The University of California Board of Regents approved President Janet Napolitano’s recommended retirement program for new employees Thursday.
Regents Rodney Davis and John Perez and Student Regent Avid Oved voted against the program.
The pension plan gives UC employees two options for retirement benefits. The first option allows employees a pension capped at the California Public Employees’ Pension Reform Act limit of $117,020 a year, plus a supplemental defined contribution plan up to the Internal Revenue Service limit of $265,000.
Faculty will receive a 5 percent contribution on all pay from the UC up to the IRS limit, while staff will receive a 3 percent contribution on pay above the PEPRA cap and up to the IRS limit.
The second option is a stand-alone defined contribution plan that allows both faculty and staff to receive an 8 percent UC contribution on all pay up to the IRS limit of $265,000.
Under the current plan, the UC capped pensionable income at the IRS limit of $265,000.
Napolitano convened a task force to propose a lower pension tier as part of the terms of the May budget agreement between Gov. Jerry Brown and Napolitano. In exchange, the state agreed to give the UC $436 million over three years to help reduce the UC’s long-term pension debt of $7.8 billion.
Multiple UC staff members asked the regents to vote against the plan during the public comment session. Some said they thought the plan would lead to a decline in the quality of staff, who would opt for other job offers with better benefits. Some also said they thought the plan would disproportionately affect women working in the UC system because there are more female staff than female faculty.
Some staff members left the meeting chanting “shame on you” following the approval of the new plan.
Perez said he was concerned the plan would disproportionately harm women with lower retirement benefits, and asked for more data about how this proposal would affect them. The data was not immediately available.
Some staff members said they think the second option, which allows employees to opt out of having a pension and instead choose a defined contribution plan with a greater contribution from the UC, will encourage people who do not intend to have a long career in the UC system to take jobs there.
Perez said he approved of many of the elements of Napolitano’s plan, but could not support a proposal that included the second option.
Oved said Wednesday he was concerned about the difference in benefits between faculty and staff under the first option.
The new pension plan will go into effect July 1 and will be in place for all employees hired on or after that day.