Approved by the:
Faculty Senate - October 3, 2002
Administration - PENDING
Board of Regents - PENDING
New tenure track assistant professors must be employed for two years
before they can join the Faculty Retirement Plan. The funds that would be
contributed to the retirement plan have been given to their colleges by Central
Administration. Currently, however, the funds in the colleges are used for
"other" purposes. In contrast, P&A staff whose salary exceeds $55,000
join the Faculty Retirement Plan at time of hire. It also should be noted that
no other Big Ten University has a waiting period for new faculty.
If new
tenure track faculty received their retirement benefits for the first two years
of their employment at the University, an analysis indicates their retirement
income could be as much as 17% higher than under the present
plan.
Because of compounding, the first two years of retirement
contributions play a very significant role in the retirement benefits of a
faculty member. A simple analysis, using reasonably conservative and
historical values for salary increases and growth of retirement funds from
investment gains, shows the importance of these contributions. Thus, providing
the first two years retirement benefits would result in an increase of 13-17% in
a faculty member’s retirement plan after a thirty-year career. Our
retirement program, which many of us boast about as being among the very best in
the nation, is drastically reduced by this loss.
If there is a
need for taking money from individuals’ retirement accounts, then the
colleges would be better served taking money from the last years of a faculty
member's service, rather than the first two years. Thus, because of "the
power of compounding," the first two years of retirement investment provides
more in the final retirement balance to an individual than the last eight to ten
years of retirement contributions in a thirty-year career and the last twelve to
thirteen years over a 40-year career.
Not being able to provide
retirement benefits for starting tenure track faculty has resulted in some
programs placing new hires in P&A status, where they can start their
retirement program immediately, and then moving them over to faculty status
after a few years. This procedure, in our view, is not the way to handle
the issue. Rather, since the retirement funds are already available in the
colleges and in many cases in departments, we believe the University should
immediately grant retirement benefits to all starting tenure-track
faculty.
The Senate Committee on Faculty Affairs had asked the
administration to drop this two-year waiting period for new faculty.
Unfortunately this has not, as yet, been approved. SCFA believes the
waiting period puts the University at a disadvantage in recruiting. It
also believes the difference between faculty and P&A appointments in terms
of initiation of retirement plans is unfair and ill-advised.
SCFA
recommends to the Faculty Senate that it ask the administration and the deans to
reconsider their position on this issue. In view of the importance of the first
two years of contributions to the retirement plan, the Committee once again
urges that the waiting period for Faculty Retirement Plan be eliminated for new
tenure-track faculty.
Adopted unanimously May 14,
2002.