Retired state employees who return to government work are costing Utah hundreds of millions of dollars in benefits at a time the state retirement system is facing a $6.5 billion shortfall, a legislative audit released Wednesday said.
The audit called for state lawmakers to ban the practice of double-dipping in which employees collect a salary in addition to state retirement benefits.
The state retirement system covers state and local governments, as well as public and higher education employers.
The audit said allowing rehired employees to collect pension benefits has cost the state more than $400 million in the past eight years and will cost nearly $900 million over the next 10.
Utah is the only western state that allows retirees to return to work with a salary, pension and 401(k) plan.
The audit recommends requiring employers to make contributions to the state retirement fund instead of personal 401(k) plans.
To qualify for a pension and a salary, rehired workers must go to work for an agency other than the one from which they retired, wait six months before returning to the same agency, or be employed at the same agency on a part-time basis.
"It was evident in the cases we reviewed that retiring was, with few exceptions, simply a maneuver to begin drawing both a pension and a salary," the audit said. "Returning to work soon after retiring suggests the retirees had not genuinely intended on ending their public service careers."
Since 1995, 4,311 public sector employees have retired and returned to government work, according to the audit.
Utah Retirement Systems Executive Director Robert Newman wrote that the agency is working to implement several of the audit's suggestions, including monitoring data on post-retirement work. But it's ultimately up to the Legislature to make changes, he said.
Legislative leaders acknowledged that lawmakers created a system that encourages many people to return to the work force.
House Minority Leader David Litvack, D-Salt Lake City, said there may also be legitimate reasons for public agencies to hire retired workers, such as filling emergency service posts or hard-to-fill teaching positions.