July 14, 2011
Faculty and staff will see a change in their next paychecks as both the University of California and its employees start contributing more to the UC Retirement Plan.
The higher contribution rates start with July earnings and will be reflected in paychecks issued between July 20 to Aug. 8, depending on whether employees are paid biweekly, monthly or on a different cycle.
Contributions for most faculty and staff increased 1.5 percentage points, going from roughly 2 percent of pay through June 30 to 3.5 percent of pay now. UC also increased its contribution from 4 percent to 7 percent.
In July 2012, employee contributions will rise to 5 percent and UC will pitch in 10 percent.
Every year, the plan incurs costs that are equivalent to about 17 percent of annual pay.
The increased contributions are part of UC’s strategy to ensure the long-term viability of the plan and to address a $14 billion unfunded liability.
Starting in 1990, UC and its employees did not pay into the retirement plan because it had a healthy surplus. But the economy, significant market losses, changing demographics and other factors led to a deficit. Employees and UC started contributing to the plan again in May 2010.
The UC Board of Regents approved the contribution increases in September 2010 as part of a larger effort to put UC’s retirement benefits on financially sustainable footing.
The increased contribution rates apply to active members of the retirement plan, and are subject to collective bargaining for unionized employees.
Regents subsequently made other changes to UC’s retiree health and pension program, including creation of a new tier of pension benefits for employees hired on or after July 1, 2013.
Learn more about UCRP and Regents’ strategies for reducing the unfunded liability at the Future of UC Retirement Plan website: http://ucrpfuture.universityofcalifornia.edu/