The Cost of Your Retirement The Cost of Your Retirement Health - PowerPoint PPT Presentation

The Cost of Your Retirement” “ The Cost of Your Retirement” “ Health Sciences Faculty Rights and Health Sciences Faculty Rights and Welfare Committee Welfare Committee University of California San Diego University of California San Diego Jim Feramisco Feramisco Rick Lieber Jim Rick Lieber Paul Friedman Harry Powell Harry Powell Paul Friedman Gary Firestein Firestein Andy Ries Ries ( ( ex officio ) Andy ex officio ) Gary Wilber Lew Lew Sam Ward ( ad hoc ) Sam Ward ( ad hoc ) Wilber

Disclaimer: I study muscle! Disclaimer: I study muscle!

Purpose Purpose • “ “Surround” the problem of 415m liability including Surround” the problem of 415m liability including • such issues as: such issues as: • Faculty hired pre Faculty hired pre- - and post and post- -1994 1994 • • APUs APUs and academic rank and academic rank • • Years of service Years of service • • Develop a mathematical model of the 415m Develop a mathematical model of the 415m • “problem.” “problem.” • Suggest methods to recover 415m liability. Suggest methods to recover 415m liability. •

Review of the facts (as of 2005) Review of the facts (as of 2005) • IRS limit on retirement system payouts = IRS limit on retirement system payouts = • $170,000. $170,000. • UCRS maximum payout (<1994) = $315,000. UCRS maximum payout (<1994) = $315,000. • • UCRS maximum payout (>1994) = $210,000. UCRS maximum payout (>1994) = $210,000. • • Difference between IRS limits and UCRS payout Difference between IRS limits and UCRS payout • = 415m liability. = 415m liability.

Retirement Retirement Y Y e e a a r r s s o o f f Age? Age? S S e e r r v v i i c c e e ? ? APU? APU? Age at Hiring? Age at Hiring? Academic Academic Rank? Rank? “How do we get our arms How do we get our arms “ around the problem?” around the problem?” “What do we know?” What do we know?” “

SCALES FOR FACULTY SALARIES - July through September 2005 Final Scales Range Adjusted, effective 10/1/2002 - reflects adjustments at right FACULTY LADDER RANK SCALES Health Sciences Compensation Plan (Uni Plan) APU APU ANNUAL RATES Scale 0 Scale 1 Scale 2 Scale 3 Scale 4 Scale 5 Scale 6 Scale 7 Scale 8 Scale 9 RANK STEP 1.0 1.1 1.2 1.3 1.4 1.5 1.65 1.8 2.0 2.25 Instructor $46,400 $51,000 $55,700 $60,300 $65,000 $69,600 $76,600 $83,500 $92,800 $104,400 Asst Prof I $53,900 $59,300 $64,700 $70,100 $75,500 $80,900 $88,900 $97,000 $107,800 $121,300 II $56,800 $62,500 $68,200 $73,800 $79,500 $85,200 $93,700 $102,200 $113,600 $127,800 III $59,900 $65,900 $71,900 $77,900 $83,900 $89,900 $98,800 $107,800 $119,800 $134,800 IV $63,200 $69,500 $75,800 $82,200 $88,500 $94,800 $104,300 $113,800 $126,400 $142,200 V $66,400 $73,000 $79,700 $86,300 $93,000 $99,600 $109,600 $119,500 $132,800 $149,400 VI $69,700 $76,700 $83,600 $90,600 $97,600 $104,600 $115,000 $125,500 $139,400 $156,800 Rank Rank Assoc Prof I $66,500 $73,200 $79,800 $86,500 $93,100 $99,800 $109,700 $119,700 $133,000 $149,600 II $69,800 $76,800 $83,800 $90,700 $97,700 $104,700 $115,200 $125,600 $139,600 $157,100 III $73,800 $81,200 $88,600 $95,900 $103,300 $110,700 $121,800 $132,800 $147,600 $166,100 IV $78,400 $86,200 $94,100 $101,900 $109,800 $117,600 $129,400 $141,100 $156,800 $176,400 V $84,100 $92,500 $100,900 $109,300 $117,700 $126,200 $138,800 $151,400 $168,200 $189,200 Professor I $78,500 $86,400 $94,200 $102,100 $109,900 $117,800 $129,500 $141,300 $157,000 $176,600 II $84,200 $92,600 $101,000 $109,500 $117,900 $126,300 $138,900 $151,600 $168,400 $189,500 III $91,300 $100,400 $109,600 $118,700 $127,800 $137,000 $150,600 $164,300 $182,600 $205,400 IV $99,000 $108,900 $118,800 $128,700 $138,600 $148,500 $163,400 $178,200 $198,000 $222,800 V $107,400 $118,100 $128,900 $139,600 $150,400 $161,100 $177,200 $193,300 $214,800 $241,700 VI $116,600 $128,300 $139,900 $151,600 $163,200 $174,900 $192,400 $209,900 $233,200 $262,400 VII $126,500 $139,200 $151,800 $164,500 $177,100 $189,800 $208,700 $227,700 $253,000 $284,600 VIII $137,000 $150,700 $164,400 $178,100 $191,800 $205,500 $226,100 $246,600 $274,000 $308,300 IX $148,800 $163,700 $178,600 $193,400 $208,300 $223,200 $245,500 $267,800 $297,600 $334,800

RETIREMENT INCOME ESTIMATE TABLE (EXPRESSED AS A PERCENTAGE OF THREE CONSECUTIVE YEARS HIGHEST ANNUAL SALARY) SERVICE YEARS CREDIT AGE 50 AGE 51 AGE 52 AGE 53 AGE 54 AGE 55 AGE 56 AGE 57 AGE 58 AGE 59 AGE 60 AGE 61 AGE 62 AGE 63 AGE 64 AGE 65 1.10% 1.24% 1.38% 1.38% 1.66% 1.80% 1.94% 2.08% 2.22% 2.36% 2.50% 2.50% 2.50% 2.50% 2.50% 2.50% 6 6.6 7.4 8.3 9.1 10.0 10.8 11.6 12.5 13.3 14.2 15.0 15.0 15.0 15.0 15.0 15.0 7 7.7 8.7 9.7 10.6 11.6 12.6 13.6 14.6 15.5 16.5 17.5 17.5 17.5 17.5 17.5 17.5 8 8.8 9.9 11.0 12.2 13.3 14.4 15.5 16.6 17.8 18.9 20.0 20.0 20.0 20.0 20.0 20.0 9 9.9 11.2 12.4 13.7 14.9 16.2 17.5 18.7 20.0 21.2 22.5 22.5 22.5 22.5 22.5 22.5 10 11.0 12.4 13.8 15.2 16.6 18.0 19.4 20.8 22.2 23.6 25.0 25.0 25.0 25.0 25.0 25.0 11 12.1 13.6 15.2 16.7 18.3 19.8 21.3 22.9 24.4 26.0 27.5 27.5 27.5 27.5 27.5 27.5 12 13.2 14.9 16.6 18.2 19.9 21.6 23.3 25.0 26.6 28.3 30.0 30.0 30.0 30.0 30.0 30.0 13 14.3 16.1 17.9 19.8 21.6 23.4 25.2 27.0 28.9 30.7 32.5 32.5 32.5 32.5 32.5 32.5 14 15.4 17.4 19.3 21.3 23.2 25.2 27.2 29.1 31.1 33.0 35.0 35.0 35.0 35.0 35.0 35.0 15 16.5 18.6 20.7 22.8 24.9 27.0 29.1 31.2 33.3 35.4 37.5 37.5 37.5 37.5 37.5 37.5 16 17.6 19.8 22.1 24.3 26.6 28.8 31.0 33.3 35.5 37.8 40.0 40.0 40.0 40.0 40.0 40.0 17 18.7 21.1 23.5 25.8 28.2 30.6 33.0 35.4 37.7 40.1 42.5 42.5 42.5 42.5 42.5 42.5 18 19.8 22.3 24.8 27.4 29.9 32.4 34.9 37.4 40.0 42.5 45.0 45.0 45.0 45.0 45.0 45.0 19 20.9 23.6 26.2 28.9 31.5 34.2 36.9 39.5 42.2 44.8 47.5 47.5 47.5 47.5 47.5 47.5 20 22.0 24.8 27.6 30.4 33.2 36.0 38.8 41.6 44.4 47.2 50.0 50.0 50.0 50.0 50.0 50.0 21 23.1 26.0 29.0 31.9 34.9 37.8 40.7 43.7 46.6 49.6 52.5 52.5 52.5 52.5 52.5 52.5 22 24.2 27.3 30.4 33.4 36.5 39.6 42.7 45.8 48.8 51.9 55.0 55.0 55.0 55.0 55.0 55.0 23 25.3 28.5 31.7 35.0 38.2 41.4 44.6 47.8 51.1 54.3 57.5 57.5 57.5 57.5 57.5 57.5 24 26.4 29.8 33.1 36.5 39.8 43.2 46.6 49.9 53.3 56.6 60.0 60.0 60.0 60.0 60.0 60.0 25 27.5 31.0 34.5 38.0 41.5 45.0 48.5 52.0 55.5 59.0 62.5 62.5 62.5 62.5 62.5 62.5 26 28.6 32.2 35.9 39.5 43.2 46.8 50.4 54.1 57.7 61.4 65.0 65.0 65.0 65.0 65.0 65.0 27 29.7 33.5 37.3 41.0 44.8 48.6 52.4 56.2 59.9 63.7 67.5 67.5 67.5 67.5 67.5 67.5 28 30.8 34.7 38.6 42.6 46.5 50.4 54.3 58.2 62.2 66.1 70.0 70.0 70.0 70.0 70.0 70.0 29 31.9 36.0 40.0 44.1 48.1 52.2 56.3 60.3 64.4 68.4 72.5 72.5 72.5 72.5 72.5 72.5 30 33.0 37.2 41.4 45.6 49.8 54.0 58.2 62.4 66.6 70.8 75.0 75.0 75.0 75.0 75.0 75.0 31 34.1 38.4 42.8 47.1 51.5 55.8 60.1 64.5 68.8 73.2 77.5 77.5 77.5 77.5 77.5 77.5 32 35.2 39.7 44.2 48.6 53.1 57.6 62.1 66.6 71.0 75.5 80.0 80.0 80.0 80.0 80.0 80.0 33 36.3 40.9 45.5 50.2 54.8 59.4 64.0 68.6 73.3 77.9 82.5 82.5 82.5 82.5 82.5 82.5 34 37.4 42.2 46.9 51.7 56.4 61.2 66.0 70.7 75.5 80.2 85.0 85.0 85.0 85.0 85.0 85.0 35 38.5 43.4 48.3 53.2 58.1 63.0 67.9 72.8 77.7 82.6 87.5 87.5 87.5 87.5 87.5 87.5 36 39.6 44.6 49.7 54.7 59.8 64.8 69.8 74.9 79.9 85.0 90.0 90.0 90.0 90.0 90.0 90.0 37 40.7 45.9 51.1 56.2 61.4 66.6 71.8 77.0 82.1 87.3 92.5 92.5 92.5 92.5 92.5 92.5 38 41.8 47.1 52.4 57.8 63.1 68.4 73.7 79.0 84.4 89.7 95.0 95.0 95.0 95.0 95.0 95.0 39 42.9 48.4 53.8 59.3 64.7 70.2 75.7 81.1 86.6 92.0 97.5 97.5 97.5 97.5 97.5 97.5 40 44.0 49.6 55.2 60.8 66.4 72.0 77.6 83.2 88.8 94.4 100.0 100.0 100.0 100.0 100.0 100.0 41 45.1 50.8 56.6 62.3 68.1 73.8 79.5 85.3 91.0 96.8 100.0 100.0 100.0 100.0 100.0 100.0 42 46.2 52.1 58.0 63.8 69.7 75.6 81.5 87.4 93.2 99.1 100.0 100.0 100.0 100.0 100.0 100.0 43 47.3 53.3 59.3 65.4 71.4 77.4 83.4 89.4 95.5 100.0 100.0 100.0 100.0 100.0 100.0 100.0 44 48.4 54.6 60.7 66.9 73.0 79.2 85.4 91.5 97.7 100.0 100.0 100.0 100.0 100.0 100.0 100.0 45 49.5 55.8 62.1 68.4 74.7 81.0 87.3 93.6 99.9 100.0 100.0 100.0 100.0 100.0 100.0 100.0

Basic Principles for 415m Liability Basic Principles for 415m Liability • Liability for payment should be proportional to Liability for payment should be proportional to • the risk of becoming a 415m liability. the risk of becoming a 415m liability. • Retirement age factors are “agreed Retirement age factors are “agreed- -upon” upon” • risk factors for high salary. Use whenever risk factors for high salary. Use whenever possible in modeling. possible in modeling. • Reasonable measures must be taken to Reasonable measures must be taken to • avoid “pension spiking.” avoid “pension spiking.” e.g., dramatic APU increases in last 3 years of career. dramatic APU increases in last 3 years of career. • e.g., •