Prompted by the continued need to address budget challenges at The University of Iowa, the Board of Regents, State of Iowa, recently approved a new retirement program to complement the existing regular retirement plan. Eligible UI employees can apply for consideration until May 15, 2010.
The new plan—the Early Retirement Program II—follows on the heels of two special programs run last year: the Early Retirement Program and the Alternative Phased Program.
fyi spoke with Richard Saunders, senior associate director and assistant vice president of UI Human Resources, about the success of last year’s plans, what’s included in the new plan, who is eligible, and how the plan differs from the regular programs.
fyi: Before we address the new early retirement plan, let’s take a moment to discuss last year’s pair of plans. How many people participated, and how great were the long-term savings associated with the plan?
Richard Saunders: Under the last early retirement program, the University has 625 applicants and 348 were approved. The alternative phased retirement program had 117 applicants and 106 were approved. Over the next five years of the two programs, the University will save approximately $67 million.
fyi: Those plans have come and gone, so let’s talk about this year’s plan, the Early Retirement Program II. What are the main differences between the new plan and the standard plan?
RS: The Early Retirement Program II requires the employee be fully retired from the University by July 31, 2010. Participants must be 55 years old with 10 years’ continuous regular service by their termination date.
The main differences between the new plan and our regular retirement plan are:
fyi: Why offer an incentive with the new plan?
RS: Retiring early gives people less time to prepare and save than they may have planned for—the incentive helps make it possible for some people to participate. We want to make the program attractive for those who are eligible and whose participation is in the University’s best interest.
fyi: So if you offer an incentive, how does this save the University money?
RS: It sounds counterintuitive, but there are situations where it will work. Through the use of work redesign, delayed replacement, and other strategies, there will be situations where departments will be able to save money even when paying an eligible employee an incentive to retire early.
fyi: It sounds like there is a fairly high bar to clear in order to participate. If someone retiring will not save the University money—let’s say it is a break-even situation—will that be approved?
RS: No. There will need to be meaningful savings for participation to be approved. The University continues to face unprecedented budgetary challenges and this plan is another tool to deal with those challenges. If it won’t save the University money, paying an incentive while losing the institutional knowledge and skills of our valuable employees is not in the University’s best interests.
fyi: How many UI employees are eligible for the new early retirement program?
RS: We have approximately 3,200 faculty and staff who are 55 or older with at least 10 years of regular continuous service and therefore eligible.
fyi: How and when can people apply for consideration for these programs?
RS: The application can be filled out online through the employee self-service site (https://hris.uiowa.edu). Applications must be submitted no later than May 15, 2010.
fyi: When will they find out if their participation has been approved?
RS: Employees will find out no later than June 30 if their participation has been approved. Depending on when the application is reviewed, they may find out much earlier.
fyi: Are there changes to the regular retirement plans?
There are no changes to the current retirement plans.