The Diminishment of Benefits Issue
It is the University's position that pension benefits would not be diminished as a result of the implementation of a Defined Contribution (DC) component to the existing Defined Benefit (DB) plan. The University's view is as follows:
1. No current academic or support staff member would be obliged to transfer to the DC option.
2. The benefits provided by the DB component of the plan would not be reduced.
3. Accepting the offer of a DC option would increase the amount of surplus/investment reserve available to plan members to be taken as cash and or improvement in benefits.
4. The University's guarantee under the DB benefit would continue.
5. The existing contribution rates of both the University and plan members would continue.
6. The DB component would become a Trusteed plan, and as a result:
a) there would no longer be an opportunity for a Board of Regents "alone" action to amend the plan; and
b) the incentives for any future ERO would rely upon the operating fund (excepting for, perhaps, the effect of increased early retirements on surplus - as in the past).
7. For those selecting the DC option, portability of pension benefits would be enhanced.
8. For new employees, obliged to join the DC component, the DC design provides immediate vesting of 100% of both employer and employee contributions, with investment income; currently, the termination of a "younger" employee would result in the a loss of value with respect to transfer of pension benefits.
9. For those in the DC component, there would be an opportunity for personal choice in the investment strategy.
10. There would be an enhanced opportunity for employees, through their unions, to bargain for increase contribution rates to the DC component.
11. A single plan would continue the tradition of comprehensive benefit plans for academic and support employees, together.