Pension Pay-in Plan Delayed
By Vic Cox
Plans to reinstate employee contributions to the UC pension plan—formerly scheduled to start as of July 1, 2007—have hit a snag and will be delayed, say UC officials.
“As previously announced, contributions from both UC and employees were… subject to several factors, including state funding,” according to an unsigned, May 17 statement posted on the UC benefits office’s At Your Service Web site <http://atyourservice.ucop.edu
>. “Because UC will not receive state support for this purpose in its 2007-08 budget, the restart of UCRP contributions will need to be rescheduled.”
The May revision does include a pledge, supported by UC, regarding future state funding for the UCRP. If passed by the Legislature, the budget language would state that “in order to meet the state’s fiduciary responsibilities associated with the University of California Retirement Plan, it is the intent of the Legislature and the governor that the state will provide its share of employer contributions, contingent on the University’s reinstatement of employee contributions, in the future at rates comparable to those of the California Public Employees Retirement System (CalPERS).”
This is the University’s first public suggestion that an approach has been found for dividing the total pension contribution between employer and employees. But how the contributions would be structured over the coming years has yet to be announced by the Board of Regents, and has been a topic of negotiation between UC and several unions.
Due to UCRP investments providing full liability funding, plus a surplus, since the early 1990s, neither the state nor UC employees have had to contribute to the cost of pension benefits since then. However, that surplus has declined steadily since 2000, when it was 154 percent, to last June 30 when it was 104 percent. UCRP is expected to become underfunded soon, so contributions will again be needed to keep the pension fund’s assets to between 95 and 110 percent of its liabilities.
Looking to the near future, the UCOP benefits statement continued: “While the new date for restarting contributions is unknown at present, the Regents’ long-term approach to how UC and employees will share the cost of UCRP benefits will be consistent with the state’s approach to contributions to CalPERS. Based on a current projected total ongoing cost for UCRP of 16 percent of payroll, this would mean UC and its employees pay approximately 11 percent and 5 percent, respectively, toward the cost of maintaining UCRP benefits.”