Supplemental Benefits Plan
Responsible University Officer(s):
- Vice President for Human Resources
- Director of Total Compensation
Individuals who are eligible for the Supplemental Benefits Plan include:
- participants in the Faculty Retirement Plan (FRP) prior to October 1, 1963; surviving spouses of those individuals who were participants in the FRP prior to October 1, 1963 and who elected benefits from that plan in the form of a joint and survivor annuity; and
- female participants in the FRP for whom contributions to the plan were made at any time prior to July 1, 1982.
The eligible population under the plan is a closed group. All potential participants in this plan have been identified and, given the groups participating, no additional participants are expected.
The Supplemental Benefits Plan is a University-funded defined benefit plan designed to provide additional retirement benefits for certain groups of individuals. These former employees participated in the FRP, but, due to plan design issues, have retirement income levels that are significantly lower than those of current participants. No benefit is provided in this plan until the individual incurs a separation of service, as defined by the Internal Revenue Service. In general, a separation of service occurs when the employment relationship is severed in its entirety due to retirement, termination, or death. In any event, no benefit is provided by this plan while the individual maintains an employment relationship with the University.
To the extent that individual plan design issues may be adopted and implemented by the University, this policy will remain the authoritative document of those benefits. To the extent that actuarial assumptions and plan design issues are specified in state statute, state statute will be the overriding authority.
Additional benefits are provided to the first two groups above because the contributions in the FRP were significantly lower prior to October 1, 1963, causing reduced retirement income for those employees.
Separate male and female annuity factors are used to annuitize pre-July 1, 1982 FRP account balances, a practice which reduces retirement income to female participants, who have longer life expectancies. The benefits provided to the third group above seek to equalize these pre-July 1, 1982 amounts.
Surviving spouses of vice presidents who receive special benefits are eligible to receive a benefit from this plan, but are ineligible for benefit increases, due to the exclusive nature of the benefit provided. (The surviving spouses of vice presidents who receive special benefits receive a 50% survivor payment even if the vice president elected a life-only benefit.)
Benefits in this plan cease upon the death of the FRP participant, or in the case of those pre-1963 participants who elected a joint and survivor annuity, upon the death of both the FRP participant and participant's spouse. The University retains the right to recover any payments made in error to deceased individuals.
REASON FOR POLICY
The University chooses to fund a defined benefit plan to provide additional retirement benefits for certain groups of individuals who participated in FRP, but who, due to plan design issues, have retirement income levels that are significantly lower than those of current participants. The second goal of Board of Regents Policy: Faculty and Staff Retirement specifically states that University retirement programs should be competitive. Prior to 1963, the Faculty Retirement Plan contained certain design features that limited its competitiveness. This policy is designed to help remedy these limitations, while maintaining the position that University-provided retirement plans are not intended to be a retiree's sole income source in retirement.
|Employee Benefits||Employee Benefits Service Center||612-624-9090 or 800-756-2363, option email@example.com|
- COLA Amount
- The Cost of Living Adjustment Amount, which was set at $20,500 on July 1, 1994, and is increased each July 1 by the cost-of-living increase applied to Social Security the previous January.
- Eligible Participants
- Pre-10/1/63 participants who retired no later than one year prior to each July 1 increase, excluding those vice presidents who qualified for special benefits, but including surviving spouses of retirees who elected the survivorship option. Eligible Participants will also include female Faculty Retirement Plan participants for whom contributions were made prior to July 1, 1982.
- Estimated Life Annuity
- The individual's accumulated cash value of funds in the FRP at retirement, converted to a fixed dollar life annuity, using the fixed annuity factor under FRP. Variable accumulations are converted on a fixed basis for this purpose. Prior endowment accumulations are treated as annuities in this calculation.
- Faculty Retirement Plan (FRP)
- A defined contribution plan sponsored by Board of Regents of the University.
- Final Five Year Average Salary
- The sum of the individual's base salary for the final five years of employment, divided by 5, and subject to the following maximums of the indicated retirement years:
Year Maximum Year Maximum Year Maximum 1976-77 $37,200 1985-86 $53,000 1994-95 $75,400 1977-78 $38,700 1986-87 $55,100 1995-96 $78,400 1978-79 $40,300 1987-88 $57,300 1996-97 $81,600 1979-80 $41,900 1988-89 $59,600 1997-98 $84,800 1980-81 $43,600 1989-90 $62,000 1998-99 $88,200 1981-82 $45,300 1990-91 $64,500 1999-00 $91,700 1982-83 $47,100 1991-92 $67,000 2000-01 $95,400 1983-84 $49,000 1992-93 $69,700 2001-02 $99,200 1984-85 $51,000 1993-94 $72,500 2002-03 $103,200
- Primary Social Security Amount
- The benefit a person would receive if electing to begin receiving benefits at the person's normal retirement age.
- Unisex Supplement
- The benefit calculated in Section E under BENEFITS.
- University Supplement
- The benefit calculated in Sections C and D under BENEFITS.
- Retired Participant
- Notifies the Office of Human Resources upon retirement.
- Files tax withholding form with Employee Benefits and updates as necessary.
- Completes a direct deposit form if desired.
- Ensures that other family members or executors know to notify Employee Benefits immediately upon the Participant's death.
- Office of Human Resources - Employee Benefits
- Ensures proper calculation and payment of University supplement amounts throughout the year.
- Coordinates the preparation of the annual actuarial report.
- Funds the plan, based on requirements detailed in the actuarial report.
- Completes the annual budget process to adequately plan for contribution payments.
- Board of Regents Policy: Faculty and Staff Retirement
- Comprehensive Review, Minor Revision. Includes minor organizational revisions that are being applied to all Human Resources policies.
- February 2009 - Minor edits were made. Procedure language in policy moved to the procedure document. Additional language was added to the reason.
- December 2008 - Policy converted to the new University-wide format for administrative policies.
- July 1977
- July 1977