TAKING A STEP towards putting the University’s pension plan on solid financial footing, the UC Board of Regents at its September meeting voted unanimously to increase the amount UC and its employees will contribute to the plan.

Beginning in July 2011, employee members of the UC Retirement Plan (UCRP) will begin contributing 3.5 percent of salary into the plan; UC will contribute 7 percent. The amount will increase again in July 2012, with employees paying 5 percent and UC paying 10 percent.

The new contribution levels are subject to collective bargaining for represented employees. The regents’ actions do not change employees’ pension benefits, only the amount they and the university pay toward the cost.

“There is an absolute urgency to act,” said UC Regents Chairman Russell Gould before the vote. “It is clear that we as regents have to move on this issue. This is not one where we can sit idly by.”

Until UC and its employees together begin contributing 17.6 percent of annual payroll to the pension program, its current $12 billion unfunded liability will grow, adding to the pressures on UC’s operating budget.

Daniel Simmons, chair of the Academic Senate, said he and other faculty members agreed with the decision to increase contributions, but stressed that the university must also look for ways to ensure competitive salaries.

“As painful as it is, the Academic Senate does support the increase in contributions called for in this item,” Simmons said. “But make no mistake, it is a pay cut for all faculty and staff.”

Executive Vice President Nathan Brostom, in a media briefing following the vote, said that UC President Mark G. Yudof had asked him and other senior leaders to come up with proposals to address the salary issue.

“Non-represented staff haven’t had pay raises for two or three years,” Brostrom said. “But it is also a time of great financial strain, so we’re trying to work that out.”

The regents also voted to amortize the pension program over a 30-year period, rather than the current 15-year time frame. The adjustment will allow UC to reduce its annuual pension liability, but the total amount paid over time will be higher.

The regents’ action comes as the university begins to address significant unfunded liabilities in both its pension and retiree health programs.

Increasing UCRP contributions is one of several recommendations the Post-Employment Benefits Task Force presented to Yudof in August.

Other recommendations include adding a new UCRP pension tier for employees who join UC after July 2013; changing eligibility rules for retire health benefits; and reducing, over time, UC contributions to retiree health insurance premiums to 70 percent of cost.

On September 24, more than 9,000 people participated in UCOP’s Web Town Hall on UC Benefits, in which the various recommendations were discussed by task force members Brostrom; Dwaine Duckett, UC vice president for human resources; Provost Lawrence Pitts; and Systemwide Academic Senate Vice Chair Robert Anderson. Questions were taken from the Web as well as from members of the audience. An archived tape of the forum can be viewed at www.ustream.tv/recorded/9789931.

More information about the task force and its recommendations, including a transcription of the forum, can be found at the Future of UC Retirement Benefits Web site at http://universityofcalifornia.edu/sites/ucrpfuture.