UC proposes higher pension contribution from employees, eliciting concern from faculty

UC administrators have proposed that the employee pension contribution rate be raised to 6.5 percent in 2013, causing faculty representatives to fear that the rate will increase again in 2014 without a corresponding increase in employees’ salaries.

At its November meeting, the UC Board of Regents will vote on the proposed increase in employees’ pension contributions for the 2013 fiscal year as well as an increase in employer contributions to 12 percent. Currently, employees pay 3.5 percent into the pension plan and will pay 5 percent next fiscal year.

“The 2013 contribution proposal is the latest in a series of UC actions aimed at addressing the retirement plan’s unfunded liability and ensuring its long-term viability,” said UC spokesperson Leslie Sepuka in an email.

However, according to a memo from the systemwide Academic Senate University Committee on Faculty Welfare, which reports to the senate on matters concerning the economic welfare of the faculty, the proposed increase to 6.5 percent in 2013 would be unacceptable unless it also came with either offsetting salary increases or a promise not to raise the contribution amount higher than 7 percent in the future.

The current pension plan was adopted by the regents in September 2009, setting the amount that employees and the university are contributing to the UC Retirement Plan during the 2011 fiscal year as 3.5 percent and 7 percent respectively, with the amounts set to increase to 5 percent and 10 percent next fiscal year.

A salary increase would be necessary because raising the employee contribution percentage decreases the cash compensation employees actually receive, according to the memo. The maximum contribution the senate finds acceptable without increased cash compensation is 7 percent.

“The problem that we have is that almost all UC employees’ salaries are well behind what competing institutions are paying,” said Robert Anderson, chair of the systemwide Academic Senate. “The move from 5 to 6.5 (percent) strongly suggests an intent to move to 8 (percent in 2014), and we’re not doing well enough with cash compensation to make that feasible.”

According to Anderson, the UC faculty’s average salaries last year were 13 percent behind the average salary at competing institutions. Despite the fact that faculty received a 3 percent salary increase on Oct. 1, the gap is not closing because competing institutions have also raised their salaries, he said.

Another issue that could keep the UC from recruiting talented new faculty members is that a new salary tier created for employees hired after July 2013 offers reduced benefits compared to those for employees hired prior.

“People hired after July 2013 will not be eligible to draw full benefits until age 65 as opposed to age 60, and the pension contribution amount is set at 7 percent for that tier,” Anderson said.

“(The Academic Senate) supported the design of the new tier as the least damaging way to reduce the cost of providing the pension benefits.”

UC administrators have stressed the need to address the retirement fund’s unfunded liability and make it viable going forward.
“The proposed 2013 UCRP contribution rates effectively stops the bleeding by not increasing our unfunded liability each year,” said

Gary Schlimgen, director of pension & retirement programs, in a statement on the university website. “It’s critical to capture sufficient contributions to support the additional liability that UCRP is absorbing each year.”

Between 1990 and April 2010, neither the UC nor employees contributed to the retirement fund because the regents saw that the fund had had a surplus. As a result of nearly 20 years without funding, the retirement plan currently has a deficit.

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  • Anonymous

    Up next:  “Occupy UC”?

  • Anonymous

    Good idea.

  • Anonymous

    “…the proposed increase to 6.5 percent in 2013 would be unacceptable
    unless it also came with either offsetting salary increases or a promise
    not to raise the contribution amount higher”
    Why does pension money going into an employee’s retirement have to be OFFSET by even more salary increases going to that same employee?  Do we have to give public employees money for immediate use every time we give them money for their own retirement?  Does the faculty think U.C. is made of money? 

    “The problem that we have is that almost all UC employees’ salaries are
    well behind what competing institutions are paying”
    And that is yet more proof that the reason U.C. students are facing such stiff tuition increases is due to U.C. employee salary and benefit demands.  Colleges around the country have been raising tuition at twice the rate of inflation.  Yet the faculty has the nerve to join the Occupy Wall Street crowd in blaming the high cost of student debt on banks and rich people.  The faculty should admit that rising tuition are due to their salary and pension demands as well as cuts in state funding, and not due to banks.

    • Opielopo

      I am a UC staff employee.  I make exactly the same amount now as I did 4 years ago.  Faculty salary scales have not increased one penny since 2007.

      • If you’re making the same as in 2007, you’re doing damn well compared to many people in the private sector, who have seen their own wages decline due to underemployment  and other factors, and many of those people don’t have the sweet pension package you do. Time for you government workers to pitch in for their own retirement…