The task force President Napolitano appointed in August to develop retirement benefits options for future UC employees met on September 15 to continue its work. Meeting highlights are summarized below.

  • Pension investment options: An off-cycle teleconference was held so a representative from the Office of the Chief Investment Officer could brief task force members on the role investment tools can play in different retirement options. Specifically, the task force was provided information about:
    • Target Date Funds: a retirement fund that identifies a specific date and defines asset allocation and risk considerations to that date of potential retirement
    • CoRI™ Retirement Indexes: age-based bond indexes designed to help investors ages 55 to 74
    • Annuities: ways in which annuity programs paired to defined contribution programs can mirror a defined benefit
  • Guiding principles: Task force members continued refining a set of guiding principles they will use to inform their recommendations. It was agreed there will be recommendations where some principles are met and others are not, but that recommendations put forward to the president should highlight that all principles were considered.
  • Supplemental benefit approach and design options: As a follow up to their last meeting, task force members continued their exploration of the supplemental benefit approach, with particular emphasis on design options that included consideration of:
    • A range of representative faculty and staff “personas”
    • The long-term financial implications of varying levels of the supplemental benefit amount
    • The possibility of contributions beginning below the cap amount
  • New task force member: The task force welcomed new member, Michael Fehr. Mr. Fehr is serving as a UC Labor Coalition representative (University Professional and Technical Employees) and is UCLA computer resource specialist.
  • Benefits for incoming faculty: Vice provost for academic personnel Carlson provided an update regarding benefits for faculty hired prior to implementation of the new retirement benefits. She informed the group that incoming faculty hired by June 30, 2016 will participate in the 2013 UCRP Tier.
  • Discussion of financial parameters: Executive vice president Nathan Brostrom discussed with task force members various cost considerations, including:
    • Importance for Governor Brown to have pension consistency between UC and state employees, reduce unfunded liabilities, and control long-term pension costs.
    • Supplemental state contributions will lessen the need for borrowing but cannot supplant the regular employer contribution. UC will evaluate supplementing the State contributions with borrowing to full Annual Required Contribution (ARC), with the goal of attaining a long-term funding status target of 95% or greater.
    • The UCRP employer contribution of 14% is expected to continue for many years due to the recent investment return and the experience study impact.
    • Consistent with UC currently providing different benefits for various workforce segments (e.g. safety and represented employees), the task force should consider scenarios where different employee groups do not necessarily have identical retirement benefits.
    • The task force process should result in set of retirement options that will allow UC to pay down its unfunded liability over time, and those resulting options should demonstrate to state leaders that UC takes its commitment to paying down that liability seriously.
    • As a guideline, EVP Brostrom recommended that 2/3 to 3/4 of the resulting funds should be directed to pay down the unfunded liability with 1/4 to 1/3 of those resulting funds used to fund a supplemental DC plan.
  • Upcoming meetings: The task force will convene for their next meeting/ teleconference at the end of September. The group’s next full-day, in-person meeting is scheduled for mid- October.
  • TIAA / CREF & Fidelity: As a follow-on to the presentation by the Office of the Chief Investment Officer, the task force will provide TIAA-CREF and Fidelity an opportunity to submit proposals to provide similar presentations.
  • Continued consultation: Task force members discussed the importance of broad consultation with constituent groups. In addition to these meeting summaries, staff to the task force will provide members with materials that can be used in consultation efforts.