Nov. 5, 2009

A second retirement incentive option program is one budget-saving strategy approved Oct. 29 by the state Board of Regents. Most of the savings for the RIO2 program will be seen in FY11. Other strategies approved by the regents to help meet a $24.5 million state funding reversion include a temporary layoff/furlough plan, partial closing of the university during the Dec. 24-Jan. 3 window and a temporary reduction in the university's contribution to employees' TIAA-CREF retirement accounts. Lastly, the board will take final action on a proposed spring semester tuition surcharge when it meets Dec. 10 in Ames.

RIO2 similar to previous retirement incentive option

by Diana Pounds

Iowa State's new retirement incentive option program, dubbed RIO2, looks a lot like last year's program with one exception. The eligibility age has been lowered to 57 at the time of retirement. The previous retirement incentive program required that employees be at least 60 years old at retirement. Both last year's program and RIO2 require employees to have 10 years of service.

More info

A separate early retirement incentive option for Extension employees on federal retirement programs requires employees to be at least 50 years old at retirement and have 20 years of service.

Details about the new programs, including FAQs and application forms, are available at www.hrs.iastate.edu/hrs/node/7/homepage.shtml.

The retirement incentive option is intended to help the university reduce expenses this year and in FY11.

The incentive for those who retire under the program is five years of post-retirement, university-paid health and dental benefits. Employees may apply for the retirement incentive program between Dec. 1, 2009, and March 31, 2010, and must be fully retired by July 30, 2010. NOTE: At the March 24, 2010, Board of Regents meeting, ISU officials will ask the regents to extend the application deadline to June 1, 2010.

University officials estimate that 1,200 employees would be eligible for RIO2 and 60 Extension staff would be eligible for the federal retirement program.

Not everyone who qualifies may be approved for the retirement incentive option. Colleges and departments will look for potential savings when making decisions on requests, said Mike Otis, associate director of human resource services. For example, it may not make financial sense for a department to grant a retirement request if the retiring employee's position would have to be refilled.

Incentive details

ISU will cover both employee and employer costs of the employee's current insurance for five years. If the retiree becomes eligible for Medicare (turns 65) during that time, the university will continue to pay the incentive at post-65 retiree rates for the remainder of the period.

For retirees enrolled in the ISU HMO or PPO plan, the university will pay benefits for the employee-only or the employee and spouse/domestic partner plans. For those covered by State of Iowa health plans, the university will pay benefits for the employee-only or family plans.

For example, the university currently would pay $1,133 monthly for health coverage for a retiree (under age 65) on the ISU PPO plan for employee and spouse/domestic partner. The current university payment for a retiree (under age 65) on the ISU Plan Blue Advantage HMO for family would amount to $848 per month. Rates and plan benefits are subject to change in future years, as they are for active employees.

Approval process

To enroll in the program, employees will need the approval of their immediate supervisor(s) and the appropriate department chair/director. Each request also must be approved by a dean/vice president. Extension employee applications will be reviewed by the vice president for extension and outreach.

Otis advises those considering the early retirement program to talk to their supervisors before submitting paperwork.

"The retirement option won't be a fit for every person," he said.

He also suggests that eligible employees pondering retirement consider visiting with financial counselors or planners to ensure that they are financially prepared to retire.

Otis also urges eligible employees to carefully review their options during the current benefit open change periods to make sure their health plan choices will meet their future needs if they choose to retire.

Eligibility requirements

  • Employees NOT on federal retirement programs: 10 years of service and at least 57 years old at retirement
  • Employees on federal retirement programs: 20 years of service and at least 50 years old at retirement

Useful sources

  • RIO2 Plan details: www.hrs.iastate.edu/hrs/node/400
  • Program participation: Department chairs, directors
  • Health, dental benefits: Benefits office, 4-4800
  • TIAA-CREF retirement planning: Ames office, (800) 732-8353
  • IPERS info: Iowa Public Employees Retirement System, (800) 622-3849