In order to remain competitive in the marketplace; keep our retirement plans sustainable in the long-term; and sustain the overall health of our retirement program, the University will adjust retirement packages for employees hired on or after October 1, 2019, or returning employees rehired on or after October 1, 2019.
The details of the new plan were approved by the Board of Curators in April 2019. The new plan does not affect retirement packages for current, active employees.
To read more about the new plan, called the Defined Contribution Plan, visit the Core and Voluntary Retirement Plans webpage.
Collaboration and review
The UM System collaborated with faculty and staff representatives and advisory groups to ensure constituent groups reviewed the Defined Contribution Plan prior to approval by the Board of Curators in April 2019. Groups included:
- September 27, 2018 – 4-Campus Retiree Association
- October 1, 2018 – HR Council
- October 4 and November 1, 2018 – General Officers
- October 9 and November 2, 2018 – Intercampus Faculty Council
- October 11, 2018 – University of Missouri Academic Officers
- October 17, 2018 – Administrative Management Council
- October 19, 2018 – Intercampus Staff Advisory Council
The Total Rewards Advisory Committee developed guiding principles to ensure the Defined Contribution Plan matched the University's organizational philosophy. These principles include:
- Make decisions that allow retirement plans to remain financially sustainable while reducing risk and volatility
- Reduce defined benefit pension liability
- When defined benefit funding exceeds 100%, excess should be used to reduce liability
- Build more efficiency into retirement plan management
Strive for Equity
- Strive to maintain equity of benefit cost among employees
- Strive to maintain equity of costs and benefits among all groups of employees (e.g., staff, faculty, administrators)
Continue to offer a retirement benefit that will attract and retain employees
- Adopt retirement plans that provide employees flexibility to address their diverse needs and expectations
- Offer a benefit that is market competitive
- Develop a communication strategy that provides employees the information they need to make informed decisions
- Provide information/education to employees to promote their understanding of their retirement benefit
- Monitor the benefit plans’ value in reference to those of primary competitors
- Fall 2017 –2018 – Working with outside vendors and leaders in HR and Finance, TRAC reviewed the financial and operational impact of current plan offerings and benchmarking data. Organizational philosophy, peer competitiveness and plan design were all considered when assessing plan design options and feasibility.
- September – December 2018 – University leadership collected feedback from faculty, staff and retiree representative groups as outlined in collaboration and review section.
- November 2018 – Information item provided to the Board of Curators.
- April 2019 – Board of Curators voted to approve proposed plan.
- October 1, 2019 and onward – Plan implemented and made available to employees hired or rehired on or after October 1, 2019.
Frequently Asked Questions
Why is the University implementing a new retirement plan?
Defined benefit plans are becoming less common in public higher education and come with a long-term financial obligation that continues to grow as new employees enroll into the plan. As such, it is important that the University periodically review and consider plan offerings in order to maintain the financial stability of the institution while also remaining competitive with offerings typical of higher education organizations.
How did the University reach the decision to recommend a new plan for future and returning employees?
The Total Rewards Advisory Committee (TRAC) serves in an advisory capacity in matters related to benefits programs. TRAC developed guiding principles to inform the review and plan design recommendations and ensure sustainability, equity and a retirement benefit that will attract and retain employees. TRAC also worked with outside vendors and leadership in HR and Finance and reviewed current plan offerings and benchmarking data and analysis.
What type of retirement plan is the University implementing for future and returning employees?
The plan is a defined contribution plan which matches up to 8% of employee contributions. The Defined Contribution Plan was approved by the Board of Curators during their April 2019 meeting.
Who will receive the Defined Contribution Plan?
The Defined Contribution Plan will be the core retirement plan for future and returning employees hired or rehired in a benefit-eligible position on or after October 1, 2019.
When will the plan change go in to effect?
The effective date for the Defined Contribution Plan is October 1, 2019.
How will the Defined Contribution Plan impact current benefit-eligible employees?
The Defined Contribution Plan is only available to new and returning benefit-eligible employees who are hired on or after October 1, 2019.
Current, active benefit-eligible employees will continue enrollment in their current retirement plan, either the Defined Benefit Plan (previously called the RDD Plan) or the Hybrid Plan (previously called the ERIP Plan). If a current, active benefit-eligible employee terminates and subsequently is rehired in a benefit-eligible position on or after October 1, 2019, they will be enrolled in the Defined Contribution Plan.
Will required contributions to the Defined Benefit and Defined Benefit portion fo the Hybrid retirement plans change?
The implementation of the Defined Contribution Plan will not directly affect required contributions for current employees’ retirement plans. The University fully funds contributions for the Defined Benefit Plan as determined by the annual actuarial study.
Separate from the new plan implementation, the University is currently performing a financial impact analysis of the Defined Benefit Plan as part of a regular review of retirement offerings. Conducting this analysis will allow leadership to ensure the sustainably of the Defined Benefit Plan and Defined Benefit portion of the Hybrid Plan into the future. Contributions to the plan are likely to increase and the University will work to identify sources of those contributions. Any recommendation to change contributions will seek input from TRAC before proceeding to the Board of Curators.
Will current employees be given the option to enroll in the Defined Contribution Plan?
No. Current, active benefit-eligible employees will continue enrollment in their current retirement plan, either the Defined Benefit Plan (previously called the RDD Plan) or the Hybrid Plan (previously called the ERIP Plan). If a current, active benefit-eligible employee terminates and subsequently is rehired in a benefit-eligible position on or after October 1, 2019, that individual would then be enrolled in the Defined Contribution Plan.
How will the Defined Contribution Plan affect non-benefit eligible employees looking to become benefit eligible in the future?
As with all University benefits available to benefit-eligible employees, eligibility for retirement plans depends on the date on which an employee enters into benefit-eligible status and the retirement plan offered as of that date.