November 15, 2012
Pace University 2013 Retirement Option
Introduction:
Before proposing the 2013 retirement option, it is important to present some comments about the
current status. On May 15, 2012, Pace had 373 tenured/tenure-track faculty on the payroll, with average
age 57.7 years and median age 59.6 years. The age distribution is given in the histogram below:
Age distribution of tenured / tenure-track faculty
as of May 15, 2012
80
71
70
69
56
60
50
41
36
40
33
28
30
18
20
9
10
0
11
0
1
0
25-30 30-35 35-40 40-45 45-50 50-55 55-60 60-65 65-70 70-75 75-80 80-85 85-90
Of the 373 tenured/tenure-track faculty, 45 are on the tenure-track and eligible for tenure; the
remaining 328 faculty members are already tenured. The breakdown into various schools is shown in
the following chart:
School/College
Number of
Faculty
(5/15/2012)
Average Age
(5/15/2012)
Faculty Eligible
for Retirement
Option
College of Health Professions
16
60.5
3
Dyson - Arts and Sciences
165
56.1
57
Lubin School of Business
97
59.2
41
School of Education
15
56.9
2
School of Law
41
58.0
13
Seidenberg School of CSIS
39
59.2
17
Grand Total
373
57.7
133
Pace often follows the practice of using the quantity (age + years of service at Pace) as the measure of
eligibility for participation in its retirement incentive plans. The distribution of this quantity for the 373
tenured/tenure-track faculty at Pace is shown below:
(Age + years of service) distribution of T/TT faculty at Pace (May 15, 2012)
35
29
30
31
30
32
30
28
26
25
23
21
21
22
23
20
15
11
11
12
12
10
5
4
3
3
1
0

Due to difficult economic times, in recent years, many faculty members have chosen to continue
their academic careers and to defer retirement.

Everyone needs to appreciate the contributions of faculty, and the many years of dedicated
service which they have devoted to building up Pace’s reputation.

Retiring faculty have great pride in their achievements and a natural desire to make sure that
excellence is maintained by their successors in the years to come.

Pace should provide dignified alternatives for retirement in order to bring ongoing research and
teaching activities to a fruitful conclusion.

An abrupt change of lifestyle is not appropriate for many people, and they may need a more
gradual transition option for retirement.

Discussions with school deans indicate that the academic impact of up to 60-80 retirements can
be handled by adjuncts and newly hired replacement faculty, especially if some faculty members
choose a phase out retirement option.

The retirement option offered must be attractive, but must not have an inordinate financial
impact on Pace.

Taking the above considerations into account, Pace University is proposing a retirement
incentive option for eligible faculty members to consider.
Retirement Option:

The option is available to all full-time tenured faculty1 who by July 1, 2013 have served
continuously2 at Pace for the preceding 20 years, and their age plus years of service at Pace
exceeds 90 years. Faculty who have previously signed individual separation agreements and
faculty who are on long-term disability leave are excluded from the retirement option. Under
these criteria, 133 faculty members are “eligible” for the retirement option (see table).
1
Tenured faculty holding chair, dean or other administrative positions must resign from their administrative
positions. Faculty on sabbatical, short-term disability and other approved leaves are also eligible. Faculty on longterm disability are not eligible.
2
Continuous service is defined by full-time service without any separation of employment. Sabbatical and other
approved leaves do not impact service time.

Tenured faculty who are eligible for the retirement option proposed here and who decide not
to apply for it, should note that this will be the last university-wide retirement incentive plan
for at least 3 years, that is until the start of AY15-16.

The application is designed to be as straightforward as possible and will offer a choice of 3 plans
corresponding to retiring immediately, phasing out from academic duties over a period of one
year, or transitioning to a half-time appointment.

The retirement option offered is relatively simple.

It is noticeably better economically than the option offered in 2011, and has the flexibility of
permitting a phase-out from official academic duties.

It is more attractive than many of the retirement incentive options offered by other universities
in the United States.

Pace will arrange programs/workshops by retirement specialists to help faculty eligible for the
retirement option make an informed decision.

Retired faculty members can explore post-retirement adjunct teaching opportunities or clinical
appointments with their school deans.

Retired faculty members are eligible for emeritus status, subject to the requirements of the
Faculty Handbook.

Schools will set aside a dedicated room as shared office space for emeritus faculty.

All faculty eligible for this program are also eligible for “Rule of 75” post-retirement benefits
o
Medical coverage - Medicare coverage will become primary for those 65 and older,
while University coverage is secondary. 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. Coverage for a spouse or a dependent
child is done so at 100% cost to the retiree
o
Dental coverage – Dental coverage may be continued for up to 42 months following
retirement (retiree pays full cost). Coverage ceases after 42 months.
o
Life Insurance – fully paid by Pace University and is equal to retiree’s last full time
annual base 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 until the
amount is equal to 40%.
Retirement Option Plans:
Three plans for retirement are being offered:
Plan 1: This plan corresponds to retirement when the academic contract for AY 12-13 ends. Plan 1 provides a
total payout of (100% of annual AY 12-13 base salary + $1,000 for every year of service at Pace until July
1, 2013). This total payout is made as a lump sum at the end of the contract period. [Note: Contracts for
Law School faculty end on July 31, 2013; for all other faculty, contracts end on August 31, 2013]. Full
benefits would be maintained for faculty until their contract for AY 12-13 ends. Since all those eligible
for this program are also eligible for “Rule of 75”, post-retirement benefits would commence at the time
of retirement.
3
Plan 2 : This plan has a phase down period of one year followed by retirement after the academic
contract for AY 13-14 ends. During the phase down year AY 13-14, the faculty member only works
50%. This could be accomplished either by working 50% during the entire AY 13-14, or taking the 2013
Fall Semester off, but working full time during the 2014 Spring Semester. The total payout for this plan
is 50% of annual AY 12-13 base salary plus 60% of annual AY 12-13 base salary + $1,000 for every year of
service at Pace until July 1, 2013. The total payout (110% plus $1,000 per year of service), is spread out
evenly in AY 13-14 as base salary. Full benefits would be maintained for faculty until their contract for
AY 13-14 ends. The 12% 403(b) contribution would also continue during AY13-14 based on the salary
received. Since all those eligible for this program are also eligible for “Rule of 75”, post-retirement
benefits would commence at the time of retirement.
3
Plan 3 : Although plans 1 and 2 offer retirement coupled with some flexibility, there are some faculty members
who are not ready to retire as yet, but would like to experience some reduction in their academic load. Plan 3
offers them the possibility of opting for half-time academic employment after July 1, 2013 for a pre-
retirement period of 5 years, followed by retirement. A 50% academic load could be accomplished by either
working 50% during the entire academic year, or by taking either the Fall Semester off, and working full time
during the Spring Semester, or vice versa. During the pre-retirement period, a faculty member would receive 50%
of their annual base salary corresponding to their half-time appointment. Full medical and dental coverage would
3
Full benefits (medical, dental, life insurance, disability, flexible spending account and 403(b) retirement) are
intended to be provided under this Plan offering, subject to compliance with legal requirements as they may be
modified during the period of the Plan offering and payment period. In the event that the ability of the University
to continue a benefit under the Plan is restricted by application of IRS guidelines, the University intends to work
with the affected faculty members to the extent possible to provide the value of such benefits by alternative
method.
be available as well as all other benefits available to full-time faculty. However, there are several benefits that are
based on annual base salary (i.e. 403(b) contribution, life insurance, short-term disability, long-term disability) that
would be reduced accordingly. Faculty members are eligible for annual salary increases during the pre-retirement
period. A faculty member may choose to retire earlier at any time during the 5 year pre-retirement period.
Example:
Professor A, a tenured full-time faculty member, was born on February 25, 1939, and has been
employed at Pace since October 20, 1972. On July 1, 2013, Professor A’s age is 74.35 years, his service at
Pace is 40.70 years, and he earns an annual academic year base salary of $100,000. He meets the
eligibility criteria for the retirement option.
If Professor A decides to accept the retirement option, and he chooses Plan 1, the total payout is
($100,000 + $1,000 * 40.70) = $140,700, and he receives this amount as a lump sum payout at the end
of his AY 12-13 contract.
If Professor A chooses Plan 2, the payout is (0.6 * $100,000 + $1,000 * 40.70) = $100,700. For his 50%
employment in AY 13-14, Professor A decides to take Fall 2013 off, and work full-time in Spring 2014. He
receives a total remuneration of ($50,000 for half-time work + $100,700 from plan payout) = $150,700
spread evenly over 24 pay periods in AY 13-14. He receives full benefits and a 403(b) contribution of
12% on the full payment of $150,700.
If Professor A chooses Plan 3, he elects to retire at the end of his AY 17-18 contract. During the preretirement period, Professor A takes all fall semesters off, and only works full time in the Spring
semesters. Assuming a 3% annual raise, Professor A’s annual base salary will be $51,500 in AY 13-14,
$53,045 in AY 14-15, $54,636 in AY 15-16, $56,275 in AY 16-17, and $57,964 in AY 17-18, followed by
retirement. Although Professor A is employed half-time during the pre-retirement period, he is eligible
for full medical and dental coverage, will receive 403(b) contributions on the reduced base salary, and all
other full benefits will be available and based on the reduced base salary, as applicable.
Financial Impact:
For budgeting purposes, one must include the cost of the payout and benefits costs as well as
replacement adjunct faculty costs to cover teaching. While predictions are difficult to make, one can at
least look at the numbers of retirements in previously offered retirement incentive plans. The 2007 plan
had 12 faculty retirements, and the 2011 plan had 11 retirements. Both plans were generally thought to
be unsuccessful. The largest number of retirements came from the “golden retirement offer” of 2000.
Here 176 faculties were eligible and 52 retired under the offer, corresponding to a rate of 30%. The
payout was 150% of base salary, and there was a phase out option. Based on the 2000 and 2011
experiences, one could estimate that roughly 30% of the eligible faculty, that is 39 faculty members will
probably take the proposed 2013 option. The payout depends on the faculty member’s base salary, but
roughly speaking each retiree would get a payout of $150K, which leads to a total payout amount of $6
million.
Application Process:
Faculty applications for the retirement option may be submitted to the Human Resources Office starting
9 a.m. on Monday July 1, 2013. Applications will be accepted until 5 p.m. on Friday July 12, 2013. All
applications will be automatically approved subject to the following limits – maximum of 28 for
retirement Plan 1 and 16 for retirement Plan 2, with no limit for Plan 3. The maximum amounts are in
excess of our estimate of the number of faculty who will participate, and therefore should be able to
accommodate essentially all retirement applications. The first 10 applications will be approved in the
order they were submitted on a first come first served basis. The remaining applications will be
approved in order of decreasing seniority (continuous years of service at Pace)2.