Contributions to resume
BY AJAY SINGH
Today Staff Writer
The UC Board of Regents has approved the resumption of contributions to the University of California Retirement Plan (UCRP), authorizing a multi-year contribution strategy set to begin July 2007, subject to the completion of the budget process.
The regents voted unanimously for the measure March 16 while meeting at UCLA. They took several specific steps to adequately fund the UCRP, thereby ensuring retirement benefits for all members while avoiding the severe funding problems that have plagued other retirement plans across the country in recent years.
The regents approved the long-term, targeted funding of 100% for the UCRP — assuring that the plan will have sufficient assets to cover its liabilities. Without such funding, consultants told the regents, the plan would run into trouble by 2009. Further, the regents agreed that in order to maintain a 100% funding level amid unpredictable market fluctuations, both university and UCRP member contributions will be within a range of 95% to 110%.
This is the first time since 1990 that contributions to the UCRP will be made. In that year, thanks to prudent management that built up a surplus, the regents suspended all university and UCRP contributions. Instead, they redirected 2% to 4% of an employee’s covered pay to a supplementary retirement fund called the Defined Contribution Plan. (The regents have not decided whether employees will continue those contributions.)
Now, however, the situation has changed. The UCRP surplus has been on the decline, and the plan is in danger of being underfunded.
Although the precise amounts of funding have yet to be determined, the regents authorized that contributions by the university and the employee will gradually increase to cover 16% of his or her gross monthly earnings, which has been the annual cost of funding the plan in recent years.
An advisory group to UC President Robert C. Dynes is currently evaluating a multi-year contribution strategy to help reduce the financial impact on employees. In May, the regents are expected to make specific recommendations on the reinstatement of contributions. In particular, they will consider how costs will be shared between active UCRP members and the university.
For represented employees, the reinstatement of contributions will be subject to the collective bargaining process. For details, see www.universityofcalifornia.edu/news/ucrpfuture/welcome.html.
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