University Prepares for Expected Increasein Employee Retirements

Link: http://www.uic.edu/htbin/cgiwrap/bin/uicnews/articledetail.cgi?id=16135

Author: Christy Levy

Title: University prepares for expected increase in employee retirements

Publication: UIC NEWS
Date: February 29, 2012

With upcoming changes to the way retirement benefits are calculated and uncertainty over pension legislation, more university employees are asking themselves: is this a good time to retire?

According to data from the State Universities Retirement System, more U of I employees are considering retirement this year compared to last, said Maureen Parks, executive director and associate vice president of human resources.

“We’re hearing from SURS that more people are setting up appointments than last year to explore whether retirement would be a good option for them,” Parks said. “Applications for retirement are also up.”

One factor prompting employees to consider retirement is a change to the Money Purchase Factor used to calculate benefits for retirees. For employees who retire after July 2, the new factor reduces monthly benefit payments by an average of 7 to 8 percent.

“I’m sure a lot of people are exploring whether or not it makes sense for them to retire as the formula stands today versus the new formula,” Parks said.

State legislators are considering pension changes that call for employees to pay significantly more to maintain the current level of benefits, pay less and receive reduced benefits, or set up a self-managed plan.

“People may be considering, ‘What will happen to my pension if there is pension reform that gets passed in the legislature?’” Parks said.

To help campus units prepare for a potential increase in retirees, the Academic Professional Advisory Committee will host a town hall for managers Friday from 9 to 11 a.m. in the Illinois Room, Student Center East.

“We hope to provide access to tools that can be implemented by departments now, to begin providing a basic framework to cope with future departures,” said APAC chair Michael Moss.

“We need to equip our managers with tools and techniques to cope with the transition,” Parks said.

“Are there critical roles that won’t be filled? How do you transfer institutional knowledge from one person who is leaving to people who are staying?”

Employees who are planning to retire must notify SURS 60 days before they leave. They should give their department manager as much notice as possible, Parks said.

“There needs to be an orderly transition,” she said. “Preplanning is really helpful. The more notice the better.”

Planning seminars are available for employees considering retirement.

SURS will hold a retirement preparation seminar Tuesday.

The university will hold a retirement planning seminar April 14 in Student Center East, Parks said.

“Even if someone has already made the decision to retire, I would still encourage them to attend because they will no doubt find helpful information,” she said.

christyb@uic.edu

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Jacqueline "Jacquie" BergerUIC Candidate for SURS Trustees

To: Members of UIC UNITED, the UIC Chapter of SUAA

SURS will hold an election this Spring to fill the expiring terms of trustee positions. A news announcement on the SURS website states that "Election ballots will be mailed to all contributing members by March 30, 2012. The voting period is April 2 - May 1, 2012. Election Day is May 1, 2012. SURS will announce the results in June 2012."

I am pleased to announce that UIC UNITED member Jacqueline "Jacquie" Berger, Director of Communications in the UIC Office of the Vice Chancellor for Research, will appear on the ballot as a Contributing Member Trustee candidate.

Merrill L. Gassman, Ph.D., President and Webmaster

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Reworking theState Universities Retirement System

Link: http://igpa.uillinois.edu/pensions/SURS-paper
Author: Jeffery R. Brown and Robert F. Rich
Title: Reworking the State Universities Retirement System
Publication: IGPA Website
Date: February 9, 2012

IGPA has proposed a new hybrid retirement system for employees of public colleges and universities that would be partially funded by additional contributions from workers and the universities that employ them. Click here to read the full paper.

The plan concentrates on the State Universities Retirement System (SURS) and is designed to reduce the state government’s payments into the system by billions of dollars over time.

“Pensions represent an important component of the overall compensation package for university employees and is key for us recruiting top-notch individuals,” said Robert F. Rich, director of the Institute of Government and Public Affairs, who developed the proposal with Jeffrey R. Brown, an IGPA professor and the William G. Karnes Professor of Finance at the U of I’s Urbana-Champaign campus.

The plan is intended to stimulate discussion among policymakers and legislators and is not intended to reflect the position of the University of Illinois, the authors said. Although the authors consulted with a large number of experts, they stress that the opinions expressed in the plan are their own. The full proposal can be found here. It contains several components that reflect some of the ideas that have been publicly discussed by state leaders in recent weeks.

The proposal has four basic components: 1) Create a new hybrid retirement system for new employees that would combine a scaled-down version of the existing SURS defined benefit plan with a new defined contribution plan that would include contributions from both employee and employer; 2) Peg the SURS “Effective Rate of Interest” to market rates; 3) Redistribute the SURS funding burden to include a modest increase in employee contributions and new direct contributions from universities, thereby reducing state government’s burden on state government; and 4) Align pension vesting rules with the private sector, which would decrease the years new employees hired after January 1, 2011 would need to work for their pension benefit to be vested.

The proposed reforms assume that all accrued benefits of current employees would remain unchanged up to the point reforms are implemented and that changing from an existing plan to the new hybrid plan would be voluntary for current employees.

“This proposal is designed to reduce costs by approximately as much as Senate Bill 512 (currently before the legislature), but in a manner that does a much better job of providing secure retirement benefits to employees,” Brown said. The proposed reforms to SURS reduce costs to state government, provide a better approach to sharing the funding burden, and provide a balanced and attractive approach to retirement security for employees, Brown and Rich said.

Find all of IGPA's research on pensions here.

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Governor’s Fiscal Year 2013 Budget Address Rendezvous with Reality

SUAA email update.

Governor Pat Quinn delivered his Fiscal Year 2013 Budget Address with a call for fundamental and lasting budget reform coupled with plans to grow and build the Illinois economy.

First on his agenda are the public pension systems. The Governor called for a “collaborative approach to strengthening and stabilizing our pension systems.” What does this mean? If we follow the Governor’s train of thought, the first step was taken in 2010 when Public Act #96 created the two-tier system with significant reductions in benefits for state employees first employed on or after January 1, 2011.

A pension working group made up of Senators Mike Noland (D-22); Bill Brady (R- 44); and Representatives Elaine Nekritz (D-57); Darlene Senger (R-96) is charged with soliciting input from all interested stakeholders and recommending a framework for “solving our pension challenges.” Their deadline is Tuesday, April 17. Yes, of this year.

“Everything is on the table for our pension working group.” Governor Quinn did not champion any specific measures at this time.

Next up was the restructuring of Illinois’ Medicaid system which the Governor characterized as “collapsing.” Falling $1.9 billion short in Medicaid payments during the last fiscal year; Governor Quinn cites a Civic Federation report that predicts $21 billion in unpaid Medicaid bills by 2017 “if fundamental restructuring is not implemented immediately.”

Quinn proposes a Medicaid restructure that includes trimming the Medicaid eligibility pool, limiting the services provided, and addressing the utilization of those services and payment amounts. He also called for further protections against fraud and abuse in the Medicaid system.

The Medicaid working group consists of Senators Heather Steans (D-7), Dale Righter (R-55) and Representatives Sara Fiegenholtz (D-12), Patti Bellock (R-47) and Healthcare and Family Services Director Julie Hamos.

Governor Quinn formally announced the closing of the following institutions: Jacksonville Developmental Center, Jacksonville; the Murray Developmental Center in Centralia; and mental health hospitals in Tinley Park and Rockford. 59 other State facilities will be closed or consolidated across the state, including prisons in Tamms and Dwight.

$43 million will be saved by consolidating and reducing lease space for State offices. The Governor’s own office budget will be cut by 9 percent.

Among proposed budget expansion, the Governor will increase direct care staff at the four Illinois’ veterans’ homes. In addition, he urged passage of the Hiring Veterans Tax Credit.

On the education front, this year’s budget calls for close to $9 billion in spending with priorities in early childhood education and Monetary Assistance Program scholarships for qualified students attending college. Quinn launched a school construction and repair initiative as part of the Illinois Jobs Now! program to create 4,000 construction jobs.

Finally, Governor Quinn targeted loopholes in the Illinois Revenue Code which allow oil companies to avoid Illinois corporate income tax. The savings generated by closing corporate tax loopholes and eliminating the natural gas utility tax will reportedly be used to provide tax relief in the form of a proposed Child Tax Credit.

Governor Quinn began his address by promising to tell us the truth, trusting that we “can handle the truth.” He closed by declaring it time to put progress ahead of politics in Illinois.

Time will tell.

As a footnote: District numbers used for legislators are the current districts.

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Illinois Governor PledgesPublic Pension Reform in 2012

Link: http://www.pionline.com/article/20120201/DAILYREG/120209985

Author: Barry B. Burr

Title: Illinois governor pledges public pension reform in 2012

Publication: Pensions & Investments Online

Date: February 1, 2012

Illinois Gov. Pat Quinn on Wednesday said the state “must have … public pension reform in the coming year.”

“We took the first step on pension reform in 2010 when we enacted landmark changes that will save taxpayers billions of dollars. But there's much more to do,” Mr. Quinn said in his State of the State address in Springfield, according to prepared remarks.

“Fixing the pension problem will not be easy, but we have no choice. We must do it together in a way that is meaningful, constitutional and fair to the employees who have faithfully contributed to the system. That's why I've assembled a pension working group to propose a solution that can be enacted this year. I will have more to say about these serious matters during my budget address three weeks from today.”

Mr. Quinn provided no specifics.

The pension working group “is exploring meaningful and constitutional reforms to the state pension system,” Kelly Kraft, spokeswoman for Mr. Quinn, said in an e-mail. The 2010 reforms enacted will save taxpayers “over $200 billion over the next 35 years; however, more reforms are needed to ensure the long-term stability of the system for employers who have faithfully contributed to the system,” Ms. Kraft wrote.

The five state retirement systems affected are the $33.5 billion Illinois Teachers' Retirement System, Springfield; $13 billion Illinois State Universities Retirement System, Champaign; and the three systems whose $10.3 billion in combined assets are overseen by the Chicago-based Illinois State Board of Investment — Illinois State Employees' Retirement System, Illinois Judges' Retirement System, and Illinois General Assembly Retirement System, all based in Springfield.

Reforms would also affect the $8.9 billion Chicago Public School Teachers' Pension & Retirement Fund.

A pension reform bill that passed the state Senate last March but didn't come to a vote in the Illinois House was resent to the House Rules Committee on Dec. 31, according to a General Assembly statement. The bill offered public plan participants a choice to either keep their current defined benefit plan and pay more, accept reduced benefits or move to a defined contribution plan.

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