Pace University
Faculty Retirement Option Program
November 30, 2012
Presented by
Matt Renna
Interim, AVP, Human Resources
Agenda
– Discussion of three Plans
•
•
•
•
•
Plan 1
Plan 2
Plan 3
Summary of three plans
Examples of the three plans
– Post Retirement Benefits – “Rule of 75”
• Medical Coverage
• Dental Coverage
• Life Insurance
– FAQs
– Next Steps
2
Plan 1
• Retirement as of end of AY12-13 (8/31/13; 7/31/13 for Law School)
– Work Schedule (AY13-14):
• None
– Payments:
• 100% of AY12-13 base salary + $1,000 for every year of service1
– Timing of payout:
• Lump Sum payment on or about October 15th, 2013
– Taxation of payout: (Supplemental Tax rates apply)
• 25% Federal; 9.77% NYS; 4% NYC (if applicable), 4.20% FICA-SS2; 1.45% FICA-HI
– 403(b) Plan:
• 403(b) contributions not allowed by employee or Pace University
– Benefits:
• Rule of 75 Post-Retirement eligible upon retirement
– Maximum Number of Applications Accepted: 28
1 Continuous service is
calculated through July 1, 2013 and defined by full-time service without any separation of employment. Sabbatical
and other approved leaves do not impact service time.
2 FICA-SS rate is currently 4.2% but may return to 6.2% effective January 1, 2013; capped at Social Security Taxable Wage Base which for
2013 is $113,700
3
Plan 2
• Retirement as of end of AY13-14 (8/31/14; 7/31/14 for Law School)
– Work Schedule (AY13-14):
• Full-time either semester or 50% both semesters (overall 50%)
– Payments:
• 50% of Base Salary
• Payout: 60% of AY12-13 base salary + $1,000 for every year of service1
– Timing of payout:
• Both payments paid concurrently with semi-monthly payroll from 9/1/13 – 8/31/14
– Taxation of payout:
• Base Salary: (Standard Tax Rates)
• Payout: (Supplemental Tax Rates - 25% Federal; 9.77% NYS; 4% NYC (if applicable),
4.20% FICA-SS2; 1.45% FICA-HI)
– 403(b) Plan:
• 403(b) contributions on both payments
– Benefits:
• Rule of 75 Post-Retirement eligible upon retirement
– Maximum Number of Applications Accepted: 16
1 Continuous
service is calculated through July 1, 2013 and defined by full-time service without any separation of employment. Sabbatical and other approved
leaves do not impact service time.
2 FICA-SS rate is currently 4.2% but may return to 6.2% effective January 1, 2013; capped at Social Security Taxable Wage Base which for 2013 is $113,700
4
Plan 3
• Retirement as of end of AY17-18 (8/31/18; 7/31/18 for Law School)
– Work Schedule (AY14-18):
• Full-time either semester or 50% both semesters (overall 50%)
– Payments:
• 50% of Base Salary (eligible for annual salary increase)
– Timing of payout:
• Base Salary - semi-monthly payroll
– Taxation of Payments:
• Standard Tax Rates
– 403(b) Plan:
• 403(b) contributions allowed; Pace continues contributions
– Benefits:
• Rule of 75 Post-Retirement eligible upon retirement
– Maximum Number of Applications Accepted: No limit
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Summary of Three Plans
Plan
1
2
3
1 For Law
Teaching
Schedule
for AY14
Payout
Amount
8/31/20131
None
Annual
Salary +
$1,000 for
each year of
service
8/31/20141
Full-time
either
semester or
50% both
semesters
60% of
Annual
Salary +
$1,000 for
each year of
service
8/31/20181
Full-time
either
semester or
50% both
semesters
from AY14 to
AY18
n/a
Retirement
Date
Taxation of
Payout
Medical
Premium
Determination
Date
403(b) on
Payout
Supplemental
Rate
8/31/20131
No
Paid
concurrently
with payroll
(9/15-8/31) 1
Supplemental
Rate
8/31/20141
Yes
n/a
n/a
8/31/20181
n/a
Timing of
Payout
Lump Sum
on or about
October 15th,
2013
School faculty, date would be 7/31
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Examples of the Three Plans
Example 1: $80,000 and 34 years of service
Plan
Teaching Schedule
for AY 14
1
None
2
Full-time either
semester or 50%
load both
semesters
3
Full-time either
semester or 50%
both semesters
for AY14 to AY18
Retirement
Date
AY 14 Total Payment
Base Pay
Payout
$80,0002 +
None
34 x $1,000 =
$114,0003
Total Payment: $114,0003
8/31/20131
8/31/20141
8/31/20181,4
$80,0001 x 50% =
$40,000
$80,0002*60% +
34 x $1,000
= $82,000
Total Payment: $122,000
$80,000 x 50% =
$40,0002
None
for each year from
AY14 to AY18
Total Payment: $40,0002 for AY14
Total Payment: $40,0002for AY15
Total Payment: $40,0002for AY16
Total Payment: $40,0002for AY17
Total Payment: $40,0002for AY18
1
For Law School faculty, date would be 7/31
This amount would be adjusted based on any salary change
3 Payout under Plan 1 is not eligible for 403(b) employee or Pace contributions
4 You may elect to retire sooner than 5 years
2
7
Timing of
Payout
Lump Sum on or
about
October 15th, 2013
Concurrently
with
semi-monthly
payroll
9/1/13-8/31/14
N/A
Examples of the Three Plans
Example 2: $100,000 and 34 years of service
Plan
Teaching Schedule
for AY 14
1
None
2
Full-time either
semester or 50%
load both
semesters
3
Full-time either
semester or 50%
both semesters
for AY14 to AY18
Retirement
Date
AY 14 Total Payment
Base Pay
Payout
$100,0001 +
None
34 x $1,000 =
$134,0003
Total Payment: $134,0003
8/31/2013
8/31/2014
8/31/20182
$100,0001 x 50% =
$50,000
$100,0001*60% +
34 x $1,000
= $94,000
Total Payment: $144,000
$100,000 x 50% =
$50,0001
None
for each year from
AY14 to AY18
Total Payment: $50,0001 for AY14
Total Payment: $50,0001for AY15
Total Payment: $50,0001 for AY16
Total Payment: $50,0001 for AY17
Total Payment: $50,0001 for AY18
1
This amount would be adjusted based on any salary change
You may elect to retire sooner than 5 years
3 Payout under Plan 1 is not eligible for 403(b) employee or Pace contributions
2
8
Timing of
Payout
Lump Sum on or
about
October 15th, 2013
Concurrently
with
semi-monthly
payroll
9/1/13-8/31/14
N/A
Examples of the Three Plans
Example 2: $130,000 and 34 years of service
Plan
Teaching Schedule
for AY 14
1
None
2
Full-time either
semester or 50%
load both
semesters
3
Full-time either
semester or 50%
both semesters
for AY14 to AY18
Retirement
Date
AY 14 Total Payment
Base Pay
Payout
$130,0001 +
None
34 x $1,000 =
$164,0003
Total Payment: $164,0003
8/31/2013
8/31/2014
8/31/20182
$130,0001 x 50% =
$65,000
$130,0001*60% +
34 x $1,000
= $112,000
Total Payment: $177,000
$130,000 x 50% =
$65,0001
None
for each year from
AY14 to AY18
Total Payment: $65,0001 for AY14
Total Payment: $65,0001for AY15
Total Payment: $65,0001 for AY16
Total Payment: $65,0001 for AY17
Total Payment: $65,0001 for AY18
1
This amount would be adjusted based on any salary change
You may elect to retire sooner than 5 years
3 Payout under Plan 1 is not eligible for 403(b) employee or Pace contributions
2
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Timing of
Payout
Lump Sum on or
about
October 15th, 2013
Concurrently
with
semi-monthly
payroll
9/1/13-8/31/14
N/A
Post-Retirement Benefits - “Rule of 75”
• http://www.pace.edu/human-resources/pre-1996-hires
• Hired Before January 1, 1996
• Age plus service (minimum of 10 years of full-time
service) must total 75 years
• Medical
• Dental
• Life Insurance
• Tuition Remission
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Post-Retirement Benefits - “Rule of 75”
Medical Coverage
• Upon retirement, Medicare Part B coverage will become primary for those 65 and older,
while University coverage is secondary1
• Pace reimburses standard Medicare B premium ($104.90 for 2013) 1
• The retiree’s contribution will be the same cost share dollar amount for individual
coverage as immediately prior to retirement without being subject to future increases in
premium.
– Plan 1 – monthly rate as of August 31, 2013
– Plan 2 – monthly rate as of August 31, 2014
– Plan 3 – monthly rate as of August 31, 2018
CIGNA
In-Net 50
$65.02
1 For
Current Monthly Retiree Rates for Individual Coverage
(July 1, 2012 – June 30, 2013)2
CIGNA
CIGNA
CIGNA
In-Net 20
90/70
100/70
$109.58
$155.64
$327.76
those under 65, the Pace plan remains primary until age 65 when Medicare Part B is required and becomes primary.
rates are subject to change during the annual renewal
2 These
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Post-Retirement Benefits - “Rule of 75”
Medical Coverage continued…
• Retiree plan is currently the same plan as the active plan
• Eligible to enroll, drop coverage or change plans at
Retirement and then annually during Open Enrollment
(effective July 1st)
• Continued coverage for a spouse or a dependent child is
optional and is at 100% of the cost to the retiree
• Subject to annual renewal increase
Coverage
Plus One Coverage
Family Coverage
Current Monthly Retiree Rates – In Addition to Individual Coverage
(July 1, 2012 – June 30, 2013)2
CIGNA
CIGNA
CIGNA
In-Net 50
In-Net 20
90/70
$635.61
$678.37
$722.55
$1,283.75
$1,374.06
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$1,459.10
CIGNA
100/70
$872.34
$1,761.23
Post-Retirement Benefits - “Rule of 75”
Other Benefits
Dental
•
•
Retiree has the option to continue on the CIGNA Dental plan for 42 months following his/her
retirement date.
The retiree pays for the full cost of this coverage
Life Insurance
•
•
•
•
Non-Contributory Life Insurance - amount equal to base annual salary up to $100,000
The amount of the policy will decrease by 10% of the original amount on the first of each July
following the date of retirement
It will continue to decrease until the amount is equal to 40% of the original amount
Supplemental Life Insurance, if any, can be converted to an individual policy
Tuition Remission
•
Available to Qualified retirees, their spouses and children
Retirement Plan - 403(b)
•
•
•
Withdrawal available
If over 70 ½, check with financial advisor for Minimum Required Distribution (MRD)
If invested in TIAA Traditional fund, distribution may be over a period of time
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Frequently Asked Questions
Q1: If I elect Plan 1, can I elect to defer the Payout from October, 2013 to 2014?
A1: No, the Payout cannot be deferred into the next year – regardless of when its paid, its considered to
have been in “constructive receipt” in 2013 and must be taxed in 2013. So even if it was deferred
into 2014, it would be taxable in 2013.
Q2: If I elect Plan 1, can I elect to have 403(b) contributions taken out of my Payout?
A2: No, 403(b) contributions cannot be deducted from post-retirement payments. You should consider
increasing your contributions on your salary from January 1, 2013 through August 31, 2013 to
maximize your contribution.
Q3: If I elect Plan 2 or Plan 3, can I work 100% either semester or 50% for both semesters?
A3: Yes, you can elect either option. You should discuss this arrangement with your dean.
Q4: Can I apply for a position as an adjunct or part-time after my retirement date?
A4: Yes, you are eligible for adjunct or part-time employment following retirement.
Q5: If I am considering any of these plans, how should I plan my schedule for AY13-14?
A5: You should plan for a standard schedule, even if you have already spoken to your chair or dean and
are strongly considering this program. Since you are not making the formal election until July, 2013,
you should plan as you normally would and adjustments would be made as necessary in July.
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Next Steps
• Retirement Transition Workshops
– December 3rd – 5th, 2012
– Refer to 11/20 email from Betsy Garti
– Will also be available in the Spring
• Formal Package to be sent December, 2012
• Contact me to setup one-on-one confidential meeting
Your spouse or other representative is welcome to attend
Matt Renna
Interim AVP, Human Resources
914-923-2738
[email protected]
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Questions?
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