UC Phased Retirement Program

Program Summary  UCSC Implementation Procedures
Overview Procedures for Enrolling
Authority Time Reduction Requirements
Eligibility Changing a Phased Retirement Contract
Details Ending a Phased Retirement Contract
Cash Incentive Formula Deadlines for Processing Contracts
Impact on Benefits Forms/Resources
Transfer, Promotion, Reappointment  
   

Program's Cash Incentive Formula

  • The program provides a lump sum cash incentive at retirement that represents a percentage of the savings realized from participants’ phased reduction in appointment percentage of at least 10% increments.

  • The base salary and the appointment percentage as of the approved enrollment date will be used to calculate an employee’s lump sum cash incentive at the conclusion of participation in the program.

  • The incentive is paid within 30 days of retirement and reported on Form W‐2. If the incentive is paid on the separation date, participants may choose to make a 403 (b) or 457 (b) plan contribution in accordance with plan eligibility requirements and annual maximum contribution amounts as a means of deferring taxation until the deferred amounts and any earnings are paid from the plan.

  • Participating employees forfeit the incentive payment if they enroll in the program and don’t retire by the end of the contract or don’t reduce their appointment by at least 10 percent each year or if they do not complete a Phased Retirement Program-General Release of Claims.

  • Participants receive “credits” that are converted to a lump sum cash incentive upon retirement. Credits accrue based upon appointment reductions in 10% increments as follows:

Percentage Appointment
Reduction in Program Base

Credit to Employee per
Program Base Salary

10%

5%

20%

10%

30%

15%

40%

20%

50%

25%

Example: Employee with an annual salary of $50,000 and appointment of 100 percent as of the approved enrollment date in the program.

Year One: Employee elects to reduce the appointment by 10 percent. Based on a 10 percent reduction of a salary of $50,000, the employee’s salary would be reduced to $45,000 and the appointment percentage would be reduced to 90 percent. The employee has a 5 percent credit ($2,500) based on the program salary of $50,000.

Year Two: Employee elects to reduce the appointment percentage by an additional 20 percent. The appointment percentage is now 70 percent. The employee receives a 15 percent credit as the 100% appointment has been reduced by 30 percent. Per the program base salary of $50,000, the employee has a credit of $7,500 (15% of $50,000).

Year Three: Employee reduces the appointment percentage by another 20 percent to a 50 percent appointment. The appointment percentage is now 50 percent. Thus, the percentage reduction from the program base appointment is 50 percent and a $12,500 credit is received (25% of $50,000). The employee is eligible for a lump sum incentive of $22,500 (Year 1 credit of $2,500 + Year 2 credit of $7,500 + Year 3 credit of $12,500) and must retire at the completion of the third year of the program or forfeit all credits.

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