The University of California Board of Regents is slated to discuss the UC Retirement Plan at this Thursday’s board meeting, following another increase in the rate that the UC and its employees contribute to the plan.
This month, the University of California employees saw another increase to the amount they must contribute to UC Retirement Plan.
On July 1, full-time UC employees started contributing 6.5 percent of their salaries to the program and the UC began contributing 12 percent – both almost double their 2010 contributions.
The regents could raise the rates, which have been increasing steadily over the last two years, to 8 percent for UC employees and 14 percent for the UC at their discussion this week.
The UC Retirement Plan is a traditional pension plan, providing monthly retirement incomes and other services. There are two tiers within the UCRP. The 1976 tier is for employees who were hired after 1976 and before July 1, 2013, and the other is for people who were hired after July 1, 2013.
The UC and its employees did not contribute to the plan after 1990, but contributions began again in 2010 when UC employees had to contribute 2 percent of their salaries and the UC put forward a fixed contribution of 4 percent of its annual budget.
The contribution rate has been steadily rising since 2011 by increments of 1.5 percent for UC employees, and by 2 to 3 percent for the UC.
Chante Henderson, assistant director at the Academic Advancement Program, has been a UC employee for 18 years. Henderson said that since the UC began raising contribution rates, she has seen more UC employees retire early to avoid paying them.
She said that though she didn’t anticipate the rates would rise this much, the gradual raising of the rates is better than having the increases all at once.
“We just have to bite the bullet for our security and for our future,” Henderson said.
UC employees did not pay into their own retirement plans between 1990 and 2010 , because the plan subsisted on UC investments.
In 1990, the UC Board of Regents suspended all employee contributions to the UCRPbecause the UC had a large surplus . However, the UC then saw a shortage in funds for UCRP starting around 2008. The Regents introduced the idea of UC and employee contributions, and they went into effect in 2010.
“There was a contribution holiday, but then we had a fiscal crisis and stocks lost a lot of value,” said Dianne Klein, a UC spokeswoman.
The UCRP currently has a $12 billion shortage in funds, said H.D. Palmer, a spokesman for the California Department of Finance.
Despite the increase in contributions, the recently passed state budget includes a plan to restructure the University’s debt. This plan is expected to give the UC $80 million annually for the next 10 years, according to Klein.
Of the annual income from the debt restructuring, $67.2 million is expected to be put toward the state employer contribution cost, Klein said.
Despite the steadily increasing contribution rates to the UC Retirement Program, the California deficit is projected to disappear in the next couple fiscal years, according to Palmer.
California’s state deficit had affected the state budget, which had implications for the funds that are derived from the debt restructuring, Klein said.
Based on the most recent projections, the California deficit will be eliminated and the statewill be working with a surplus, Palmer said.
Money from the state goes toward the UC in helping pay its share of the retirement plans.
The funds raised from debt restructuring would help the UC pay its contribution to the UC Retirement Plan.
I love how the “projections” are unquestioned. Along with contributions, it would also be informative to list and explain the amount/length and types of benefits. That way we can at least get a reference point.