Phased Retirement Program: Crookston, Morris, Rochester, Twin Cities

Program Overview

The Phased Retirement Program implements Board of Regents Policy: Faculty and Staff Retirement. The Phased Retirement Program is offered by the University to eligible tenured faculty and to a select number of academic professionals with a continuous appointments in the University’s library system to support the facilitation of change within the collegiate and administrative units. The University provides this program as a commitment to the wellbeing of faculty as they transition into retirement.

Eligibility

The University's Phased Retirement Program is a voluntary internal retirement program provided to tenured faculty members and a select number of academic professionals with continuous appointments in the University’s library system who:

• have an appointment of at least 75 percent on a nine-month or greater basis; and
• will be at least 55 years of age on their last day of regular employment.

Exclusions

The Phased Retirement Program is not available to any individual who participates in another University exit program, voluntary or involuntary, to which the University contributes or has contributed monies. This includes those actively receiving benefits via the Academic Disability Program. Administrative positions are not eligible for the program—this includes employees who have a 50% faculty and 50% administrative position. Contract teaching faculty positions with a specific end date are also not eligible. The only employees eligible for the phased retirement program are tenured faculty members and a select number of academic professionals with continuous appointments in the University’s library system.

This policy does not pertain to those individuals on the Duluth Campus represented by Unit 9 UEA (University Education Association).

The documents used in connection with the program include a Phased Retirement Agreement and two Releases. Participants must complete and sign the Phased Retirement Agreement, and the Agreement must be approved and accepted by the University as a condition of entering the program. Participants must also sign the initial Release as a condition of entering the program. Participants must sign the second Release at the end of their phased retirement period in order to receive benefits after their end date.

Duration and Work Effort

Faculty and academic professionals who participate in this program must reduce their work effort over a period of between one to five years, as agreed upon by the employee and their unit. Department leaders have discretion to offer the Program for a period of less than five years based on departmental need. The phased retirement period must be continuous with the exceptions of any leaves permitted by the University. A phased retirement agreement of less than one year can be approved under special circumstances.

Based on an annual 100 percent appointment, the work effort during the phased retirement must be for at least 25 percent and not more than 75 percent time, as agreed upon by the employee and their unit. The work effort percentages must be explicitly stated (e.g., 50%, not 50%-60%). Salary paid will be based on work effort.

Individual departments have and can continue to take a more conservative approach to the guidelines outlined in this section. For example, it is acceptable that a department does not allow a phased term for more than two years.

University-Sponsored Benefits

Employees on phased retirement will receive the benefits as defined below. As benefits offerings change at the University, the details of the benefits may be revised as well. For example, if the University’s medical providers change, this could affect retiree medical coverages.

Benefits Offered during the Phased Retirement Program:

1. Medical and Dental Benefits

The University’s contributions to the University-sponsored medical and dental insurance plans continue during the phased retirement period, provided that these plans continue to be offered to regular benefits-eligible individuals of the University. The University’s contribution to premiums while employed will be based on the individual’s work location and permanent residence.

2. Faculty Retirement Plan Contributions

The University’s contributions to the Faculty Retirement Plan continue during phased retirement, regardless of the percentage of leave without salary in effect at any time during the phased retirement. Contributions to the individual’s Faculty Retirement Plan account will be based on the individual’s unreduced salary, subject to contribution limits imposed by law. Faculty Retirement Plan contributions will cease according to the provisions of the retirement plan documents.

3. Other Retirement Plan Benefits

All contributions to University-sponsored retirement plans will cease according to the provisions of the retirement plan documents. After the last day of employment, the individual will have access to retirement plan accounts as provided by the applicable plan documents and investment contracts.

4. Life Insurance

The University’s contribution to life insurance coverage continues under this program. Life insurance coverage will continue during the phased retirement period, based on unreduced salary, subject to the terms of the group insurance policy.

5. Academic Disability Program

The University’s contributions to the Academic Disability Program continue under the program, regardless of the percentage of leave without salary in effect at any time during the phased retirement. In the event of certification of disability, payments may not exceed the level of the phased retirement actual salary. Coordination of benefits between the Academic Disability Program and the Phased Retirement Program is detailed within the Academic Disability Program. Contributions to the Academic Disability Program end on the last day of employment.

6. Vacation

During the phased retirement period, participants will continue to accrue vacation if they are on a 12-month appointment, and their percentage of effort is 67 percent or greater. Otherwise, they will not continue to accrue vacation. To the extent participants have a positive balance in their vacation account when they enter the phased retirement period, they must use it during the phased retirement period, or they will lose it.  Vacation accrued but unused during the phased retirement period will be considered vested and earned at the end of the phased retirement period, but only if the participant signs the final release used in connection with the program. Such vacation is typically paid out within 2-3 payroll cycles after an employee's departure.

Benefit earned at the End of the Phased Retirement Program:

For those individuals who have medical coverage at the end of the phased retirement period, the University will deposit a lump sum amount to the State of Minnesota's Health Care Savings Plan (HCSP). This lump sum will be calculated as of January 1 of each calendar year and will be based upon the subsidy of two adults for 24 months in the Twin Cities base medical and dental plans. If an individual fulfills the terms of the program, retires, and signs the release, but dies prior to the deposit to the HCSP, a taxable cash payment equal (in gross) to the amount of the HCSP lump sum will be made to the individual’s spouse, or if none, to the employee’s estate. If the individual has waived participation in the HSCP under the terms of the plan, no lump sum will be deposited, and no further benefits will be due post-employment.

Benefits after Departing from the University:

1. Retiree Medical and Dental Coverage

If eligible, participants in the medical and/or dental program may continue coverage(s) in effect at the time of retirement as retirees, subject to the terms of the program in which they participate (either a University plan or federal). Additional information on University retiree coverage may be found on the Office of Human Resources website. Retirees will need to pay the full premiums.

2. Consolidated Omnibus Budget Reconciliation Act (COBRA)

If eligible, individuals may elect to continue certain benefit coverage under COBRA. Participants should refer to the COBRA page within the OHR website for protocols for electing COBRA benefits. Retirees will need to pay the full premiums.

3. Continuation of Coverage for Life Insurance

Individuals may opt to continue the coverage(s) in place at retirement. The premiums would no longer be subsidized by the University. Please see the OHR website for details. Retirees will need to pay the full premiums.

Termination of Employment and Returning to the University

The purpose of this policy is to encourage retirement. The individual must terminate employment and surrender tenure or rights to a continuous appointment no earlier than one year and no later than five years after the last day of regular appointment. The last day of employment must be specified in writing and must be mutually agreed upon by the faculty member or academic professional with a continuous appointment, the unit administrator, dean or other appropriate senior leader and the Senior Director, Total Rewards (Office of Human Resources).

Once retired, individuals may not return to work at the University for a minimum of 6 months. This restriction includes summer appointments. After that time, working in a non-benefits-eligible appointment, or as an independent contractor, if eligible, pending approval by the academic unit in which the work is carried out is allowed. A non-benefits eligible appointment is defined as a temporary, non-tenured appointment with scheduled hours of 19.5 per week or less.

In consideration of the benefits received through the program, each release signed releases the University from all future claims, including tenure rights and rights to a continuous appointment.

Disability

If a faculty member or academic professional with a continuous appointment becomes totally disabled on or before their last day of regular appointment prior to the beginning of their phased retirement, the phased retirement agreement is void. In this situation, only disability benefits apply, under the terms and conditions of the faculty member's regular appointment.

If a faculty member or academic professional with a continuous appointment becomes totally disabled at any time during the term of the phased agreement, the agreement will end on the original ending date. After the last day of employment, the faculty member or academic professional with a continuous appointment will have no further employment claims on the University and will surrender all tenure rights.

If the faculty member or academic professional with a continuous appointment continues to be totally disabled past the end date of the phased retirement agreement, the continuing disability benefit will be based upon their last actual salary amount paid during the phased retirement (i.e. the reduced salary). Disability payments continue until the end of the normal disability benefit period.

During the term of the phased agreement, the faculty member or academic professional with a continuous appointment will receive Faculty Retirement Plan contributions based on their full, unreduced base salary. For the period of time during which such faculty member or academic professional with a continuous appointment is totally disabled, the retirement plan waiver in the disability plan will fund those contributions.

A faculty member's or academic professional with a continuous appointment's health insurance subsidy will follow the provisions of the phased agreement, regardless of disability status. Health insurance subsidy is limited to the term of the phased retirement agreement. The HCSP deposit will be made upon termination of employment and surrender of tenure rights.

Death

If an employee who enters into a phased retirement agreement dies prior to the end of the phased retirement term, the phased retirement agreement is null and void and applicable death benefits are provided to the employee’s spouse, dependents, or beneficiary.

If an employee dies after the phased retirement term but prior to the HCSP deposit being made to them, a taxable cash payment equal (in gross) to the amount of the earned HCSP deposit will be made to the surviving spouse (if applicable) or the employee’s estate as a lump sum.

Exception Circumstances and Protocols

The Phased Retirement Agreement, Releases, and any other documents executed in connection with this program constitute a legally binding contract between the participant and the University. They can be amended by the mutual agreement of the parties.