Listen to Regents Discuss Retiree Health on Nov. 14, 2013

We’ll post the audio for the entire Nov. 14 Regents meeting subsequently. However, below is a link just to a discussion of the issue of retiree health. As blog readers will likely know, as part of the open enrollment, UC retirees who are out of state are being dropped from UC programs and given a flat dollar contribution to buy their own policies from local exchanges. An external contractor – Extend Health – has been engaged to provide counseling for out-of-state retirees.

According to the back and forth between regents and UC administrators, this change will drop the liability to the retiree health program by $700 million. It was also pointed out that because the UC liability is limited to the flat dollar amount, the risk of health care costs has been transferred to the out-of-state retirees. In the course of the discussion, it appears that consideration is being given to apply the out-of-state approach at some point in the future to in-state retirees as well.

You can find a link to the discussion below: [Audio only with still picture.]

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Post by CalPolicy.

Food for Thought on Retirement at UC

Inside Higher Ed today unveiled a survey of human resource executives in higher education. The full survey can be downloaded from that source and the link is at the bottom of this post. But start with the observation that much of higher ed operates with defined contribution pension plans such as TIAA-CREF. Thus, there is no particular incentive for older faculty to retire built into the pension.

As can be seen below, higher ed HR execs thus worry that older faculty are not retiring, making it difficult to recruit new faculty. UC, with its defined benefit system, does have a built-in retirement incentive. And stock market gyrations – although they affect the funding of the plan – do not affect the basic retirement incentives as seen by participants.

The survey also shows that worries about retiree health care can adversely affect retirement incentives. In most cases (including UC), retiree health benefits are not guaranteed in the same way that (defined benefit) pensions are guaranteed. That’s something to think about as such benefits are manipulated for immediate budgetary reasons or even long-term cost reasons. The basic lesson is that benefit plans are more than costs; they affect behavior. A focus only on costs can obscure potential perverse employee incentives that changing benefits can bring about – such as excessively delaying retirement. It’s the kind of lesson everyone knows but, paradoxically, is often ignored or forgotten in practice.

A chart from the survey can be seen below. Click on it for a clearer image.

The article with a link to the detailed survey is at:

http://www.insidehighered.com/news/survey/human_resources_2012

Post-Employment Benefits session audios

The UC Post-Employment Benefits Taskforce was hosted by the UCLA Academic Senate on 5-4-10. Below are links to audios (videos with a still picture) of that session.

The audios are in 10 parts. Parts 1-8 run about 14 minutes each. Parts 9 and 10 run about 8 minutes each. You can access these audios at the following addresses:

PEB audios 5-4-10

Part 1

Part 2

Part 3

Part 4

Part 5

Part 6

Part 7

Part 8

Part 9

Part 10 (end)