Damn double dippers!

Double DipperLast week’s blog received a comment from Anonymous regarding double dippers. For those who have not read the comment I will quote it here for you.

Anonymous said “Maybe they should stop double dipping. Like when employees retire and come back to work in the same City they just retired from; and go into job(s) they are not qualified for….Big and Small Cities”

I appreciate Anonymous taking the time to comment as I value everyone’s opinion. And, it gave me fodder for this weeks blog. Therefore I would like to take this opportunity to address concerns and dispel myths around so-called double dipping.

In reality, “double dipping” is somewhat archaic as the practice originally meant a person would retire with a government pension, then become reemployed and begin working towards a second government pension. If that person achieved the second pension then paying twice to that person was a drain on the pension system, especially if they lived long enough to make it matter. Today a person who has been rehired can only draw one state pension. They are required to pay into a government pension system but at the end of their employment, that money is either paid out in a lump sum, or it is paid over time through an annuity.

Some might say it is the same thing, but it is not, and here is why. A pension goes on forever, or at least until the death of the retiree and his or her spouse. Theoretically a person could, if they live long enough, draw a pension for more years than they worked. Typically money paid into a pension system is recovered in the first several years and all the rest of the years the pension is paid out from funds not contributed by the person receiving the pension. The annuity, on the other hand, has a limit. It is paid until the contributions, plus interested, are recovered. At that point it stops.

So, is it a bad thing to rehire a retiree? I submit, it is a good thing,k both for the employer and for the pension systems. Typically, a person is rehired due to a demonstrated skill set, knowledge base or talent. If you, as an employer, have to choose between a person with known abilities or a person without, who do you choose. If you must choose to hire a person who can go right to work, require no training, indoctrination, or hand holding, which would you choose? And let us not forget, the rehired retiree is infusing much-needed cash into a pension system that eventually will help to support future retires.

In the current connotation, a double dipper is a person who is drawing a pension and a paycheck. That certainly expands the circle of double dippers. Look around, does this group include police officers and firefighters in the DROP program. After all, they are retired, drawing a pension that is invested from them, and collecting a paycheck from the same employer. Are the Police Chief and Fire Chief double dippers?

And so Anonymous, based on this, should we still stop double dippers? Is double dipping a bad thing? Do you have a hidden agenda for attacking double dippers? Or are you just jealous?

Those are my thoughts, what are yours?

 

Tom Lind

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1 Comment

  1. Mark ShermanOctober 22, 2012

    The year before I retired from teaching, the school system I worked for would not agree to rehire me even though they realized that they would save about $62,000, admitting that it wasn’t “pc”. (A levy was coming up that year.) So I stayed on for another year at full salary. It’s sad that a few loudmouths can force weakminded administrators to make bad decisions.

    Reply

Feel free to comment, why should I have the last word.

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