Improvement in employee retirement plan announced
In an improvement to the Retirement Income Plan for Employees (ERIP), the University has announced the elimination of the 1 percent employee contribution to the Defined Benefit portion of the plan, effective Jan. 1. The amount of retirement benefits for employees enrolled in ERIP will not be reduced at all.
This change will have the effect of increasing the net take-home pay of each employee who participates in ERIP by 1 percent, less applicable taxes. If an employee's annual salary is $25,000, for example, his or her annual net take-home pay will increase by about $175.
There are two portions of ERIP, the Defined Benefit portion and the Defined Contribution portion. Under the Defined Benefit portion, the amount of an employee's retirement benefit is determined by a formula that takes into consideration the employee's years of service in the plan and the employee's final average pay. Employees had been required to contribute 1 percent of their earnings to this portion of the plan. Effective Jan. 1, benefits earned under the Defined Benefit portion of the plan will be entirely funded by the University.
Under the Defined Contribution portion, each employee invests 3 percent of his or her salary in one of six funds offered by TIAA-CREF, while the University contributes 1 percent. The retirement benefit from this portion is determined both by the amount of contributions by the employee and the University and by the performance of the employee's investment selections. No changes have been made to this portion of the plan.
Retirement benefits for ERIP participants compare favorably with benefits offered by other colleges and universities, as well as with those offered by other major employers, said Henry Webber, Associate Vice President for Human Resources Management and Administrative Planning.
"This change is the latest in a series of plan improvements that have been made since 1985," Webber said. "Each of these changes has either increased the benefits to ERIP participants or reduced the amount that participants must contribute toward their benefits."
The series of changes began in 1985 with a "past service update," implemented for all plan participants and retirees, that counteracted the effects of inflation on retirement benefits. In 1989, the Defined Contribution portion of the plan was added; the final-average-pay formula was introduced for service after Jan. 1, 1989; and the employee contribution to the Defined Benefit portion was reduced. In 1990, benefits for retirees were increased by up to 24 percent to adjust for the impact of inflation since 1985, and in 1992, the final-average-pay formula was extended to service prior to Jan. 1, 1989, which improved plan benefits by up to 30 percent for most participants.
For more information about ERIP, call a benefits counselor at 702-9634 or Robert Riesman, Director of Staff Benefits, at 702-9822.