The University of California has launched a new program that allows employees near the end of their careers to gradually transition into retirement and receive a cash incentive.
Under the Phased Retirement Program, staff members who are 55 or older can reduce their work hours by at least 10 percent a year for up to three years before retiring. Employees will receive a lump sum payment upon retirement equal to half the amount they would have otherwise earned.
Campuses and departments will have the option of whether to offer this program, after reviewing their business needs.
Phased Retirement is a voluntary program that began Jan. 1, 2012. Employees who want to enroll can check with their local Human Resources office or their department manager to see if their location offers the program.
UC developed this program to give employees an alternative to retiring immediately, and to provide the university with another tool to manage costs. It also helps departments plan for transferring an employee's knowledge and expertise before retirement, as well as assess personnel and recruitment needs.
"This is a great tool for employees who want to start taking steps toward retirement," said Dwaine B. Duckett, vice president of UC Human Resources. "They will still be able to actively contribute to the university as they gradually transition. And it will allow the university time to plan, evaluate its needs and keep operations running smoothly."
Staff members with at least five years of service credit and who work at least 60 percent time are eligible. They can enroll for as little as 120 days to a maximum of three years. If they enroll multiple years, the reduction in time must be at least 10 percent of their appointment in the first year, with additional 10 percent increases in subsequent years. Employees retire when they finish the program and collect the incentive payment.
For example, if a full-time employee earning $50,000 a year reduces work hours by 10 percent the first year, the annual salary becomes $45,000 and the appointment rate would be 90 percent. The employee receives a one-time incentive payment of $2,500 upon retirement, or half the amount they would have otherwise earned.
If the employee stays in the program instead of retiring immediately, that person would reduce his or her appointment the next year by at least an additional 10 percent. If the person reduces his or her appointment by an additional 20 percent that second year, the annual salary would be $35,000, the appointment rate would be 70 percent and the incentive payment would be $7,500.
Employees who enroll and decide later not to retire will forfeit the cash incentive.
Members of the senior management group and faculty are not eligible. The program is subject to collective bargaining for represented staff.
Some employee benefits, such as vacation accrual, will not be affected by signing up for Phased Retirement. Eligibility of medical benefits stays the same as long as employees work 17.5 hours a week or more.
However, other benefits will be affected by having a reduced salary or lower appointment rate. Employees will earn less service credit toward the UC Retirement Plan, meaning their retirement income may be reduced.
The program details and a list of frequently asked questions is available on the At Your Service website at http://atyourservice.ucop.edu/employees/policies_employee_labor_relations/phased-retirement/. A 30-day employee comment period was held in September before the program was approved to launch this month.
Katherine Tam is a communications coordinator in Internal Communications at UC's Office of the President.