UC Seeks State Funding to Match Employee UCRP Contributions
UC Regents were presented a state budget proposal for 2007-08 that included a request for funding that would allow UC to match employee contribution levels to the UC Retirement Plan (UCRP) when contributions to the plan are reinstated. The Regents had already specified that contributions should restart as of July 1, 2007, allowing for lower initial contributions that would gradually increase over time in order to soften their financial impact on both employees and the University, and avoid a reduction in employee net take-home pay as a result of the contributions restarting.
The move to restart contributions comes after a long funding holiday, since the early 1990s, when The Regents suspended all contributions to the UCRP because very favorable investment earnings led to a surplus of assets needed to support the ongoing costs of the plan. However, that surplus has been declining steadily, so contributions to the UCRP will need to be reinstated to ensure funding for retirement benefits for all UCRP participants. As stated at the July Regents meeting, UC's intent for the initial restart is to redirect into the UCRP the mandatory contribution employees currently make to their DC Plan accounts (just under 2% for most participants). This means there will be no reduction in take-home pay due to the restart of pension plan contributions.
The contribution restart on July 1, 2007, is subject to the availability of funding, the budget process and collective bargaining for represented employees. Most importantly, UCRP benefits are not being cut. UC remains committed to providing its employees with competitive total compensation, including retirement benefits.
Actuary's report shows UCRP surplus continues to decline
The latest actuarial report on the UCRP's funded status shows that the plan's surplus continued to decline in the most recent plan year, July 1, 2005, through June 30, 2006.
Meanwhile, accrued liabilities (the value of employee benefits that the plan has promised to pay) continue to increase. The report notes that when the surplus is depleted, the amount required to keep the plan fully funded "will go from zero to the full normal cost very suddenly, i.e., in only one or two years." The Regents have made it a high priority to ensure the long-term viability of the retirement program for the benefit of all UC employees.
The Regents have stated that restarting contributions in order to protect the future of UCRP is a prudent measure, especially at a time where failing public and private pension plans are making the news across the country.
Campus Human Resources, Benefits Services
Phone: (310) 794-0830 | Fax: (310) 794-0835