the Journal Editorial Board | Posted: Sunday, October 19, 2008 11:00 pm
|
A practice becoming more common among the state's public sector
employees who are members of the South Dakota Retirement System
(SDRS) is expected to be reviewed by the SDRS and likely by the
state Legislature.
Good. The practice of allowing
state employees to retire, collect a pension or realize some other
lump sum benefit and then be rehired for the same job is not
working as intended.
The practice is called
retire/rehire and it's commonly thought of as "double
dipping."
It's not illegal in South Dakota
but it is controversial, and rightly so.
The practice that allows for the
retire/rehire had merit in the early-80s when it was developed.
Then, it served to encourage retirement and therefore open
positions for young workers. Unfortunately, today it has morphed
into a practice that encourages retirement only to have the same
person be rehired and collect benefits and a paycheck
simultaneously.
Today it's a flawed practice that
should be modified to better reflect its original purpose: Enticing
fresh, new thinking and new workers to South Dakota.
Allowing current employees to be
rehired after retirement stifles new hiring. We're sure school
districts are pleased to have retired employees return to the job,
but at what cost? Are new employees actively sought out far beyond
the state's borders? Are young graduates being encouraged to stay
in their home state?
And what about the financial cost?
Some school districts have incentives in place to encourage early
retirement. As it is today, when the same employee returns to work
for the same wage (but also collecting a retirement incentive), it
flies in the face of common sense.
A real concern should be bringing
new people with fresh ideas to South Dakota. We wonder how
motivated employers really are when they know the retire/rehire
plan can take the place of engaging in a search and then the
competition for new talent?
A simple change that would make
sense is this: Mandate that all public sector employees who retire
can't be rehired for a period of no less than one year.
That simple change makes abusing
the system less likely and forces employers to search out new
talent.
Clearly there is an aging
population that will be in a position to take advantage of the
retire/rehire practice. In the past six years, the number "double
dipping" has grown by 75 percent.
Think that number will decrease?
Think again. It's expected the soon-to-retire baby boomers will
lead to even more double dipping. And, as a consequence, less
opportunity for young South Dakotans and others interested in
moving here from outside our borders.
The practice that allows for
retire/rehire had its time. Today, the original intent of it is
lost and it needs to be amended to better reflect the
times.
