Faculty Senate Report Retirement David M. Quillen, MD January 25, 2018
Faculty Senate UF F • First presented to BOT A – December 17, 2017 C U • Presented to UF Deans L T – January 9, 2018 Y • Presented at the President’s cabinet S – January 19, 2018 E N • Will present to the advisory council of A faculty senates tomorrow in Tallahassee T E • Disclaimer
Retirement at UF UF F • How does retirement compensation A C affect UF faculty and staff? U L • Does it? T Y – Make it hard to hire new faculty? S – Does it help other institutions hire our E faculty? N A – Does it delay retirement? T E – Does it impact morale?
Materials distributed at the BOT meeting UF F • Faculty retirement summary A – MSword file - Faculty Retirement for top 10 C U pub U and AAU L • Spreadsheet Excel T Y – Retirement for AAU and top 10 S • 2003 UNC peer benefits review E N – UNC Benefits2003.pdf A • Editorial from the Chronicles of Higher T E Education – retire already.pdf
UNC report 2003 UF F • “People used to come to work at A C Carolina FOR the benefits. U L • Now they leave BECAUSE OF the T Y benefits.” S E N • Reasonable methodology for doing A T benefit comparison among peer E institutions.
UF History UF F • Like many state institutions of higher education A benefits generally linked to state employee C benefits U • 2011-13 L T – Employer contribution reduced from 10.42% to Y 5.14% over 2 fiscal years • In the defined contribution plan S • Unclear the impact on the defined benefit plan E – Drop payout reduced N – Staff and out of unit faculty received a 3% raise in A exchange for sick leave payout (President Machen) T – Employee mandatory contribution of 3% E • New state regulation – No matching program at UF or for State Employees
Peer Comparison UF F • Method A – Cohort of 61 institutions C • US News public top 10 U • AAU public L • AAU private T – Search each HR web page Y – Summarize retirement of the defined contribution S plans. E • Employer contributions N • Employee mandatory or match programs A – It is much more difficult to try and compare defined T benefit plans E – Not all have defined benefit plans – Everyone* has a defined contribution plan. – *Hawaii (not in the AAU comparison group)
Peer Comparison Results UF F US News and World Report top 10 Public • A – UF is last in employer contribution to retirement C Public AAU • U – UF is last in employer contribution to retirement L Private AAU • T – UF is last in employer contribution to retirement Y • Employer 5.14% • Employee 3.0% S Vanderbilt, MIT and University of Missouri E • N – Employer 5% A – Employee 5% T – BUT , Missouri and MIT also has a defined benefit plan E and Vanderbilt has an additional flexible 5% for most faculty and administrative staff.
Peer Averages % of Salary UF Employee match or F A Employer mandatory C U All 8.72 4.47 L Top 10 public 8.09 6.24 T Y AAU public 8.51 5.32 S AAU private 8.96 3.41 E N A UF 5.14 3.00 T E
Goals for Retirement UF F • Be competitive for hiring A C • Be competitive for retaining U L • Compensate to assist appropriate T Y retirement S • Improve morale E N A T E
Is it possible? UF F • Locally controlled benefits A – Can we supplement retirement? C – Or are we “locked? to the state? U • We already have “local” benefits L T – Sick leave pay out (in unit faculty) Y • If we had funds for retirement – Where could we put it? S E • 401(a) plan already exists at UF N – Sick leave payout option and special pay plan A – FICA ALT pay for OPS staff T • HR has already started the process for an E additional 401(a) plan and selected a vendor (TIAA)
New 401(a) UF F • Add funds over a period of time A C • Goal 4-5% U L – Bringing UF’s employer contribution to a T Y total of 9-10% and in line with our peers S • Getting to 15% E N – 9% employer A – 6-7% employee T E
Some options UF F • Match/mandate? A C • Graduated based upon U L – Age? T Y – Salary? S • Age endpoint? E N • Vesting period? A T E
Match/Mandate UF F • A match encourages employees A • Builds retirement faster C U • Makes it easier to retire “on time” L • Harder on lower income levels T Y • Will help move the employee contributions closer to our peers and on a better path to S retire appropriately E – 3.0% to 4.47% N A • 11 AAU peers have no match or mandatory T employee contribution. E • 5.31% for those that have either a match or mandatory employee contribution.
Graduated UF F • Some peer plans increase benefit with age A – Up to 35 y.o. C – 36 to 50 y.o. U L – 51 and over T • Advantages with decreasing benefit with Y age? S – More put into investment at a younger age E – Less overall employer contribution with greater N assets at retirement. A – Better retention? T E – Better recruitment – Completely unique among AAU • Or nationally
Age endpoint and vesting UF F • Age endpoint A C – Something to consider U L – Employer contribution to supplemental T plan could end at 65 or 67 y.o. Y • Vesting time frame S E – All current Defined Contribution Plans at N A UF vest immediately. T E • Except FRS investment plan – 1 year
My recommendation UF F • 1 to 1 matching program in the new 401(a) A for employer and current 403(b) for C employee U • Limit 4% L T – Total employer contribution would be 9.14% Y – Total employee contribution would be 7.0% S – 16.14% “get to 15%” E • Plan closes to employer contributions at 65- N 67 y.o. if possible A T • All faculty (and staff) have the same plan E • Could reduce match requirements for lower salaried. Use SS wage limit or 75%.
Conclusion UF • Being 61 st of 61 peer institutions is F A C inconsistent with our goals and U values of being a top 10 or 5 public L T research institution. Y • We have a method to fix the problem S E if we can direct the resources N A • We have some very interesting T E options Updated January 18, 2018
All 50 state comparison UF F • New comparison group A C • All 50 states U L • Most state educational systems have T Y state wide plans, like Florida S • A few exceptions E N A T E
Limitations UF F • One state had no defined A C contribution plan – Hawaii U L • Similar estimates had to be made for T Y states that did not have single plans S – Indiana E – Kentucky N A – Louisiana T E
Results UF Employee match or Employer mandatory F A All 50 states* 9.26 6.31 C U L T Florida 5.14 3.00 Y Only Massachusetts and Missouri at 5% S Missouri also has an additional pension plan (for all employees) E Massachusetts also has extensive supported benefits including N health, dental, life and disability insurance. A T Massachusetts pension plan is the clear option for those that can E choose. Florida is still last…. *Average with zero not counted
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