Below is the UCLA Today version in regular type and then a comment from yours truly and the actual transcript in italics. Also, the audio (a video with a fixed picture) is at the bottom of this posting along with various links.
Question: What is the
impact of Governor Brown’s pension reform on our UC retirement benefits?
Yudof: The governor’s proposal actually shares many
characteristics with what has already been approved for the University of
California Retirement Plan. Employees
would pay more under the governor’s proposal. Ours remains wholly a pension
plan, not even partially a defined contribution or 401(K)-type plan. And one
major difference is, ours is in place; his is not. And I’ve said that to him. The way the governor’s proposal is currently
constructed, it would seem to apply to everyone, but I just can’t believe they
would try to push this for the University of California where, for better or
worse, we seem to have settled these issues. What would be the point? I predict
it’s not going to happen to UC employees, but we’ll be watchful.
Comment: His actual
remarks indicate that the issue at UC has been settled for a couple of years
which could that there may be a revisiting of the issue thereafter. The text is ambiguous.
Here is the literal transcript:
PENNY HERBERT: So this is an interesting one, again around
the statehouse: help me understand what the impact of Governor Brown’s pension
reform is and how does that threaten my retirement at the University of
California?
PRESIDENT MARK
YUDOF: Well this is a little hard to
predict. The Governor’s proposal
actually shares many characteristics with what has already been approved for
the University of California.
PENNY HERBERT: Yeah.
PRESIDENT MARK YUDOF: The employees would pay more, there’d be a
new tier. But it has other
characteristics which we did not incorporate.
That is, ours remains wholly a defined benefit plan, not even partially
a defined contribution plan. We do not
-- it was in one of the earlier that you asked, but we do not deduct social
security payments. The feeling was that
was too regressive. It hurt our lowest
income employees, lower income employees than most. It does have all those elements and one major
difference is, ours is in place; his is not.
And I’ve said that to him. The
way it’s currently being constructed, it would seem to apply to everyone but I
just can’t believe they would try to push this for the University of California
where for better or worse, we seem to have settled these issues for a couple of
years. You know, what would be the
point? So what I can say is we’re
vigilant, we’re watching, we’re very alert to this, taken literally it would
have an impact. It would reduce the
benefits in the new tier -- not so much -- and actually it would cost more in
the present tier. That’s another -- the
present employees but I predict it’s not going to happen to UC employees but
again, we’ll be watchful.
Question: Will there
be a maximum cap for the employee contribution to the UC retirement plan?
What’s going to happen over the next couple of years?
Yudof: That’s hard to know. We’re hitting it pretty hard and
I feel badly about it because, de facto, it’s a pay cut. On the other hand, the
last thing in the world I want is for your retirement not to be there when you
retire.
Comment: In his actual
remarks, he says that the governor’s notion of a 50-50 split of contributions
to the pension is too harsh, i.e., the employee share should be smaller. He talks about the employee contribution
going to 6% and maybe 7%. In the past,
the Academic Senate has viewed 7% as a cap but various projections made for the
Regents appear to have the employee share going to 8%. Contributions are already scheduled at 6.5%.
Here is the literal transcript:
PENNY HERBERT: And just for the audience out there, we will
be answering more of these questions on our Web site and on this site. So if some of them didn’t have the detail you
wish, if you want to ask them again through the Staff Advisor Web site, but
also look for postings of the commonly asked questions after the fact. So I have another question that might be
looking into a crystal ball again. Will
there be a maximum cap for the employee contribution to the UC retirement
plan? What’s going to happen over the
next couple of years?
PRESIDENT MARK
YUDOF: That’s hard to know. We’re hitting it pretty hard and I feel badly
about it because, you know, de facto it’s a pay cut. You know?
That’s just what it is. There’s
no other way to slice it. On the other
hand, the last thing in the world I want is for the money -- for your
retirement not to be there when you retire.
And we didn’t make contributions, you didn’t make contributions and the
University didn’t for 20 years. The --
all I’ll say is this, the Governor’s proposal has a 50/50 split between the
employer and employee. I think that’s
too harsh on our employees so I don’t know if there’s a cap but I think that
really is way too harsh for present employees in a context where you’re not
getting year in, year out merit raises and cost of living adjustments. So we’ll
see what happens. It’ll probably -- I’m guessing it’ll probably go to six
percent or maybe even seven but I’d be real reluctant to push it any harder
unless we had some real salary relief for the staff.
Question: Given that private sector employees pay much more to their
retirement, doesn’t it make sense to consider moving to a 401(K)-type vehicle?
Yudof: I have a couple of reactions. First, we can’t do that
for existing employees certainly without their consent, just as a legal matter.
So we’re locked in for the vast bulk of people to a defined benefit program.
Second, we probably have some subset of employees who would prefer something
like a defined contribution, 401(K), and I’m willing to look at that. The third thing is I am one of the skeptics
of 401(K)s. People by and large have not been very good at managing these
things. There are some skilled people who have been very good, but I think I’m
not one of those people. And I want to be real careful. It is paternalistic,
but I think many employees would prefer to have the pros do the investing. And
if they don’t, that’s fine — they can take it on, but I don’t know that it’s
good fit for everyone.
Comment: The actual
remarks show somewhat more receptivity to defined contribution than the text
above. Some groups might prefer defined
contribution and UC is willing to talk about it.
Here is the literal transcript:
PENNY HERBERT: We have a couple of minutes left so we’ll go
to a couple of your questions, Zach.
ZACH: Great, I’d be glad to do that. So this I believe speaks to sort of the
breath and passion that our employees, our staff have towards their retirements
and their retirement plan so here’s another that we might not have specifically
talked to yet. Given that private sector
employees pay much more to their retirement, doesn’t it make sense to consider
moving to a 401(K) type vehicle? What do
you say to that?
PRESIDENT MARK
YUDOF: I have a couple of
reactions. First we can’t do that for
existing employees certainly without their consent, just as a legal matter. So
we’re locked in for the vast bulk of people to a defined benefit program and so
forth. Second, we probably have some
subsets of employees who would prefer something like a defined contribution,
401(K) and I’m willing to look at that. You know, for example, when we have
negotiations with the unions, we have to keep our costs consistent with the
non-represented employees but there may be some things they want that are different
and I don’t know that they would want a defined – part defined
contribution. Maybe they’d still like
defined benefit. But we’d be happy to talk about that with them. The third thing is I am one of the skeptics
of 401(K)s. I have to say that I read a
lot of behavioral economics. And people
by and large have not been very good in managing these things. It’s just true. There are some skilled people who have been
very good but I think I’m one of those people.
You know? I don’t know which
stocks and I make an investment, I forget what it’s in and all. So I just do index funds and (sic – should be
“in”) my other retirement. And I want
to be real careful. It is paternalistic
but I think many employees would prefer to have the pros do the investing and
if they don’t, that’s fine. They can
take it on but I don’t know that that’s good fit for everyone.
The non-italics text is from http://today.ucla.edu/portal/ut/10-questions-uc-president-mark-230194.aspx
Actual video is at http://www.ustream.tv/recorded/20832191
The official transcript is at http://universityofcalifornia.edu/news/transcripts/transcript-ustream-webchat-pres-yudof-mar2012.pdf
Audio of the three pension questions can be heard below:
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