Retirement benefit change may damage recruiting


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UI officials say cuts to retirement benefits could hurt faculty recruitment.

UI President Sally Mason told the DI last week that she is worried the 2 percent reduction could hurt the university’s ability to attract top faculty. The benefits package has always been a big draw for faculty, she said, making up for the UI’s smaller salaries compared with those of other institutions.

“Everyone here will tell you that maybe our pay isn’t quite as good as some of our peer institutions,” she said. “But the compensation, the issues of retirement and the issues of health care, so forth and so on, have always been pretty competitive.”

Approximately half of 30 peer institutions — all members of the Association of American Universities — pay their professors more than the UI’s average $124,600, according to The Chronicle of Higher Education.

The highest paying of those peer institutions, the University of California-Los Angeles, pays professors an average of $144,500; University of Oregon professors come in the lowest with an average income of $99,800.

UI Faculty Senate President David Drake, who met extensively with Mason and other UI administrators to formulate her budget reduction plan, said he, too, realizes the importance of the benefits package in recruitment.

“I am worried about it,” he said. “We fully realize that this benefits package is very attractive to top faculty.”

The reduction is set to reverse automatically after 20 months, on June 30, 2011. Mason said barring any special action — which, she said, she has no intention of taking, —the benefits would be fully restored at that time. Drake was also confident the reduction would be reversed but admitted there is no guarantee of anything in a tumultuous financial time for the state.

The reduction, accepted in each of the three regent university’s budget plans, is estimated to garner $3.25 million for the UI, $2.6 million at Iowa State University, and $1 million at University of Northern Iowa.

The cut will affect the roughly 16,000 employees in the TIAA-CREF program to whom the university makes a contribution to retirement accounts, said Richard Saunders, the senior associate director of UI Human Resources. Several thousand other employees will not be affected by the cut because they are either in the state IPERS program or they are student employees whose positions don’t merit a retirement contribution, he said. People accepted into both the early and phased retirement programs will be affected as well, he said.

Saunders noted that some staff and faculty might not realize how big of an impact the 2 percent reduction actually has.

“It has a much larger effect on what goes into a person’s retirement account,” he said.

The 2 percent reduction is to the university’s contribution, which is 10 percent of a person’s salary.

So if an employee is making $30,000 a year, the university would contribute $3,000 to that person’s retirement fund. But with the reduction taking the contribution down to 8 percent, the university will now contribute only $2,400 — a number that reflects a 20 percent change in the amount of money going into a person’s account, Saunders said.

The UI does not contribute more than $24,000 per employee each year.

Drake said there is no indication the reduction has changed anyone’s retirement plans and said he feels confident everyone understands the severity of the reduction.

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