Sunday, August 15, 2010

What Retirees Are Being Told by UCOP About Possible Changes in Retiree Health Care and Pensions

Judgment Day is Coming from the Post-Employment Benefits Task Force According to the “New Dimensions” Benefits Newsletter for UC Retirees, July 2010, published by UC Human Resources at UCOP. Below is the relevant article:

Post-Employment Benefits Task Force to Send Recommendations to President Yudof

Predictable but reduced UC contributions for retiree health premiums and changes in eligibility for retiree health benefits for many future UC retirees are among the options the Post Employment Benefits Task Force is considering sending to UC President Mark G. Yudof. After more than a year of study, discussion and wide consultation, the task force is now completing its work, and plans to send its report recommendations for changes to the UC Retirement Plan, retiree health benefits and funding of the pension and retiree health benefits to Yudof by early August.

The task force has been charged with developing options for balancing the long-term costs of postemployment benefits with the need to be competitive. “Our focus has been on how to sustain these benefits,” said Randy Scott, executive director of talent management and workforce development and UC staff lead on the project.

The greatest impact on current retirees is likely to be predictable and scheduled phased-in reductions in the level of UC’s contribution to retiree health premiums from the current average of 89 percent.

Dr. Charles Hess, former chair of the Council of UC Emeriti Associations and chair of the task force retiree health benefits work group, points out that UC’s retiree health benefits are higher than those of comparable universities. “The University of Michigan is in the process of doing what we’re discussing—decreasing contributions to retiree health.”

The task force is also considering recommendations to mitigate the effect on retirees who might be more adversely affected, said Hess. This includes, for example, those who are under age 65 and not yet eligible for Medicare and a smaller group, 65 and older who were not coordinated with Social Security and are not otherwise eligible for Medicare.

“Retirees over 65 not eligible for Medicare have saved the university money over the years because UC did not pay into Social Security for them,” said Scott. “The retiree health work group and the task force feels strongly that we should make every effort to mitigate the impact on these retirees.”

For the under age 65 group, the task force is considering whether their health premiums should continue to be blended with those of active employees, which lowers the retirees’ premium cost and thereby keeps premiums more manageable as the UC contributions decrease. The task force is also looking at recommendations that would change eligibility criteria for retiree health benefits for future retirees. For example, one option would be to raise the minimum eligibility for an employer contribution to retiree health from the current age 50 to age 55. Changes to the current graduated eligibility formula whereby those with 10 to 20 years of service receive a percentage of the UC premium contribution are also being discussed.

If implemented, the retiree health options could reduce UC’s current unfunded liability from $14 billion to between $9 and $10 billion. As for the pension, nothing will change for current retirees, says Marian Gade, chair of the Council of UC Retirement Associations (CUCRA) and a member of the task force pension workgroup. “We are among the fortunate people in the world who have a stable pension and will continue to have one,” she said. “The university will continue to pay the benefits we’ve earned, and we will not have to contribute to the pension plan.”

The pension work group is considering several recommendations including a new UCRP tier for new employees with different minimum retirement age and age factors, a defined contribution plan option for some workers, and future levels of employer and employee contributions to the UC Retirement Plan.

Once the Task Force delivers its report, much work will remain, says Scott. The President will review the recommendations and decide which to discuss with the Regents. Consultation with the Academic Senate, the UCRS Advisory Board, and other UC leadership will continue. Changes are subject to collective bargaining with represented groups.

NOTE TO LANL and LLNL RETIREES: Post-Employment Benefits Task Force proposals will have no effect on your retirement income or retiree health benefits.
The entire newsletter is available at
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