Raised retirement plan contribution rates draw mixed reactions

The UC Board of Regents approved an action item at its July 17 meeting that increases the rates of contributions made by the university and its faculty and staff to the UC Retirement Plan for the 2014-15 school year.

Beginning on July 1, 2014, the “1976 tier” of the UCRP, which consists of the majority of employees hired before 2013, will increase its contribution rates from 6.5 percent to 8 percent, and the university contribution rates will increase from 12 percent to 14 percent. This decision has been met with mixed  reactions, with some faculty members supporting the decision and some unions criticizing the increase in employee contribution rates.

The UC Academic Senate voted unanimously to support the contribution increases, and the UC Board of Regents expressed similar support at its meeting on July 17.

From 1990 to 2010, the university stopped paying into its pension program due to a surplus in funds. Following the economic downturn in 2008, however, UCRP suffered a significant decline in the value of its assets, resulting in an underfunded status that has since propelled increasing contributions, such as this last decision, by the university and employees to the plan.

“A gradual ramp-up will be less detrimental,” said Nathan Brostrom, UC executive vice president of business operations. “The trade-off is reasonable.”

As a part of the approved change to UCRP funding, contributions from members who were hired before July 1, 2013, will be decreased by $19 a month.

Although the total contributions to the UCRP fail to meet the regents’ funding program, they will surpass the plan’s normal cost, which is the cost of benefits earned per year.

“It is absolutely necessary, and more needs to be done,” said Academic Senate chair Robert Powell regarding the UCRP change. “The employer contribution needs to increase to 18 percent as soon as possible.”

Many other faculty members are also in support of the new plan because they said they want to preserve their pension funds.

“Right now, the pension fund has an unfunded liability,” said Christine Rosen, vice chair of the Berkeley Faculty Association and an associate professor at Haas School of Business. “We’re trying to fill the hole, but it’s extremely difficult to do it, because it takes a lot of money.”

However, not all are in favor of this plan. The University Professional and Technical Employees Union is among several unions that have expressed discontent regarding the plan.

“We are for contributions and for increased contributions to the fund, but we are also for accountability,” said Tanya Smith, president of the Local 1 chapter of UPTE-CWA 9119, which represents technical, research and professional health care workers at the university. “Employees who are contributing more also should have increased salaries.”

Similarly, members of the American Federation for State County and Municipal Employees 3299 strongly oppose the contribution increases.

“What happened at the UC Regents meeting is a continuation of a terrible pattern,” said Todd Stenhouse, a spokesperson for AFSCME 3299. “This is about doing everything and anything to avoid doing the right thing, which is capping executive pensions.”

The UCRP media release predicts that UC employer contributions will continue to increase in the future.

“Today’s action is part of a broader effort to maintain financially sustainable pension benefits for employees,” the statement says.

Contact Jane Nho at [email protected]

Please keep our community civil. Comments should remain on topic and be respectful.
Read our full comment policy