Retirement Task Force Makes Recommendations; Input Sought
February 3, 2016
After months of discussion and analysis, the task force UC President Janet Napolitano convened last summer to recommend options for retirement benefits for future UC employees concluded its work and presented her with its recommendations.
Napolitano is now seeking comments from faculty and staff members and others on the task force recommendations to help inform the proposal she is expected to bring to the UC Board of Regents in March. The deadline to submit feedback Tuesday, Feb. 16.
The proposed changes will not alter retirement benefits of current employees and retirees. However, it is still critically important for faculty and staff members to weigh in, according to Brian Powell, UC Merced's assistant vice chancellor for Human Resources.
"We need to assess the institutional impact these changes can have on our campus and workforce," Powell said.
Anecdotally, people have expressed mixed reactions, Powell said. Some like the elements of portability and view it as a new tool to attract Millennial and Generation Z professionals, while others have expressed concerns. Lowering the salary cap, as one proposal suggests, could reduce UC's marketplace appeal as a competitive employer.
Either way, "if you are supportive of the proposals, let President Napolitano know," Powell said. "If you have reservations or concerns, the president wants you to register those with her as she deliberates. This is the most direct means of sharing your opinions to assist her in the formation of future policy that will impact UC Merced."
Prior to the comment period's close, UC Executive Vice President and Chief Operating Officer Rachael Nava, who chaired the task force, will hold a webinar from 1-2:30 p.m. Feb. 10 to discuss the recommendations and field questions from interested faculty and staff.
To join the webinar:
- Go to the Readytalk website and enter the participant code: 5854736, or
- Call 877-256-8282 and enter access code 21804895 to listen to the webinar.
Once final, the new retirement benefits will apply only to UC employees hired on or after July 1, 2016. Retirement benefit changes for union-represented employees will be effective upon completion of the collective bargaining process.
2015 Budget Agreement Prompted Changes
The UC is developing new retirement benefits options as a result of the 2015 budget agreement between itself and state leaders. Under the agreement, Gov. Jerry Brown and the Legislature will provide UC $436 million over several years to help pay down UC’s unfunded pension liability, in exchange for UC implementing a cap on the defined benefit (pension) portion of its retirement benefits.
Doing so will mirror the cap on pension benefits for state employees under the 2013 California Public Employees’ Pension Reform Act (PEPRA), an approach that will help ensure the long-term financial stability of UC and its retirement program.
Key priorities for UC in designing a new set of retirement benefits include:
- ensuring UC’s long-term financial stability that, among other things, maintains the financial stability of the UC Retirement Plan (UCRP) for current and future employees and allows for regular salary/merit increases for faculty and staff;
- maintaining the competitiveness of overall compensation for UC faculty and staff; and
- facilitating shared responsibility between UC and employees for individual retirement readiness, and providing programs and other support that help employees prepare for retirement.
As part of their charge, task force members explored a range of options that applied the PEPRA pension cap. Napolitano also asked them to discuss possible options with colleagues and constituent groups throughout the university, and to use feedback from those discussions to inform their deliberations.
The task force has recommended offering future UC employees a choice between two retirement benefit options:
- Option A — Hybrid Approach: A new UC Retirement Plan defined benefit (DB) plan capped at the PEPRA salary limit (currently $117,020) plus a new supplemental defined contribution benefit (“DC Supplement Plan”) with eligible employee pay up to the Internal Revenue Code limit ($265,000); and
- Option B — Pure Defined Contribution Approach: A new stand-alone defined contribution (DC) plan with benefits-eligible employee pay up to the Internal Revenue Code limit, currently $265,000.
The Office of the President posted a detailed story on the UCNet website. See the links below for additional information and resources:
