UC raises retirement plan contributions

article image


We're an independent student-run newspaper, and need your support to maintain our coverage.

MAY 30, 2011

The University of California and its faculty and staff will be contributing more to the university’s underfunded pension plan beginning July 1.

The UC Board of Regents approved the increases — which will see most faculty and staff paying 3.5 percent of their total compensation while the university will pay 7 percent of employees’ salaries — at a meeting last fall. Currently, most employees pay 2 percent of their total pay while the university pays 4 percent to the UC Retirement Plan. The rates are set to increase again in July 2012, with employees paying 5 percent and the UC paying 10 percent.

UC President Mark Yudof chose to recommend a second tier to the plan — in which contributions for employees hired on or after July 1, 2013 will rise to 7 percent of their total compensation while the university will pay 8.1 percent.

Under this tier of the plan, employees hired after July 2013 will have their minimum retirement age increased by five years to 55 and will no longer have the option of a lump sum cash-out.

The university’s decision was met with strong contention from UC employees and their advocates, who have stated that the plan could leave lower-income UC employees struggling to stay out of poverty.

Until April 2010, the UC and its employees had not contributed to the fund for nearly 20 years, mainly due to the fact that it had maintained a surplus. However, the board voted to reinstate the contributions in February 2009 as a way to combat its deficit.

According to a university statement, the board has taken a number of actions to address the shortfall in the past year, including the establishment of a new tier of benefits for employees hired beginning July 1, 2013, and the approval of internal borrowing options to better fund the pension plan.

“Until UC and its employees together begin contributing enough to cover the annual increase in cost for active members (in excess of 17% of pay), the pension program’s  current $14 billion unfunded liability will grow, adding to the pressures on UC’s operating budget,” the statement reads.

Corrections: A previous version of this article incorrectly stated that UC President Mark Yudof recommended a dissenting plan for retirement plan contributions. In fact, he recommended a second tier of contribution increases that was adopted by the UC Board of Regents.

Contact Allie Bidwell at 


JUNE 10, 2011