Retired workers across the country are disproportionately affected when the economy sours, because – unlike active employees – retirees are on a fixed income with limited potential for increase. This is particularly true in a state such as California, which has traditionally experienced a volatile property market, meaning retirees cannot refinance or sell their homes to reduce expenses. Consequently, retirees can find themselves in need of work - but unsure what impact this decision will have on their retirement payments.
Retired Californians are eligible to collect unemployment from another job – while still receiving a retirement pension – if they otherwise meet the unemployment eligibility criteria. Unemployment typically cannot be claimed from the same job the individual retired from, because retiring is a voluntary decision.
However, it is possible there might be some limited examples where a former employee could claim constructive discharge forced him to retire. If an individual is rehired as a retired annuitant – even into the same or substantially similar position as he was formerly employed – unemployment insurance is likely to be payable if the individual is then laid off from that position and continues to look for work.
When a Pension Is Deductible
Under California's unemployment insurance criteria, an individual receiving a pension for prior work – which was entirely funded by the employer – may be required to deduct the amount of the pension from the unemployment insurance payment. This situation only applies where the work as a retiree is for a company connected with the original retirement – such as the original company, or another company which shares the same retirement plan – and the work as a retiree either affected the individual's eligibility to receive the pension or increased his retirement amount.
When a Pension Is Not Deductible
A California pension is not deductible from unemployment insurance when the individual contributed toward the pension. Even if the contribution occurred only infrequently, or at the very beginning of employment, as long as the worker made some type of personal financial contribution toward the retirement plan, it cannot be deducted from unemployment payments. In this situation, the individual is eligible to receive the full amount of unemployment insurance in addition to the full retirement payment he would otherwise receive.
While it is permissible to receive unemployment insurance and retirement at the same time in California, legislation – such as AB 775 and Section 21223 through 21229 of the California Government Code – prohibits federal, state and local employees from being hired as retired annuitants if they have received any unemployment insurance payments in the 12-month period immediately prior to being hired. Individuals who plan on seeking work after retirement should carefully assess the benefits of claiming unemployment insurance. The short-term compensation might not be worth the potential lost wages over the following 12 months.
- California Employment Development Department: Total and Partial Unemployment TPU 460.55
- Boomerang -- State of California Retirees Job Connection: Frequently Asked Questions
- CalPERS: Employment After Retirement
- Onecle: California Government Code Section 21229
- The Fiscal Times: Unemployed and Retired? You, Too, Can Double Dip
- LegInfo.CA.gov: AB 775 Assembly Bill (Niello)
For more than a decade, Tia Benjamin has been writing organizational policies, procedures and management training programs. A C-level executive, she has more than 15 years experience in human resources and management. Benjamin obtained a Bachelor of Science in social psychology from the University of Kent, England, as well as a Master of Business Administration from San Diego State University.