Next month, the State of Indiana will outlaw “sham retirements” in which a public employee will retire for a short period and then return to work. This practice allows the workers to begin collecting their monthly pension and get their full salary. Here’s an excerpt from The Times newspaper in Munster, Indiana.

A new state law, going into effect July 31, not only will stop pension payments to working public employees abusing retirement regulations, but also force them to disgorge any benefits they already have received.”The new law simply reflects what already exists at the federal level. You cannot do this and have either a handshake or a written agreement with your employer,” said Jeffrey Hutson, chief communication officer for the state’s Public Employee Retirement Fund. He said anyone who legitimately retires and later is called back to work has nothing to fear.

Can you believe that Philly? Someone would fake their retirement and start collecting a pension check then continue drawing a salary? I’m not going to trust anyone from the Midwest again.

I found this article after the Poynter Institute’s Al Tompkins wrote about the mini uprising against the abuse of these DROP-like programs around the nation. It’s not just in Indiana, but also in New Mexico and Florida.

In Florida, they call this practice “double-dipping.” The legislature has passed a bill that would make it harder but not impossible to retire and get rehired. A worker must wait six months before reapplying for their job.

Philadelphia currently allows for these double-dipping or sham retirements for its City Council members. Under city rules, a council member can “retire” for a day and then return to work. Council members have defended this by saying that at the end of their four year term their employment with the city is kaput. But it’s the voters, in all their wisdom, rehire them for another four year term. The City Solicitor recently checked on the legality of this and found no problems with it.

It may be legal, but that doesn’t mean people can’t see the absurdity of retiring for a day. Earlier this year, when a series of public budget workshops were held and there the citizens identified the DROP program’s use by elected officials as something that ought to end. Here’s an excerpt from the the Final Report.

One of the most discussed items. Fierce public outrage over elected and appointed officials being eligible for this. Strong opposition to people retiring for a short time, then returning to work. Support for what is seen as the original purpose: Helping the retirement security of people who’ve done physical or dangerous work for the city, while clearing the way for younger, cheaper workers.

City workers in Philadelphia are eligible for the DROP program, but citizens for the part have no problem with how they use it.  The big difference is that while city worker’s can draw his/her pension during their last four years on the job, when they retire they leave the building.

Philadelphia Mayor Michael Nutter has ordered a task force to look into the DROP program to see if any changes should be made.

In the meantime, I’m curious what you think. Should elected officials be allowed to retire for a day and collect retirement benefits?

For a good description of how the DROP program works in Phillly, check out this story from Ben Waxman at It’s Our Money.