At the September 2019 meeting of the University of California Board of Regents, the Regents voted to approve changes to actuarial assumptions that may impact the future UC Retirement Plan (UCRP) benefits of some UC employees, depending on when they retire and the options they choose. These changes will not impact the retirement benefits of current retirees.
Specifically, the Regents approved a decrease in the investment return assumption (e.g, discount rate) from 7.25% to 6.75% and a modification to the mortality assumption, reflecting findings that UCRP members and beneficiaries are continuing to live longer than they did in the past. The changes, guided by an experience study conducted by the actuary for UCRP, will go into effect July 1, 2020.
These changes will not affect how Basic Retirement Income is calculated. For retirement dates of July 1, 2020, or later, however, the calculations of the UCRP lump sum cashout and UCRP monthly retirement income for members and contingent annuitants under Payment Options A-D will change. A contingent annuitant is someone a retiree chooses to receive monthly survivor benefits. For more information about UCRP retirement benefit options, see the Retirement Handbook for UCRP Members.
What these changes mean to you
Because of the changes in the investment return and mortality assumptions, the factors used to calculate the lump sum cashout will increase significantly (around 8% to 9% at retirement ages from 50 to 65), resulting in higher lump sum cashout benefit amounts for retirement dates of July 1, 2020 or later.
For the factors used to calculate benefits under Payment Options A-D, the change is not as significant and depends on the member and contingent annuitant ages. However, there will generally be increases at many of the more common member and contingent annuitant ages.
Decisions about retirement are personal, and depend on many factors and circumstances. Please discuss your options with your financial adviser before making final decisions about when to retire and what retirement benefits are best for you.