Inside Iowa State: Iowa State University

INSIDE IOWA STATE
March 15, 2002

Officials propose no replacement for early retirement incentive

by Anne Krapfl
Iowa State will not immediately have a new early retirement incentive program (ERIP) when its current plan expires June 30. Neither will any of the other four regents institutions in Iowa.

All five regents schools and the staff of the Board of Regents, State of Iowa, planned to recommend to the board this week that no replacement plan be proposed at this time. High costs and federal age-discrimination laws currently make a replacement proposal difficult to implement. Current federal law doesn't allow the termination of benefits to be tied to a person's age (for example, eligibility for Medicare or Social Security).

President Gregory Geoffroy has asked ISU's University Benefits Committee, which has studied early retirement options since August, and appropriate university administrators to continue to study the issue and track any changes in federal laws and regulations. In the meantime, the regents have authorized regents schools to develop "window" programs as needed. A window program is designed for a specific group of employees and has a limited enrollment period. Another option, though used infrequently, is for the university to negotiate individual early retirement arrangements with employees.

Under the university's current early retirement incentive program, employees who, on June 30, are at least 57 years old with 15 years of service at ISU may retire early. Last fall, Geoffroy announced a two-year extension on the program so that those who are eligible on June 30, 2002, actually have until June 30, 2004, to apply for the program.

Early retirement at Iowa State is not considered an entitlement, but a means to respond to shifting personnel and program needs.

Ideas for the future
Vice president for business and finance Warren Madden, to whom the benefits committee makes recommendations, said there generally is support on campus for an ERIP. Key considerations for employees include the following:

A high priority is uninterrupted access to health insurance coverage.
All units, regardless of size or funding sources, should have equal access to any ERIP developed in the future.
Funds used for salary improvements shouldn't be used to finance an ERIP.
Some believe another age-service combination would be more appropriate (ex: "rule of 90" -- a combination of age and service that adds up to 90 years).

Madden also noted that changing demographics may reduce the demand for an ERIP in the future. With people living and working longer, incentives to retire early may not be necessary. The challenge to the university, he said, may be in education or retraining for employees as they move through a series of careers, perhaps some of them part time.