At its March 2016 meeting, the UC Board of Regents approved a new retirement program for future UC employees proposed by President Napolitano, as part of a broader effort to maintain the university’s excellence and sustain its long-term financial health. The new program, which is consistent with UC’s 2015 budget agreement with the state, will bolster the long-term financial stability of UC and its retirement program, while providing critical funding for many university priorities through savings generated by the plan and through additional funds UC will receive from the state.
Under the 2015 budget agreement, UC is receiving nearly $1 billion in new annual revenue and one-time funding over several years. To sustain the financial stability of the university and its retirement system, and consistent with the 2015 budget agreement with the state that was approved by the regents, the new retirement program includes a cap on pensionable earnings for UC employees hired on or after July 1, 2016 that mirrors the limit on pensionable pay for state employees under the 2013 California Public Employees’ Pension Reform Act (PEPRA).
Priorities supported by the president’s plan include:
- Reducing the cost of UC’s retirement program while maintaining the caliber of personnel and UC’s excellence; the new program will generate average savings of $99 million a year over the next 15 years.
- Ensuring UC’s long-term financial stability, including that of the UC pension plan by, among other things, channeling more than half the savings from the president’s proposal toward UC’s unfunded pension liability.
- Focusing on overall employee compensation by (1) allowing UC to budget for regular pay increases for faculty and staff, and (2) making merit-based pay a regular component of systemwide salary programs to reward employees based on performance.
- Helping to preserve UC’s quality by devoting resources to assist campuses in attracting and retaining faculty and key staff, and improve the student experience.
- Offering enhanced retirement counseling and education for all employees, including new hires, as part of UC’s commitment to helping employees successfully plan for retirement.