UC Regents Approve Contentious Pension Plan
Friday, September 17, 2010
Category: News > University > Higher Education
The UC Board of Regents voted to increase employer and employee contributions to the university's massively underfunded pension system Thursday despite UC employee protests, which forced a brief suspension of the meeting.
In an effort to reduce the program's $14 billion funding deficit, the board approved a plan to increase the total level of contributions into the pension program by more than 250 percent, a move that employee advocates say could leave the lowest-income UC employees teetering on the brink of poverty.
"If you work for such a great institution, you should be able to retire with dignity," said Arnold Meza, an organizer for the American Federation of State, County and Municipal Employees Local 3299. "Even if you try to live off $2,000 a month, it's really hard, because you have to pay for a place to live, you have to buy food, you're going to be living off cat food ... because it comes to that."
Under the new plan adopted Thursday, employee contributions will rise from the current 2 percent of an employee's salary to 3.5 percent in July 2011 and to 7 percent in July 2012. Employer contributions will rise from the present level of 4 percent to 7 percent in July 2011 to 10 percent in July 2012.
Members of AFSCME and other unions have criticized the increase in contribution rates, saying that many workers simply cannot afford to pay a higher portion of their current salaries into the pension fund.
"If you want us to be able contribute to our pension, put it in our checks," Meza said. "Trying to contribute an extra 5 percent to a pension without getting that money, you're looking at about $2,000 (out of a paycheck) for the average worker, and that's a big burden."
Protesters shouting "Whose university? Our university!" and "Arrest Yudof!" disrupted the meeting, forcing the regents to take a recess at about 10:15 a.m. so police could clear the room. The protesters' actions were declared an unlawful assembly, and the demonstrators were forced to leave the meeting, shouting "Shame on you," as they left.
Members of the board's committee on finance stressed the need for resumed state contributions into the pension fund, saying it is unfair for state money to help fund public high school and community and state college employee pensions but not pay anything toward the UC pension program.
The board also approved the re-amortization of the pension fund over a 30-year period - twice its current 15-year schedule - to reduce the program's susceptibility to sharp investment gains and losses and to create a more attainable annual payment level.
"Every time you don't pay the recommended amount, that creates a new unfunded liability the next year and that makes the policy go up," said Regent Paul Wachter at the meeting. "By having a more attainable funding policy, you actually reduce the amount that you're falling short in the early years, and you greatly reduce the cost of that shortfall in later years."
The increased contribution rates expire in July 2013, when university officials plan on implementing a new pension model.
UC President Mark Yudof will present his recommendation for the new pension policy at the board's November meeting. The board will debate and vote on the new model at a single-issue meeting in December and will then bargain with all UC employees before the plan takes effect.
Jordan Bach-Lombardo covers higher education. Contact him at [email protected]
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