April 22, 2010
A new round of retirement incentives
by Paula Van Brocklin
In an effort to better meet the needs of retiring employees and provide additional administrative flexibility, Iowa State will propose two new retirement incentive options to the state Board of Regents at its April 29 meeting in Iowa City.
While some implementation details still are being worked out, both programs would require that employees be at least 55 years old and have 10 years of service at the time of retirement.
"Part of the reason for putting these programs into place is to give individuals a choice," said Mike Otis, associate director of human resource services. "The new programs are designed to help provide some flexibility for staffing, as well as potential budget savings."
Similar, yet different
The first program, dubbed RIO3, would be similar to Iowa State's previous two retirement incentive options (RIO and RIO2), but with one significant change. Employees who currently are enrolled in TIAA-CREF would have the choice of five years of health care coverage (as with the previous plans) or five years of employer-paid retirement contributions. The contribution would be based on the university's defined contribution percentage for an active employee's salary at the time of retirement.
Employees with IPERS would not qualify for the employer-paid retirement contributions because IPERS is a defined benefit retirement plan, which does not allow contributions other than those outlined through state legislation. IPERS employees would choose the health care coverage incentive.
As proposed, the application deadline for RIO3 would be Aug. 1, and individuals must retire by Dec. 31. And as with past programs, the employee's department and/or supervisor must approve the request.
Another option
A new program, called the phased plus program, would offer qualified employees a reduced appointment for a maximum of two years. At the end of that appointment, the employee also would have the option of medical coverage or employer-paid retirement contributions for the balance of five years once phased retirement has begun, with the same stipulations as the proposed RIO3 program.
As proposed, the application deadline for the phased plus program is April 30, 2011, and the phased retirement period must begin by Jan. 1, 2012. The employee's department must approve the request.
Otis said this program might be attractive to both employees and departments.
"There are a number of employees who aren't fully prepared to immediately retire," he said. "This [option] may provide them an opportunity to step back, work through some of the details and ease into retirement."
Attention RIO2 applicants
The university is considering allowing employees who have been approved for RIO2 (but have not yet retired) to apply for either the new RIO3 or phased plus programs, but that decision is not final. Employees who have applied for RIO2 or the current phased retirement program, but have not yet been approved, should review and discuss the new programs with their supervisors or department chairs, if they are interested.
Projected savings
About 1,500 employees are eligible for the RIO3 and phased plus programs. Savings from the programs would depend on the number of approved applicants, but administrative leaders expect more faculty and staff may consider participating in these programs, compared to the RIO and RIO2 options. The first RIO yielded 206 retirements, and RIO2 currently has 95 approved applications.
The deadline for RIO2 is June 1.
