Policy Approval Authority | President |
Responsible Division | Human Resources Services |
Responsible Officer(s) | Chief Human Resources Officer |
Contact Person | John Acardo |
Primary Audience |
Faculty
Staff |
Status | Active |
Last Review Date | 11-25-2013 |
Policy Category/Categories |
Human Resources / Employment
|
In accordance with Public Act 97-0968, Public Act 98-0596, the Illinois Pension Code, and Board of Trustees Regulations, this policy outlines the conditions of employment, hiring procedures, and earning restrictions for State Universities Retirement System (SURS) annuitants. The following university procedure is necessary to fulfill compliance requirements and the avoidance of significant financial implications for the university and retirees seeking re-employment. This policy is subject to modification pursuant to statute, Administrative Rules, and procedures established by the SURS.
Board Regulations II.A.9 and II.A.6 Rehiring of Retirees:
The employment of personnel retired under the State Universities Retirement System (SURS) shall be in accordance with university procedures authorized by the President. Compensation for employment of a person receiving a retirement annuity under the SURS shall not exceed limitations set forth in the relevant provision of the Pension Code, including Article 15 and/or other applicable statutes, nor any limitations set forth in Public Act 97-0968 that would create employer obligations pursuant to rules and definitions pertaining to an Affected Annuitant.
Retirement (annuity) or separation refund (lump sum distribution) under retirement plan options available under the SURS constitutes resignation of employment from Northern Illinois University, subject to any subsequent re-employment authorized pursuant to this Regulation.
Effective August 1, 2013, Public Act 97-0968 establishes a 40% of Highest Annual Earnings (under the SURS) limitation on total compensation paid to retirees of the State Universities Retirement System (SURS), otherwise, the retiree will become designated under statute as an “affected annuitant.” This limitation is in addition to and may be more restrictive compared to the annuitant’s personal earnings limitation. SURS earnings limitations are summarized below:
Three potential total earnings restrictions apply to SURS annuitants re-employed by one or more SURS employers:
Human Resource Services (HRS) will centrally administer employment procedures for SURS annuitants. All specifications concerning earnings limitations, annuities, highest annual earnings, and determination of any exceptions will be in accordance with information and procedures provided by the SURS. The university is required to provide records to SURS relating to employment and compensation paid to any SURS annuitant. Significant financial consequences may pertain to individuals exceeding their personal earnings limitations and to employers continuing to employ retirees who exceed the 40% earnings limitation thus becoming classified as “affected annuitants.” It is important to note that, the 40% is an annual academic year limitation, which the statute has defined as September 1 – August 30 as of the statutorial change effective November 19. 2013. Prior to the change the university defined this as August 16 – August 15. Retirees who exceed the 40% annual earnings limitation will become classified as an “affected annuitant.” Therefore, individuals who exceed the 40% limitation will generally not be eligible for future re-employment at NIU or other SURS employers.
All current retirees, new hires, and rehires, regardless of employment category, will be required to complete the Declaration of Status under the State Universities Retirement System (SURS) form. Modification to current appointments may be required. On the declaration form, individuals will indicate whether or not they are a SURS annuitant. If the individual is an annuitant, a copy of the SURS Award Letter documenting both the personal earnings limitation and the highest annual earnings will be required. Compensation for SURS retirees who are re-employed will be limited to the lesser of the two earnings limits. Participants are encouraged to provide updated statements of earnings limitations from the SURS. Otherwise, the personal earnings limitation established at the time of retirement will be utilized. In addition to providing this information, annuitants will also be required to certify any employment that has been obtained and disclose whether or not they have already been determined to be an affected annuitant. The statute places responsibility on retirees to provide accurate information concerning earnings limitations provided by the SURS and employment status. Thus, the accuracy of information contained on the declaration form is very important, and misrepresentation of this information may result in discipline, revocation of the appointment, and possible financial and legal consequences (including, but not limited to, repayment of fees and penalties charged to the university). Specifically, falsification of information contained on the Declaration Form is considered a Class A misdemeanor under statute.
Annuitants who obtain employment with another SURS employer after they have submitted their initial form will be required to notify the university of any such employment by submitting an updated Declaration form within 5 days of accepting employment. The acceptance of additional employment at another SURS employer may result in termination of employment. No offer of employment may be authorized by any university department or representative until Human Resource Services (HRS) has verified the prospective employee's status. Departments/divisions that employ individuals in this category prior to the approval of HRS will be responsible for any fines subsequently imposed by the SURS associated with the hire. Human Resource Services will continuously review the status of employees in this category, which may result in necessary appointment revisions. Any necessary appointment revisions will be discussed and coordinated with the applicable personnel and department(s).
In accordance with Public Act 97-0968, the university will certify the annuitant’s hiring information to SURS within 60 days. This certification will include the dates of employment, projected earnings, fund source for the employment, and a summary of the applicable contract.
Following receipt and confirmation of information contained on the Authorization and Declaration forms, HRS will verify earnings on a per-pay-period basis taking account of applicable earnings restrictions as outlined above. Additionally, fund source specifications will be evaluated with respect to available statutory exceptions. The determination and verification of maximum earnings an annuitant may receive will include the following considerations:
The university is required to certify the funding source of a re-employed annuitant. Therefore, if an employee is going to be paid on a grant (Fund 44) or foundation (Fund 90 and 91), it should be reflected in HRS at the time of hire. Under Public Act 97-0968, an employee paid solely by a grant (Fund 44) or foundation (Fund 90 and 91) may be considered exempt from the Highest Annual Earnings limitation (40%) but not the personal earnings limitation. Thus, the employee will continue to be limited to their respective earnings limitation. No journaling from or to a grant can be done after the hire. Until the Administrative Rules are established by the SURS, the university has established that the individual must be paid 100% from grant or foundation funds to be excluded from the 40% earnings limitation for monitoring purposes. This must be reflected as base funding in Human Resource Services and not implemented as a journal voucher post hire.
SURS retirees appointed in an exempt (salaried) capacity (e.g., Faculty, Graduate Assistant, Civil Service, or SPS) will be temporary and limited in compensation to no more than 39% of their Highest Annual Earnings or 100% of their personal earnings limitation, whichever is less. A maximum earnings limit will be determined by distributing the applicable earnings limitation over the number of pay periods authorized for appointment and as appropriate for the content, purpose, and duration of a given appointment. For faculty or other personnel that the department wishes to employ on multiple appointments (e.g., 9 month contract, intersession, summer, other part-time appointments), it is recommended that a hiring plan be shared with HRS along with the initial appointment request so that this can be accounted for in the analysis. Civil Service employees in this category are only those annuitants employed as of July 1, 2013; future hires will be in the capacity of temporary faculty, temporary SPS, Graduate Assistant, or Affiliate.
For example, for a 12-month appointment where the Highest Annual Earnings is $100,000, the calculation would be as follows: $100,000*.39 = $39,000/24 = $1,625.00 per pay period or less. This would result in $1,625 being the maximum per pay period that the individual would be able to receive. However, if the existing personal earnings limitation was less than $39,000, then the individual would be limited instead to their personal earnings limitation.
For appointments where the maximum earnings limitation is distributed for an appointment of less than 24 pay periods, it must be emphasized (as stated on the Declaration Form and university policies) that a successive appointment at NIU or subsequent employment by another SURS employer could cause the person to become an “affected annuitant” and therefore not be eligible for future employment at NIU.
SURS retirees being hired in an hourly capacity (e.g., civil service, extra help, or student) will be limited in compensation to no more than 39% of their Highest Annual Earnings or 100% of their personal earnings limitation, whichever is less. A maximum earnings limit will be determined by distributing the applicable earnings limitation over the number of pay periods authorized for appointment and as appropriate for the content, purpose, and duration of a given appointment. Civil Service employees in this category are only those annuitants employed as of July 1, 2013; future hires will be in the capacity of student or extra help.
For example, for a 900-hour extra help appointment where the Highest Annual Earnings is $40,000, the calculation would be as follows: $40,000*.39 = $15,600. The employee may be limited to this earning limitation divided by 900 or $15,600/900 = $17.33 per hour or less. Thereafter, the individual would not be eligible for a subsequent extra help appointment for the remainder of the academic year, unless sufficient earnings capacity remained. Under no circumstances can the employee be paid less than the minimum wage. Departments must not commit to or authorize overtime or differentials for non-exempt employees, as this may put annuitants over their earnings limitation and/or disqualify them from future employment with NIU or other SURS employers in the event that such compensation results in an “affected annuitant” designation. In some situations, based on the individuals pay rate, the employee may not be able to work the full 900 hours. For hourly employees with a monthly earnings limitation, the calculation will reflect the monthly earnings limitation divided by 162.5.
Questions regarding this policy should be directed to Human Resource Services (HRS).
References:
80 IL Adm. Code 1600.203
Illinois Pension Code
Public Act 97-0968
Public Act 98-0596
Board of Trustees Regulations
Policy Library
815-753-5560
policy-library@niu.edu
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