Prompted by the need to address budget shortfalls at The University of Iowa, the Board of Regents, State of Iowa, recently approved two new retirement programs to complement two existing plans. Eligible UI employees can apply for consideration until Sept. 30, 2009.
The new plans—Early Retirement and Alternative-Phased—will be implemented in a different manner from the Regular and Phased Retirement programs. fyi spoke with Richard Saunders, senior associate director of UI Human Resources, about the new plans, who is eligible, and how the plans differ from existing programs.
fyi: Benefits Office materials say that the new retirement programs approved by the Board of Regents are different than past programs because “an employee will only be approved for participation when: 1) the department will be able to achieve significant cost savings, and 2) the employee’s participation in one of these programs is in the University’s best interests.” Can you explain that a little more?
Saunders: There are two retirement programs recently approved by the Board of Regents: Early Retirement and Alternative-Phased. These plans were approved specifically as a targeted effort to rapidly produce cost-savings.
Because of this, if an employee’s participation will not help the University meet those goals, they will not be approved. Additionally, there are situations where losing a staff or faculty member would not be in the University’s best interests, so those applications also will be declined.
Give us a brief overview of the programs—what are the main differences between the new plans and the existing plans?
First, the new plans. The Early Retirement program requires the employee be fully retired from the University by June 30, 2010. The Alternative Phased plan requires a reduction to 50 percent time by June 30, 2010, and the employee must leave no later than after two years of 50 percent time.
The regular Phased Retirement plan allows employees to reduce their time more gradually and phase out over five years.
The main differences between the new plans and our current plans are:
Why offer an incentive with the new plans?
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 programs attractive for those who are eligible and whose participation is in the University’s best interest.
So if you offer an incentive, how does this save the University money?
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.
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?
No. There will need to be meaningful savings for participation to be approved. The University is facing unprecedented budgetary challenges and these plans are a 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.
How many UI employees are eligible for retirement programs, and are they all eligible for the new programs?
We have approximately 3,000 faculty and staff who are 57 or older and therefore eligible. About 2,600 people are eligible for both the Early and Alternative-Phased programs, while only about 400 are eligible for only the Early program.
In order to be eligible for the Alternative-Phased program, you must be a regular full time employee, while to be eligible for the Early program you only need to have at least a regular half-time appointment.
How and when can people apply for consideration for these programs?
The application can be filled out online through the employee self-service site (http://hris.uiowa.edu). Applications must be submitted no later than Sept. 30, 2009.
When will they find out if their participation has been approved?
Employees will find out no later than December 2009 if their participation has been approved. Depending on when the application is reviewed, they may find out much earlier.
Are there changes to the current retirement plans?
There are no changes to the current retirement plans.