“Can I retire and also continue working for my employer?”

Question: My company allows me to retire at age 62, but collect benefits as if I was 65 because I have earned enough “points” due to my long service.

Can I start collecting my retirement benefits at age 62, but keep working for the company?

Portland, Oregon

Answer: Dear Mark:    

It is often the case that my overall response to someone who asks me a question is “It all depends on what your ‘plan’ says.” That is the case, here, too. That said, let me elaborate.  

1. In my experience, most retirement plans do not permit both “retirement” and continued working. As I’m sure you know, those two ideas seem inconsistent. While I must admit I have never before been asked the question that you pose, and thus have never reviewed a retirement plan with your question in mind, I believe most retirement plans require the employee to leave employment in order to collect retirement benefits.

2. That said, the definitive answer can be found only in your own retirement plan. A retirement “plan” is something of a contract by which, if you meet the eligibility requirements, and satisfy the terms and conditions, you receive certain benefits, subject to the plan’s “rules.” Your inquiry should be directed first to a careful review of the retirement plan, itself. I believe it is quite likely that the answer to your question will be found in the “eligibility” section of your retirement plan. You can get a copy of your employer’s retirement plan by asking for a copy from Human Resources, in particular your employer’s Benefits Department, or equivalent. 

3. However, even if your retirement plan says “No,” you can ask for an exception. All employee welfare and benefit plans I have reviewed say that the plan will be operated and supervised by a “Plan Administrator” or “Retirement Committee” or similar such title. This person, or group, are responsible to oversee the operation of the plan. Most plans give this person, or group, the authority to make exceptions where “it is in the interests of the plan and its beneficiaries.” Thus, even if the plan says, “No,” the “administrators” of the plan are likely empowered to say, “OK.” So, don’t assume that the plan is inflexible on this point; the truth is almost all welfare and benefit plans provide for such flexibility. The identity and contact information for the plan administrator should be in the retirement plan, or can be obtained from Human Resources. 

4. And even if an exception is not granted, working not as an employee, but as a “consultant” may be a way to proceed. If the plan says, “No,” and the administrator also says, “No,” you and the company’s management – if they are interested in retaining your services – may be able to get around the “rules” by using a “technical” argument to do so: keeping your working relation with the company, but not as an employee, but rather as a consultant. Independent consultants are not usually entitled to employee benefits, or other employment-related rewards such as bonuses, stock awards, unemployment insurance, or retirement credits, but they are paid, and can be paid additional amounts to make up for the loss of these other rewards.  Though this may not seem likely to be granted, it surely is worth trying, if all else fails.

My expectation is that in the future more and more people will want to do as you do. And, too, that more and more employers will not want to lose the know-how, experience and loyalty of their soon-to-retire employees.

I hope this is of help to you. Good luck in your quest. Thanks for writing in. Please tell your friends and colleagues about our blog.

Al Sklover

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© 2011 Alan L. Sklover, All Rights Reserved.

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