The University of California will soon have a third pension tier if the Regents approve a plan put forth by the Retirement Options Task Force on Friday. UC President Janet Napolitano charged the Task Force, which included management and Academic Senate representatives, with finding a way to implement her agreement with Gov. Brown to set a cap on pension benefits in exchange for state funds to support the pension system.
Over the weekend, as faculty activists read the task force report and a second report produced by Senate leaders (Guide to reviewing the recommendations of the Retirement Options Task Force) it has become clear that the proposed options will significantly decrease pension benefits for new hires, will not save very much money, and may weaken the viability of existing pension tiers in the UC Retirement System (UCRS).
To get up to speed on this issue, read the following posts:
- Dan Mitchell, The Default Option is Not in Our Stars but in the Plan
- Michael Meranze, Pensions, Politics, and the Failures of Leadership
The proposed new pension tier would offer new hires after July 1, 2016 two options, so currently faculty are not directly impacted. Plan A is a defined benefit (DB) plan like the existing tiers but with contributions based on income under $117,000. Income over the cap will count toward a supplemental defined contribution (DC) plan. Plan B does away with the traditional pension arrangement and offers a DC plan only. Employees choosing Plan B could be convert into the Plan A system after 5 years.
According to independent faculty analysis, both plans represent a significant cut in benefits for new hires, save relatively little money for the UC budget, and do little to address the underfunded pension liability. Despite the sacrifice by UC employees, the State of California will not commit to paying its share of pension costs. There are many more financial details, wherein resides the devil as they say. The upshot for current faculty is that the financial arrangements of the new plans pose a significant risk to the financial health of the retirement benefits of currently employed faculty, according to those who have carefully read the proposal.
The UC Office of the President (UCOP) has generously given faculty leaders until February 15 to respond to the complex recommendations, and the Senate in turn has asked for faculty comment by February 5. Under these circumstances, the Academic Senate should reject the plan or at least demand more time for review.
UC employee representatives, including the Faculty Associations, have an online petition calling on the Regents to reject the proposals. Please consider adding your name!
Sign the Petition: http://www.protectmypension.org/