UC Retirement System and the Restart of Contributions UCI
Financial Expo April 15, 2010 Slide 2 2 UC Retirement Plan (UCRP)
UCRP DC Plan 403(b) 457(b) 457(b) Deferred Compensation Plan
Defined Contribution (DC) Plan Tax-Deferred 403(b) Plan Components
of UCRS Slide 3 3 While employed at UC At Retirement DeathThe
After-life During Retirement What Does UCRP Provide? Disability
Protection Survivor Benefits Death Benefits Lifetime retirement
income or lump sum equivalent Annual COLAs Death Benefits
Postretirement Survivor Continuance Slide 4 4 Funding Retirement
Benefits Elements of Cost The Normal Cost is the portion of the
long term cost allocated to a year of service. Only active members
have a current Normal Cost The Actuarial Accrued Liability (AAL)
measures the Normal Costs from past years. For retired members, the
AAL is the entire value of their benefit Current Year Normal Cost
Actuarial Accrued Liability Future Normal Costs Current AgeEntry
AgeRetirement Age Slide 5 5 What it Takes to Stay 100% Funded Slide
6 6 UCRP Investment Rates of Return AVA recognizes each MVA return
above or below the assumed rate (7.5%) over five years Slide 7 7
UCRP Historical Funded Status Campus/Medical Centers Only Slide 8 8
Why Restart Contributions? Sustain and preserve UC retirement
benefits Maintain UCRP target funded status of 100% Allocate cost
of UCRP to all funding sources: State and UC general funds and
student fees Contracts and grants Medical Centers and other
self-supporting enterprises Department of Energy (Lawrence Berkeley
National Lab) Slide 9 9 Regents Approved 2010 Contributions
Employer FY 09/10, beginning April 15 All employer payroll funding
sources will start at 4% FY 10/11 At least 4%, higher if funding
available Member Beginning with May earnings Amounts currently
redirected to the DC Plan No reduction in take home pay About 2%
for most members Same amounts for FY 10/11 Gradually increase to
parallel CalPERS member rates (currently 5%) Subject to collective
bargaining, as applicable Slide 10 10 2014 Funded Ratio = 60% ($20
Billion Unfunded Liability) UCRP Funded Ratio (Actuarial Value
Basis) Campus/Medical Centers Only Illustration Assumptions:
Initial 4% employer contribution increases 2% per year starting
7/1/2011 Initial 2% employee contribution increases 1% per year
starting 7/1/2011 (maxing at 5%) 7.5% market value return per year
starting 7/1/2009 Slide 11 11 PEB Task Force Charge Using the Task
Forces Guiding Principles Assess and analyze the impact of: Market
Competitiveness Work Force Behavior Employee and Labor Relations
Legal Implications and Risks Current and Long-term PEB Funding
Options Impact on UC Financial Integrity Make recommendations to
the President which allow the Regents to meet: Fiduciary
Obligations Educational Responsibilities Slide 12 12 Pension
benefits that current employees have already accrued to date
Retirees will not be asked to contribute when active employees
begin contributions What is NOT Changing for UCRP ? Slide 13 Task
Force Considerations for Current Faculty and Staff - Pension Faster
ramp up of contributions for all employer funding sources and for
active members* Offering choice to current faculty and staff*
Complete stakeholder discussions on risks and impacts of applying
new tier defined benefit options to current faculty and staff for
future pension benefits* *PEB changes are subject to collective
bargaining for represented groups 13 Slide 14 14 Q U E S T I O N
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