
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Kernersville, NC -- There's a new chief in town, but he's no stranger in the Piedmont.

Winston-Salem Police Chief Scott Cunningham is retiring from that department and taking over the same position in Kernersville.

READ:W-S Police Chief Takes Job in Kernersville

His new job will begin June 30. In Winston-Salem, he leads more than 500 officers. In Kernersville, it will only be 67. He will also be making about $30,000 less a year in salary.

But, he could be taking home two paychecks because of his retirement benefits from Winston-Salem.

Winston-Salem police officers are required to enroll in the city's retirement plan.

It's completely separate from the state's Local Government Employees Retirement System that most law-enforcement agencies offer. 

Winston-Salem police officers can enroll in that system too, but it's optional.

To access that money, employees have to work for at least 5 years and be 55 years of age, or work 30 years and be any age.

WSPD officers pay in 6-percent of their paycheck, and there is a formula to determine just how much the officer will make in retirement benefits.

When officers retire, they can take their earned pension and find a new job. If they pay into the state retirement system, they can collect money once they retire.

 

WFMY News 2's Morgan Hightower spoke to several financial experts about the retirement plans and they said collecting retirement and earning a paycheck is not uncommon. In fact, they said it happens often across all industries.

"It would be just as if I worked for some major industry out here in the private sector and simply changed jobs after retirement and took other employment. There is absolutely nothing wrong with doing that. It's no different than what goes on everyday in the private sector," explained Randy Jones, retired law enforcement officer. "[Cunningham] is not double-dipping from tax payers from what you are talking about here because it is not within the same system. Just as I'm not because I'm not in the retirement system."

Randy Jones worked at the Burlington Police Department for 30 years. He retired as a Captain 10 years ago. He is collecting state retirement benefits and is working part-time for the Alamance County Sheriff's Office.

"I'm not allowed to go from a full-time job, local to local level, and continue employment as a law enforcement officer. I can only work a maximize 1,000 hours per year in a non-vested basis and a non-benefited basis. So it is in fact a part-time retirement job," explains Jones.

Jones' has to follow strict guidelines to keep his state retirement.

He says he cannot work more than 1,000 hours per year and has a limitation on how much money he can make.

"The part-time function I serve at the sheriff's office, I am on a straight contractual basis. There is no future retirement for me under that system. It doesn't matter if I remained employed at the county for 20 years. I will draw absolutely nothing in way of additional retirement, it will not increase the retirement that I am drawing, and the county is not responsible for paying any type of benefits, medical, dental, nothing of that nature," explained Jones.

Jones added that law enforcement agencies across the state are hiring retirees just like him. He says it's because they're already trained, know the business, and aren't paid benefits or high salaries so it's cost-effective for taxpayers.

The annual retirement benefit for state employees enrolled in the system is figured through a formula. The average final compensation, which is the average salary of the four highest years paid, is multiplied by 1.85 percent. That number is then multiplied by the years the employee worked. The product is then divided by 12 to get the monthly benefit. 

Again, Winston-Salem's police retirement plan and the state plan are different systems, but they figure their retirement benefits the same way. 

To learn more about how you can plan wisely for retirement, click here.

WFMY News 2

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