Gary Schlimgen

After a holiday of nearly 20 years, UC and employee members of the UC Retirement Plan (UCRP) will begin contributing to the plan in mid-April. Contributions are needed to support faculty and staff pension benefits. Gary Schlimgen, director of pension and retirement programs, answers questions about the restart of contributions.

When do our contributions start?
As planned, contributions begin in mid-April and apply to your May earnings. So, depending on how often you get paid, you’ll see the UCRP contribution on your pay stub beginning anywhere from May 12 to June 1.

Who will be contributing?
All UC employer funding sources will be contributing, and employees who are members of UCRP will contribute. Safe Harbor employees, who are not UCRP members, will continue to pay into the Defined Contribution Plan (DC Plan) in lieu of Social Security.

How much will I be contributing?
For now through June 2011, members of UCRP will contribute the same amount they currently contribute to the DC Plan. So contributions won’t affect employees’ take home pay. For most employees contributions are roughly 2 percent of their pay, on a pretax basis.. Those who earn more than the Social Security wage base ($106,800) will pay 4 percent on wages above $106,800.

Is the amount likely to go up?
Yes. As previously announced, both employer and employee contributions are expected to increase over time in order to sustain the pension fund. The annual cost for an additional year of service for active members is about 17% of pay – this is the combined total amount UC and employees eventually should be contributing each year to cover the annual increase in liability. Ultimately, UC’s long-term approach is intended to be similar to CalPERS’ approach to contributions for its members. Currently most CalPERS members contribute anywhere from 5 to 7 percent of pay and Governor Schwarzenegger wants to raise that even higher – to 10 percent. The Post-Employment Benefits Task Force is evaluating appropriate contribution levels and will be making recommendations to the President about the level of future employer and employee contributions.

How much is UC contributing and where will those contributions come from?

The employer contribution will be 4 percent. The money will come from all of the sources that fund employee salaries, including the medical centers, contracts and grants, the Department of Energy, the state and other payroll sources.

What happens if the state doesn’t provide funding?
Both UC and its employees will begin contributing, even if the state does not provide funding. Campuses will have to cover the state share from other sources. That’s why the University’s current advocacy efforts are so important. We want the state to contribute to UC employees’ pensions, just as they do for other state workers. I encourage faculty and staff to join the advocacy campaign at UCforCalifornia.org; our legislators need to hear from us about this issue.

At the same time, we can’t wait for the state funding. By restarting contributions, UC can capture employer contributions from the other payroll funding sources mentioned earlier. Approximately two-thirds of UC employee pay comes from contracts and grants, medical centers and other non-state sources. UC cannot ask those funding sources to contribute if UC and/or the state are not contributing.

My union hasn’t agreed to contributions yet. What happens to my pay?
You will continue to make mandatory contributions to the Defined Contribution Plan (DC Plan) until such time as your union agrees to participate. I want to stress that UC has been and will continue to meet all collective bargaining obligations for those employees who are exclusively represented.

How do I keep track of my contributions?
Your contributions are in an individual account for you; interest will be credited to your account at an annual rate of 6 percent. You’ll be able to see your contributions on your pay stub and by signing in to your personal account on At Your Service. The employer contributions are on behalf of all members and are placed in a general account, not individual member accounts.

If I leave UC employment, what happens to my contributions?
You can choose to leave your contributions on deposit with UCRP or take them as a rollover or distribution.. . If you are vested – that is, if you have five or more years of service credit – and take your contributions, you forfeit a lifetime pension.

What happens to my Defined Contribution Plan account?
If you’re a member of UCRP, you will no longer make mandatory contributions to the DC Plan. You keep your current balance and can continue to manage it through Fidelity Retirement Services. That means you can change the fund or funds you invest in at any time. It will be available to you as an additional source of retirement income when you retire.

If you are not a member of UCRP, but a Safe Harbor employee, you will continue to make mandatory contributions to the DC Plan.

For answers to more of your questions about the restart of contributions, see the Future of UCRP website.