Systemwide Communications - October 20, 2011
Today during the University of Missouri Board of Curators meeting in Kansas City, curators approved a new retirement plan design for employees hired after Sept. 30, 2012. The current university defined benefit plan for existing employees and retirees remains in effect.
As you know, this change has long been in the making with more than two years of study. In short, the new plan design will allow the university to better moderate risk and volatility, help ensure the existing plan’s long-term viability for current employees and retirees and offer new employees a fair and equitable retirement plan that is growing in popularity among public higher education institutions.
The retirement plan for new employees is a combination of a defined benefit and defined contribution plan. The defined benefit portion of the plan is similar to the university’s existing retirement plan and uses the same benefit calculation method with a multiplier formula of 1 percent of base pay. The required employee contribution is identical to that of the current plan. The terms for employee vesting in the defined benefit portion of the plan also are identical to the university’s existing plan.
The defined contribution portion of the new retirement plan includes a university contribution of 2 percent of pay to an employee-directed investment account. Vesting for this portion of the plan design will be three nonconsecutive years of benefits-eligible employment. New employees may elect to make tax-deferred voluntary contributions to their defined contribution accounts, which will be matched 100 percent by university contributions up to 3 percent of pay.
As we have indicated throughout our analysis, the university intends to honor its obligations to retirees and current employees under the current retirement plan. Today's action does not adversely affect the current retirement plan and the board of curators is not considering making changes to it that would change the amount of retirement benefits payable or the amount of employee contributions required of current university employees. Detailed reports and independent actuarial analysis have confirmed that the current plan will not be harmed by closing it to new employees.
Finally, I would like to thank again the various constituencies across our four campuses who have contributed their thoughts and time to the new plan design, including the ad hoc Retirement Plan Advisory Committee and the Retirement and Staff Benefits Committee. As always, your input has been invaluable.
Stephen J. Owens
Interim President, University of Missouri System