Statement on executive pension benefits
In light of recent media reports about a letter by 36 University of California executives regarding pension benefits, Board of Regents Chairman Russell Gould and University President Mark Yudof today (Jan. 4, 2011) issued the following statement:
Ten years ago the University of California sought a determination from the IRS that a proposed new method for calculating pension benefits complied with federal tax rules. The new method would have resulted in higher pension payments to certain highly paid University employees. While that determination ultimately was granted, it did not obligate the University in any way to proceed with its proposal. In fact, the initial Regental action required that an implementation plan be developed and submitted by the President of the University and approved by the Chair of the Board and the Chair of the Finance Committee. For reasons of fiscal prudence in a changing economy, this step — necessary for the proposal to become effective — was never taken.
For this reason, and contrary to the arguments presented in the letter, it is our belief that the action taken by the Board 10 years ago was not self-executing and that the pension proposal was never implemented. Months ago, the Board retained counsel to assist the University in the event this position should need to be defended in the courts. While those who signed the letter are without question highly valued employees, we must disagree with them on this particular issue.