Home < Human
Resources and Benefits Briefing < July
2006
Regents continue plans for
gradual reinstatement of needed UCRP contributions; phased increases planned
to ease initial financial impact on employees
At their May meeting, The UC Regents continued their discussions about how to ensure the long-term financial health of the UC Retirement Plan (UCRP), including the eventual restart of contributions by both UC and UCRP members. UCRP is a defined benefit pension plan that pays lifetime monthly benefits to members when they retire.
The Regents took no action on a specific schedule to reinstate contributions, but they did reiterate their intention to require restart of contributions in July 2007, subject to availability of funds, the budget process and collective bargaining. This timing will permit lower initial UC and UCRP member contributions with gradual increases over time. Delaying the restart would require much higher initial contributions from both UC and members.
During their meeting, The Regents reviewed new projections that continue to show that without contributions, the UCRP will become under-funded sometime within the next several years, meaning there will not be enough money in the plan to cover all its liabilities. Accordingly, The Regents continued to discuss various contribution reinstatement options, focusing on a slow ramp-up over several years to ease the financial impact on plan members, who will have to start making new contributions. The cost of restarting contributions will be shared between UC and employees, though The Regents have not yet defined who will pay how much. It is anticipated that UC contributions will always be at least equal to the contributions made by UCRP members.
While some things remain uncertain, like the precise date UCRP might become under-funded, it is clear that resuming contributions sooner rather than later will help ease the financial burden both on the University and employees. The longer contributions are delayed, the bigger the financial deficit that UC and employees will need to fund, and the bigger the impact on employees’ take-home pay. A larger funding deficit may also make it more difficult for the University to secure sufficient state funding to adequately support the UCRP.
The Regents are mindful that over the long term, contributions to the UCRP may decrease take-home pay of UC employees unless they receive meaningful pay increases. As part of Regents Item RE-61 in November 2005, which outlined their goal of achieving market-competitive total compensation for all UC faculty and staff groups, The Regents pledged that they would obtain, prioritize and direct more funding, to the extent funds are available, for salary increases beyond those already outlined in the Compact with the Governor.
UC is continuing active consultation and discussions regarding the restart of contributions to UCRP with faculty, staff, and unions. Starting contributions to UCRP for represented employees will be subject to collective bargaining.
At future meetings, The Regents will hear specific recommendations as to when contributions will be restarted and how costs will be divided between the University and employees.
To stay informed about these issues, visit UC’s special website, "The Future of the UC Retirement Plan," which is updated with the latest information. The site may be accessed via the At Your Service website.
