New UCRP pension tier
The Post-Employment Benefits Task Force has proposed offering a different pension tier for UC faculty and staff who join the university after July 2013. Current employees could also have a one-time option of joining the new tier.
While the task force agreed on the concept and many of the features of a new tier, they did not reach consensus on some issues, including contribution rates. As a result, the group put forward two options. (See chart below).
Task Force options
The least expensive option would require the university and its employees together to contribute about 12 percent of annual pay, while the task force’s second option would cost about 14 percent, compared with the current cost of 17.6 percent.
The president has also agreed to look at a third option, one that the task force steering committee thought was too costly. It would require the university and its employees together to contribute about 15 percent of pay, but would more closely match the current pension in terms of benefits.
Under the options advanced by the task force, employee contributions to UCRP would be 3.5 to 4 percent of pay on an amount determined by the Social Security Administration – currently about $60,000 – and 8.2 to 9.5 percent of pay for any portion of wages over that amount. UC would contribute between 7 and 9 percent. The percentage range reflects the differences between the two options.
Integrating Social Security benefits
Both task force proposals integrate UC’s pension with Social Security benefits to ensure that long-term employees can retire with up to 100 percent of their income when UCRP and Social Security benefits are combined.
Many retirement experts say 80 percent of income is the amount needed to maintain one’s current lifestyle after retirement. By coordinating the UCRP tier with Social Security benefits, UC would be able to reduce its pension costs while ensuring that faculty and staff would have sufficient retirement income when Social Security, UCRP benefits and retirement savings are combined, task force members said.
The chart below offers a quick comparison of the plan features for the current UCRP plan and the proposed options for a new tier.
