Rick Perry Retires (But Remains Governor) To Boost Take Home Salary

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59. Its called the DROP

Deferred Retirement Option Plan. Costs the government nothing.

When someone has a defined benefit retirement plan, they and the employer put money into a fund to buy an annuity. The longer they work, the longer they put money into the fund, the more money the annuitant (retiree) gets when they start drawing from it (date of retirement). If the government is paying someone $100,000 a year in salary, plus $10,000 a year into their retirement, plus the employee is putting $10,000 of their own salary into their retirement... well that's their normal working situation. When they elect to use the DROP, the government stops putting money into their retirement (saving $10,000 a year for that employee) the employee stops putting money into their retirement (saving them $10,000 a year) and the annuity starts paying out, though usually to a separate money market or no risk or similar account until they stop working, when they have access to that money. Take it all at once (and get taxed on the $50,000/yr of retirement benefits x however many years they used the drop; max I've ever seen is 8, 3 and 5 are common) or do a 1035 exchange and transfer that money into an IRA where they get taxed on the money as they pull it out.

Anyway, this does directly cost the government money if they created a retirement plan for him and have to pay it out eventually, it just means he's getting it early. This is a benefit commonly asked for by unions (mine included) and very coveted.

Why did they deny this to the teacher's union...it inspires the workers to work for those extra years (3, 5, 8) at their highest pay level (though your retirement pay is lower by retiring those many years earlier) when it'd be cheaper to get rid of the senior teachers and hire new ones at half price. Thats what's going on with registered nurses in south florida.

Hope this illuminates the confusion a bit.