retirement programs & services update
TRANSCRIPT
Retirement Programs &
Services Update CUCRA/CUCEA Spring 2017 Meeting
Gary Schlimgen, Executive Director
Retirement Programs & Services
April 27, 2017
Campus/Medical Centers Only
UCRP Historical Funded Status and Funded Ratio (5 year smoothing) as of July 1
105% 103% 95%
86% 82%
78% 76% 79% 81% 81%
0%
20%
40%
60%
80%
100%
120%
$0
$10
$20
$30
$40
$50
$60
$70
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
$ in
Billi
on
s
Actuarial Accrued Liability (AAL) Actuarial Value of Assets (AVA)
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8% 8% 8% 8% 8% 8% 8% 8%
14% 14% 14% 14% 14% 14% 14% 14%
$96 $171 $171
$564 $481 $392 $595 $623 $720 $782 $750
0%
5%
10%
15%
20%
25%
30%
35%
2015 2016 2017 2018 2019 2020 2021 2022
Pe
rce
nt o
f C
ov
ere
d P
ayr
oll
Plan Year Beginning July 1,
UCRP Contribution IllustrationCampus and Medical Centers Only ($ in millions)
Funding Shortfall
STIP Transfers
State Funding
Employer Contribution
Employee Contribution
Normal Cost
-Assumes active member population grows by 0.7% per year.
-Assumes a 7.25% market value return per year starting July 1, 2016.
-Assumes no future changes in actuarial assumptions.
-Includes approved STIP transfers and State Funding through 2017/2018. -Includes 2016 Tier (20% “Savings Choice” Election).
-Assumes employer contribution remains at 14%, but includes Savings Choice UAAL Surcharges.
-Assumes Total Funding Policy Contribution made each year starting July 1, 2018, with any funding
-shortfall paid by transfers, borrowing and/or State Funding.
UC Normal Cost for all Members (~18%)
UCRP Contribution Illustration
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New UC Retirement Choice Program
Two new retirement options for employees hired on or after July 1, 2016
Option 1
Pension with PEPRA cap + Defined Contribution (DC) supplemental
plan
• UC pension (2016 Tier) capped at PEPRA limit ($117,020)
PLUS
• A supplemental DC plan on pay up to IRS limit ($265,000)
• Eligible Faculty: 5% UC contribution on all pay up to IRS
limit
• Staff/Other Academic: 3% UC contribution on pay above
PEPRA limit up to IRS limit
Option 2
New stand-alone Defined Contribution (DC) plan
• Faculty/Staff: 8% UC contribution on all pay up to IRS limit
($265,000)
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Gary Schlimgen, Executive Director
Retirement Programs & Services
April 27, 2017
UC Retirement Savings Program (RSP)
Fee Allocation Methodology Project CUCRA/CUCEA Spring 2017 Meeting
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Considerations in evaluating options for updated methodology
o Fee Transparency
o Equitable Allocation
o Fee Subsidization
o Fee Levelization
Decision: a flat administration fee (rather than asset-based) will be charged
to each participant
o Effective June 1, 2017: $35 per year / $8.75 per quarter
‒ one fee per participant, regardless if in more than one plan
‒ first fee to be deducted October 2017
o Postcard announcement to be mailed May 2 to all RSP participants
Note: An expense ratio will continue to be charged by each fund for investment
management services
Methodology Considerations
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RASC Update,
Family Member Eligibility &
Interface with UCPATH
CUCRA/CUCEA Spring Meeting
Michael Waldman, Manager
Retirement Administration Service Center
April 27, 2017
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Retirement Season Snapshot as of April 19
Personal Retirement Profiles (PRPs):
• 2017 1,300
• 2016 1,100
Key Metrics
• Retirement Counseling Service Level is at or above goal of 80% of calls answered in 90 seconds
• 88% of customers are Satisfied or Better with their overall experience
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Preparing for Retirement RASC Presentations
On-site, in-person – Spring 2017
• Delivered 23 presentations reaching 1,800 employees
• 93% of respondents were either Very Satisfied or Satisfied with the presentation (20% response rate)
Webinar (hosted)
• Offered on second and fourth Tuesdays of every month from 10:00 a.m. to 12:30 p.m. Pacific
On-demand web
• Available on UCnet (Compensation & Benefits, Preparing for Retirement)
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UC Path
• Payroll
• Academic Personnel
• Timekeeping
• Human Resources
RASC
• Retirement Administration Service Center
UC Path / RASC
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What is a Health and Welfare Eligibility Recertification?
• A request for verification of current relationship
status for those family members whose
relationships can change over time.
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Why are we conducting the Recertification?
• It is industry standard to conduct a recertification of
previously verified eligible spouses, domestic partners,
and Parent Child Relationships that are subject to
change.
• Some organizations conduct an annual recertification
(CSU, CalPERS).
• We have a fiduciary responsibility under public trust laws
and according to our vendor contracts to maintain
enrollment only for eligible dependents.
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Who are we Verifying?
• In addition to the approximately 44,000
employees currently undergoing recertification,
UC will recertify a random selection of 5,000
retirees’ spouses, domestic partners,
grandchildren & legal wards enrolled between
January 2012 and December 2014.
• Many retirees in the initial 2012 verification effort
will be captured in this recertification.
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$1,100,000
What is the Expected ROI?
Estimated savings to UC:
Based on industry data, most organizations expect 2-4% of the dependents who
were initially verified eligible may no longer be eligible for coverage due to a
change in relationship. From a population of 5,000 retirees in the recertification
effort we estimate 1.32% (below the industry standard), or 160 dependents, will
have a status change. Per member per year average benefits costs are
estimated at $6,920.
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What documents will we require?
We are only requesting one document that shows the relationship is current.
• Spouses & Domestic Partners
• Examples: Federal Income Tax Return listing both
spouses/domestic partners; Mortgage statement
listing both; current credit card statement with both
names listed, utility bill, etc.
• Grandchildren & Legal Wards
• Federal Tax Return showing child listed as a
dependent.
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Proposed Timeline • Include “heads up” in employee & retiree 2016 Open Enrollment
Booklets (complete)
• Consult with CHROs 1/9/17; APDs 1/12/17; Faculty Health Care
Task Force 1/20/17
• Include articles on UCNet (Jan & Feb 2017), Campus websites &
newsletters (Feb & Mar 2017)
• Targeted letters to CHROs, APDs, Unions, (Early 2017)
• Launch Employee Recertification (April 2017)
• Publish Article in New Dimensions (May 2017)
• Targeted email to retirees selected for the recertification (Mid-
May)
• Early June: Mail Verification Packet to all selected retirees.
Package includes: Cover Letter introducing Secova, Cover Sheet
for FMEV, Eligibility Definitions & Required Documents, Detailed
Instructions for all aspects of the process, and FAQ’s
• August: Follow-up communications, including email & phone
calls, reminders to send in documents
September: Appeals. Handled by a review team at UCOP
UC
Systemwide
Vendor
UC
Systemwide
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REDWOOD: A multi-year project to improve operations and your experience with the Retirement Administration Service Center
Expected to be live in 2019
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Redwood Objectives: • Modernize the University’s pension
administration technology
• Adapt to the changing landscape of retirement programs
• Enhance the member experience
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Modern interface
• Reduced training time
Modern technology
• Weekly vs. monthly updates with health & welfare
vendors, including Medicare
Workflow
• Increased visibility and better tracking of work
• Faster processing of retirements and survivor
benefits
Enhanced member portal
• More transactions via the web
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