UC Regents: Retirement Plan Contributions to Resume in 2007
By Vic Cox
After months of signals about pending changes in the UC Retirement Plan (UCRP), the Board of Regents on March 16 approved a general framework of actions that the Office of the President characterized as “ensuring the stability” of UCRP.
The actions confirmed that employees would be required to resume UCRP contributions as of July 2007, and that as part of an as-yet undefined “multi-year contribution strategy…contribution rates will increase gradually…to 16 percent of covered earnings, based on UCRP’s current normal cost,” according to the UCOP announcement.
The Regents also approved a goal of fully covering anticipated pension expenditures over the long term. To do that, the total University and UCRP member contributions are expected to fluctuate within a range of 95 percent to 110 percent of full coverage.
Left for future discussion, possibly at the May 17-18 Regents meeting at UC San Francisco, were details such as exactly how much would be the cost-sharing between employees and the University for each year between 2007 and 2013, the hypothetical outer limit of this action. No promise was offered that these measures would allow another “contribution holiday,” as phrased by the OP Web site “The Future of the UC Retirement Plan” <www.universityofcalifornia.edu/news/ucrpfuture
The $42.4-billion investment fund (as of June 30, 2005) has performed so well over time that no employee or University contributions have been needed since the early 1990s. However, the once-healthy surplus of assets over potential liabilities has declined steadily in recent years. In 2002 it was about 40 percent above the fully funded mark of 100 percent; by 2005 the surplus had shrunk to 10 percent, according to an OP fact sheet.
No explanation for this precipitous decline in surplus is offered on the UCRP future Web site, but some observers suggest that the billions in stock market losses from fraudulent or misleading stock price manipulations is a possible factor. As the lead plaintiff in several class action suits against Enron, Dynegy, WorldCom, and other transnational corporations, UC has recovered settlements to date worth more than $7-billion for all parties. (See OP’s Enron lawsuit Web site <www.universityofcalifornia.edu/news/enron
>.) How much will actually return to UCRP from these settlements has yet to be determined.
For represented employees, the reinstatement of contributions to the UCRP is subject to the collective bargaining process. “Reinstatement of contributions is also subject to the availability of funding and completion of the state budget process,” warned the OP announcement.
UC’s special Web site on the future of the UCRP is updated with the latest information. This site is also accessible via the At Your Service Web site: <http://atyourservice.ucop.edu