University’s Board of Curators approves retirement plan design for new employees
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Current plan will remain for existing employees
The University of Missouri Board of Curators today approved a new retirement plan for employees hired after Sept. 30, 2012. The current university defined benefit plan for existing employees and retirees remains in effect.
“After more than two years of study, we are changing the retirement plan for new employees,” said University of Missouri System Interim President Steve Owens. “The new plan will allow us to better moderate risk and volatility for the university, ensure the current plan’s long-term viability for existing 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 with the same methodology for calculating benefits but uses a 1 percent of pay multiplier. 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 are also identical to the university’s current 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. Investment providers, funds and policies available to new employees and retirees under the defined contribution portion of the new retirement plan will be selected and monitored by a university investment committee.
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.
The current UM retirement plan for existing employees and retirees will continue, with no change in benefits paid at retirement. The university is committed to honoring the obligations of the current plan, including funding the annual required contribution and continuing the annual mandatory contribution from employees with an amount as low as reasonably possible. Detailed reports and independent actuarial analysis have confirmed that the current plan will not be harmed by closing the current plan to new employees.
The retirement plan, slated to begin for new employees Oct. 1, 2012, is the result of more than two years of analysis and input from numerous constituencies across the university’s four campuses, including the ad hoc Retirement Plan Advisory Committee and the Retirement and Staff Benefits Committee.
The University of Missouri Board of Curators first voted in June to close the current retirement program to new employees beginning late next year. Since then, the board has received regular updates on new retirement plan draft designs before approving the final plan design today at their regularly scheduled October board of curators meeting in Kansas City.
To view the final recommended plan design, click here (PDF).