UC’s new cost-shifting proposals
PAY MUCH MORE, GET MUCH LESS AT RETIREMENT?

Since April, most of us have been paying 2% extra into the UCRS pension plan. Now, UC is proposing that we pay another 1.5% next year and even more in subsequent years – up to 7% by 2013.

We all want a stable pension plan, but we do not want it eroded. The UCRS plan is currently 95% funded based on actuarial value (a very healthy number). Like other public pension plans, UCRS needs elected employee representatives to bring greater accountability and transparency to the planning process, and careful oversight to keep it healthy.

UC wants to massively shift costs to employees. Here are some of the key recommendations from UC’s latest report. UPTE-CWA strongly opposes these changes, and will be working with other UC unions to fight them at the upcoming regents' meeting and at the bargaining table. To get involved, contact your local.

• A “NEW TIER” WILL CUT MOST PENSIONS BY 40%
UC executives propose setting up two tiers for the pension plan. In the lower tier, you would have a lower monthly contribution, but the maximum age factor (the multiplier used to determine your pension) will go down from 2.5% to 1.5%. That means when you actually get your pension, you’d take a 40% cut! The higher tier would have a 20% increase in the age factor from 2.5% to 3.0%. Most low- to middle-income employees live month-to-month and would likely take the
lower tier because they need the cash for current expenses.

A two-tier plan is likely to cause division in the workplace because employees doing the same work will have different benefits. Short-term employees will seek to maximize pay increases while long term employees will want to protect their pensions. Building unity in union contract campaigns could be more difficult.

Having any portion the UC workforce make smaller pension contributions will hurt the funding level of UCRS, a particularly bad option when the fund has already taken a hit by the economic downturn.

• ELIMINATE THE PENSION PLAN FOR MEDICAL CENTER EMPLOYEES
Medical center CEOs say they won’t offer a pension plan for new employees and will allow current employees the opportunity to opt out. Instead, those not in the plan would have a 401k-style/defined contribution plan with some employer matching funds.

This is a cheaper plan for UC, and has many drawbacks for employees. Such 401k-style/ defined contribution plans almost always result in a smaller pension. All the risk of a market downturn is on the individual instead of the overall fund.

Also, as employees stop making contributions to the UCRS pension fund, the overall fund will suffer.

• REDUCE THE MAXIMUM PENSION BY 20%
For the proposed lower tier plan, the maximum pension payment would be 80% of salary instead of 100%. (The higher tier – if you pay more to be in it – could still go to 100% of salary.)

• REDUCE COST-LIVING INCREASE FOR PENSION PAYMENTS
Increases would be capped at 5% instead of 6%.

• RAISE RETIREMENT AGE FROM 50 TO 55
This is a large benefit cut with several very negative consequences. Those who would have retired at 55 will need to work longer to achieve the same age factor and the same pension payment. Those who leave or are let go from UC prior to age 55 will probably lose their retiree health benefits because you must retiree within 120 of separating from UC to receive
retiree health benefits.

• RAISE AGE OF ELIGIBILITY FOR RETIREE HEALTH BENEFITS
UC currently pays for a large portion of your health care premium after you retire, if there no break in service and you meet eligibility requirements. UC now proposes to change those requirements. Instead of the current 50% of the benefit after 10 years of service and 100% after 20 years, employees would start with 0% at 10 years and only achieve the full benefit after 30 years of service credit.

• COST INCREASES FOR RETIREE HEALTH BENEFIT PREMIUMS
This year, UC increased the monthly health care premiums for retirees by 50%. Additional
increases will occur especially for those under 65 and not yet eligible for Medicare

Stay tuned to www.upte.org for more information. You can find the recommendations of UC's Post Employment Benefits Task Force and the dissenting opinion by faculty/staff opposing it here.