Working after you retire from VSTRS

The rules

A retiree who resumes service as a teacher must rejoin VSTRS, contribute, and give up the allowance for that fiscal year if, in the fiscal year, they are paid for more substitute-teaching days than the Board allows, or are paid more than 60% of the average compensation in the teacher system. Rejoining is retroactive to the start of that fiscal year, and allowances already received that year are recovered from later payments. On re-retirement the former allowance resumes, without COLAs for the restored period, plus a separate allowance for the new service. 16 V.S.A. § 1939(a)-(c)

The dollar amount retired teachers can earn in FY24 (July 1, 2023 to June 30, 2024) without freezing their pension is $41,200. Going over the cap without freezing the pension, or without approval as an Act 173 interim educator, means the retirement allowance and health insurance are subject to the normal stop and recoupment procedures. Sept. 2023 newsletter, p. 1, FY2024 Retired Teachers' Earnable Compensation Cap; p. 4, Act 173 Implementation Factsheet FY24

The interim-educator program (ended)

Act 173 (2022) let a retiree who had been in pay at least six months serve as an interim school educator for up to one school year while keeping the allowance, if the superintendent certified that no qualified active educator could be hired and the employer paid the contribution and the health assessment. It began in FY2023, the Treasurer could renew it for FY2024 and FY2025 (a different position each year), and the section was repealed June 30, 2026. Act 173 (2022) as enacted, pp. 1-2, Sec. 1(a)-(e); Act 173 (2022) act summary, p. 1

For FY24 the school district, not the retiree, applied by Sept. 30 and certified it had exhausted all reasonable options to hire an active educator. The retiree had to have been receiving a benefit for at least 6 months. The district paid the new-teacher assessment, the projected employee contributions and any insurance subsidies already paid. The retiree could not keep VSTRS insurance (COBRA or district coverage instead), paid no contributions and earned no service credit. Sept. 2023 newsletter, p. 4, Act 173 Implementation Factsheet FY24

What the sources say

• If you go back to teaching in Vermont, there is a yearly earnings cap. Go over it and you must freeze your pension (stop receiving it) for that fiscal year, rejoin VSTRS and contribute. The law sets the cap at 60% of the average pay in the teacher system.Sept. 2023 newsletter, p. 1; 16 V.S.A. § 1939(a)
• Check with VSTRSFor fiscal 2024 (July 1, 2023 to June 30, 2024) the cap was $41,200. It is reset every year, so ask VSTRS for this year's figure.Sept. 2023 newsletter, p. 1The current year's cap is not in any source.
• If you go over the cap without freezing your pension, your benefit and your VSTRS health insurance are stopped and what you were paid is recovered.Sept. 2023 newsletter, pp. 1, 4
• When you retire again, your old benefit restarts, without cost-of-living increases for the time you were back, plus a separate benefit for the new service.16 V.S.A. § 1939(b)-(c)
• Check with VSTRSA temporary program (fiscal 2023-2025) let a school district hire a retiree as an interim educator for a year without the pension stopping. The retiree lost VSTRS insurance and earned no service credit. The program was repealed on June 30, 2026.Sept. 2023 newsletter, p. 4; Act 173 (2022) as enacted, pp. 1-2, Sec. 1Extension bills were found only as introduced; confirm no later act revived the program.

On re-retirement your old pension resumes without COLAs for the time you were back, as the COLA page explains, and the new service earns a second pension under the benefit formula. Still deciding when to retire? See one more year?

Questions

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