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.