/Retirees elected to Legislature in November can draw pension, thanks to IRS phone call

Retirees elected to Legislature in November can draw pension, thanks to IRS phone call

Based on an IRS telephone call, the Public Employees Retirement System Board voted unanimously Tuesday for a change to its long-standing regulation, which prevented retired public employees who were serving in the Legislature from drawing their pension. The PERS Board had decided to amend the regulation by January last year, subject to an IRS ruling that it would not affect the tax exempt status of the system. It appears that the IRS did not approve the change based on preliminary discussions. This would have led to seven new legislators being elected in November. The assumption was that they would be able to draw their retirement pensions. In general, their salary is much higher than their legislative pay. On Tuesday, Ray Higgins, PERS Executive Director, stated that IRS officials had recently called to say they “intended” to approve the regulation change. Based on this phone call, the PERS Board decided to amend the regulation. PERS’s vote came less than a month prior to the January 7th start of a new four year legislative term in which new members would have to decide whether or not to take the seats they were elected for in November. According to Higgins the IRS decision was partly based on a call from Jim Hood’s office explaining state law. Hood’s office released an official opinion in late 2018 stating that the PERS Board regulation that retired legislators cannot serve in the Legislature or draw their retirement checks was inconsistent with state law. Many pro-education groups were excited by the AG ruling, as it raised the possibility that retired educators might run for the Legislature. In the opinion of the attorney general, it was argued that prohibiting public employee retirees serving in the Legislature while drawing retirement benefits was a violation of a right that all citizens have. Public employee retirees are allowed to serve in local government, while retirees from private sector companies can also serve in the Legislature. Randy McCoy (former superintendent of Tupelo Public Schools District) said, “I believe that it is a positive thing that all retirees who have been denied the right to serve” McCoy and the other board members expressed concern over what would happen if official approval from IRS was not granted. The Board could revoke the regulatory change at any time, according to attorneys. This would not affect the tax exempt status of the system. The IRS claimed that the IRS had approved the change’s approval and that it was currently being vetted before being released. The change could mean that public employee retirees who are serving in the Legislature will have to forfeit a portion their legislative pay in order to be considered part-time and to draw their retirement. Current public employee retirees serving in the Legislature would not benefit from this change in regulation. PERS staff stated that they would require a 90-day break from the Legislature to be eligible.