University California reducing pension payout for contingent annuitants

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Topic Author
Fractalleaf
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University California reducing pension payout for contingent annuitants

Post by Fractalleaf »

Any UC employees close to retirement? This announcement caught me off guard, I never received any communication in the mail regarding the proposed changes to our pensions. The negative changes primarily affect those who will name a contingent annuitant for continuation of survivor pension payments. The new calculations won't show up in the pension estimator until April 1, 2024 (appropriate date) and will be implemented on July 1, 2024. That provides only 3 months to prepare for retirement if the reduction is substantial.

https://ucnet.universityofcalifornia.ed ... MAIL_ID%5D
The changes to the factors used in the calculation of benefits under Payment Options A-D will vary and depend on the ages of the member and contingent annuitant. Generally, there will be decreases at many common retirement ages for the member and contingent annuitant. This will lead to lower benefits payable under these options for retirements on or after July 1, 2024....

The new factors are scheduled to be implemented in UCRAYS on April 1, 2024, for retirements on or after July 1, 2024. The current factors will continue to be used for retirements prior to July 1, 2024.
jackrabbit14
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Re: University California reducing pension payout for contingent annuitants

Post by jackrabbit14 »

Thank you for posting this.
GAAP
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Re: University California reducing pension payout for contingent annuitants

Post by GAAP »

Not particularly surprising, there are inherent issues with pension plans in general -- one reason my wife went the cashout route:

State Street Corporation (UC Investments’ single biggest partner) Chairman and CEO Ron O’Hanley:
“I agree that pension plans were already endangered, and with the crisis, they’re even more at risk. This is particularly true with public plans, which have been chronically underfunded. Here’s why: Germany’s Iron Chancellor from the 19th century, Otto von Bismarck, designed the first pension plan to start paying off at 65 at a time when the average life expectancy was somewhere between 59 and 60 years. A pretty good deal for the plan sponsor, right? The problem is we haven’t adjusted plans for dramatic increases in longevity since then, and in fact, many public plans have promised additional benefits to those already in retirement. But this economic crisis may be the tipping point at which we finally say, “We’ve got to make some changes here.” I don’t see a way of fixing public pension plans without everyone giving something up — beneficiaries as well as taxpayers — and instituting some kind of proportionate sharing of risk. Personally, I think we ought to use this crisis as an opportunity to fix pension plans, not do away with them.”
– UC Annual Report 2020
“Adapt what is useful, reject what is useless, and add what is specifically your own.” ― Bruce Lee
popoki
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Re: University California reducing pension payout for contingent annuitants

Post by popoki »

How sad for these employees who worked for less pay than their private-sector peers, with the pension benefit to themselves and their beneficiaries being the main reason to have worked in the system.

I'm sure many of the beneficiaries didn't work outside the home due to caring for children, etc. knowing that they could rely on the stable income of the pension if their spouse pre-deceased. I'd guess that most of them are women who will outlive their husbands.

Hopefully, current employees are "grandfathered" out of this negative effect.

I don't know if UC employees pay into Social Security, but if not, that just makes the situation even worse.

What an embarrassing betrayal by the politicians, trustees, or whoever made this decision.
Gray doesn't matter.
GAAP
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Re: University California reducing pension payout for contingent annuitants

Post by GAAP »

From the linked announcement:
These changes will not impact the calculation of Basic Retirement Income. However, for retirements on or after July 1, 2024, changes will be implemented in the calculations of the UCRP lump sum cashout and UCRP monthly retirement income for members and contingent annuitants under Payment Options A-D.
“Adapt what is useful, reject what is useless, and add what is specifically your own.” ― Bruce Lee
stan1
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Re: University California reducing pension payout for contingent annuitants

Post by stan1 »

I'm not clear who this impacts with the term "contingent annuitant", is this a spouse or someone else such as an adult child someone might name?
JGS88
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Re: University California reducing pension payout for contingent annuitants

Post by JGS88 »

Thanks for the post. I wasn't aware of this. It doesn't seem like they should be able to move the goal post like that.

My wife was all set to start retirement on July 1, 2024 and take one of the payment options. Now we will go back and possibly go for the lump sum.
Topic Author
Fractalleaf
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Re: University California reducing pension payout for contingent annuitants

Post by Fractalleaf »

GAAP wrote: Fri Mar 08, 2024 5:57 pm From the linked announcement:
These changes will not impact the calculation of Basic Retirement Income. However, for retirements on or after July 1, 2024, changes will be implemented in the calculations of the UCRP lump sum cashout and UCRP monthly retirement income for members and contingent annuitants under Payment Options A-D.
People who do not elect any contingent annuitant, usually spouses, won’t be affected. However anyone who wants payments to continue after death will be getting less, with the reduction probably tied to the survivor’s age. This also affects anyone who “dies in their boots”, as the default coverage for the surviving spouse is full continuance.

Apparently the decision to make changes was approved last year but I don’t recall any mention of it. They should at least provide examples of the degree of reduced benefit we can expect. The vague wording and short notice are frustrating.
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Fractalleaf
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Re: University California reducing pension payout for contingent annuitants

Post by Fractalleaf »

stan1 wrote: Fri Mar 08, 2024 6:01 pm I'm not clear who this impacts with the term "contingent annuitant", is this a spouse or someone else such as an adult child someone might name?
It’s usually a spouse but some people do elect an adult child, subject to IRS regulations. I once inquired about the adult child option but was told I must wait until retirement and request the information as part of the process. The plan allows for 3 continuance options (A,B,C) for survivors. With plan A the survivor will continue to receive the same pension, which is reduced from the amount the retiree would receive if no contingent annuitant was designated. Plan B allows the retiree to receive more, but upon death the survivor gets 75% of that amount.
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Fractalleaf
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Re: University California reducing pension payout for contingent annuitants

Post by Fractalleaf »

JGS88 wrote: Fri Mar 08, 2024 6:12 pm Thanks for the post. I wasn't aware of this. It doesn't seem like they should be able to move the goal post like that.

My wife was all set to start retirement on July 1, 2024 and take one of the payment options. Now we will go back and possibly go for the lump sum.
She might want to just push the retirement date up by a month. The lump sum is tempting but it’s a huge tax hit, plus you forfeit Medicare supplements and some flexibility in choosing Medicare plans. For example, with UC retiree medical coverage you can move more easily between Medicare Advantage plans and regular Medicare supplemental plans without worrying about underwriting (preexisting conditions).

Again, if they would just give a hint about the degree of reduction it would help with decision making.
Jeepergeo
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Re: University California reducing pension payout for contingent annuitants

Post by Jeepergeo »

popoki wrote: Fri Mar 08, 2024 5:42 pm How sad for these employees who worked for less pay than their private-sector peers, with the pension benefit to themselves and their beneficiaries being the main reason to have worked in the system.

I'm sure many of the beneficiaries didn't work outside the home due to caring for children, etc. knowing that they could rely on the stable income of the pension if their spouse pre-deceased. I'd guess that most of them are women who will outlive their husbands.

Hopefully, current employees are "grandfathered" out of this negative effect.

I don't know if UC employees pay into Social Security, but if not, that just makes the situation even worse.

What an embarrassing betrayal by the politicians, trustees, or whoever made this decision.
Please, provide the proof (studies, independent analyses) that these government employees were paid less than their private sector peers. Please don't include pieces that don’t factor in everything such as paid time off, holidays, years required before one can retire, and post-retirement benefits such as health care supplements, etc.
GAAP
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Re: University California reducing pension payout for contingent annuitants

Post by GAAP »

Fractalleaf wrote: Fri Mar 08, 2024 6:59 pm
JGS88 wrote: Fri Mar 08, 2024 6:12 pm Thanks for the post. I wasn't aware of this. It doesn't seem like they should be able to move the goal post like that.

My wife was all set to start retirement on July 1, 2024 and take one of the payment options. Now we will go back and possibly go for the lump sum.
She might want to just push the retirement date up by a month. The lump sum is tempting but it’s a huge tax hit, plus you forfeit Medicare supplements and some flexibility in choosing Medicare plans. For example, with UC retiree medical coverage you can move more easily between Medicare Advantage plans and regular Medicare supplemental plans without worrying about underwriting (preexisting conditions).

Again, if they would just give a hint about the degree of reduction it would help with decision making.
The lump sum is eligible for a rollover to an IRA. The benefits could be the deal-breaker, depending upon the options available for the spouse.
“Adapt what is useful, reject what is useless, and add what is specifically your own.” ― Bruce Lee
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Fractalleaf
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Re: University California reducing pension payout for contingent annuitants

Post by Fractalleaf »

GAAP wrote: Fri Mar 08, 2024 7:31 pm
Fractalleaf wrote: Fri Mar 08, 2024 6:59 pm
JGS88 wrote: Fri Mar 08, 2024 6:12 pm Thanks for the post. I wasn't aware of this. It doesn't seem like they should be able to move the goal post like that.

My wife was all set to start retirement on July 1, 2024 and take one of the payment options. Now we will go back and possibly go for the lump sum.
She might want to just push the retirement date up by a month. The lump sum is tempting but it’s a huge tax hit, plus you forfeit Medicare supplements and some flexibility in choosing Medicare plans. For example, with UC retiree medical coverage you can move more easily between Medicare Advantage plans and regular Medicare supplemental plans without worrying about underwriting (preexisting conditions).

Again, if they would just give a hint about the degree of reduction it would help with decision making.
The lump sum is eligible for a rollover to an IRA. The benefits could be the deal-breaker, depending upon the options available for the spouse.
I didn’t know the lump sum could be rolled over, good thing I’m scheduled for a retirement planning webinar next week. I’ll have a lot of questions for them!
Thesaints
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Re: University California reducing pension payout for contingent annuitants

Post by Thesaints »

Sweet! Lump sum will increase a bit.
Yes, it can be rolled over into an IRA
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Fractalleaf
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Re: University California reducing pension payout for contingent annuitants

Post by Fractalleaf »

Thesaints wrote: Fri Mar 08, 2024 10:20 pm Sweet! Lump sum will increase a bit.
Yes, it can be rolled over into an IRA
Aside from losing retiree medical benefits, the lump sum option is tempting. It would allow a few years gap between retirement and RMDs, perhaps a good opportunity for Roth conversions.
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Sandi_k
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Re: University California reducing pension payout for contingent annuitants

Post by Sandi_k »

Thanks for posting this - it's the first I've heard of the changes to the calculations.

I sent out a note to the faculty and staff in my unit, to alert them. Very much appreciated!
talzara
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Re: University California reducing pension payout for contingent annuitants

Post by talzara »

Fractalleaf wrote: Fri Mar 08, 2024 6:59 pm Again, if they would just give a hint about the degree of reduction it would help with decision making.
Here are the changes to the mortality tables that were adopted at the July 2023 meeting. These are not payout rates, so you'd have to do the calculation. The mortality improvement scale adds another complication to the calculation.

15% is a very large decrease for male faculty retirees. I don't know of any medical advances in the last 14 years that have reduced male mortality by 15%. Male faculty at the University of California must be much healthier than all male teachers in the United States. The Pub-2010 Teacher mortality table is based on mortality experience for all American teachers, including K-12 and college.
Pre-Retirement – Pub-2010 Teacher Employee Amount-Weighted Above-Median Mortality Table, table rates decreased by 10% for males and decreased by 5% for females, projected generationally with the two-dimensional mortality improvement scale MP-2021

Healthy Retirees – Pub-2010 Teacher Healthy Retiree Amount-Weighted Above-Median Mortality Table, projected generationally with the two-dimensional mortality improvement scale MP-2021. For Faculty, table rates are decreased by 15% for males and decreased by 5% for females. For Staff & Safety, table rates are not adjusted for males and increased by 5% for females.

Beneficiaries in Pay Status as of Valuation – Pub-2010 Contingent Survivor Amount-Weighted Above-Median Mortality Table, table rates are not adjusted for males and decreased by 10% for females, projected generationally with two-dimensional mortality improvement scale MP-2021.

https://regents.universityofcalifornia. ... ttach1.pdf
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Fractalleaf
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Re: University California reducing pension payout for contingent annuitants

Post by Fractalleaf »

talzara wrote: Sun Mar 10, 2024 4:32 pm
Fractalleaf wrote: Fri Mar 08, 2024 6:59 pm Again, if they would just give a hint about the degree of reduction it would help with decision making.
Here are the changes to the mortality tables that were adopted at the July 2023 meeting. These are not payout rates, so you'd have to do the calculation. The mortality improvement scale adds another complication to the calculation.

15% is a very large decrease for male faculty retirees. I don't know of any medical advances in the last 14 years that have reduced male mortality by 15%. Male faculty at the University of California must be much healthier than all male teachers in the United States. The Pub-2010 Teacher mortality table is based on mortality experience for all American teachers, including K-12 and college.
Pre-Retirement – Pub-2010 Teacher Employee Amount-Weighted Above-Median Mortality Table, table rates decreased by 10% for males and decreased by 5% for females, projected generationally with the two-dimensional mortality improvement scale MP-2021

Healthy Retirees – Pub-2010 Teacher Healthy Retiree Amount-Weighted Above-Median Mortality Table, projected generationally with the two-dimensional mortality improvement scale MP-2021. For Faculty, table rates are decreased by 15% for males and decreased by 5% for females. For Staff & Safety, table rates are not adjusted for males and increased by 5% for females.

Beneficiaries in Pay Status as of Valuation – Pub-2010 Contingent Survivor Amount-Weighted Above-Median Mortality Table, table rates are not adjusted for males and decreased by 10% for females, projected generationally with two-dimensional mortality improvement scale MP-2021.

https://regents.universityofcalifornia. ... ttach1.pdf
Very interesting! Thank you for unearthing that document. Interesting that they predict a decrease in the number of members electing the lump sum distribution. The notice stated that lump sum totals will increase, so they are making the carrot bigger to lure more people to that option.

I'm also dubious of the 15% drop in male faculty mortality. It's not clear to me how they will average the staff mortality with faculty mortality data, since we have many more staff than faculty. I'll bump this thread in April, once the new formulas are available.
Thesaints
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Re: University California reducing pension payout for contingent annuitants

Post by Thesaints »

15% mortality reduction is for healthy retirees, if I'm not mistaken. If people retired earlier, their mortality would drop (on average)
talzara
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Re: University California reducing pension payout for contingent annuitants

Post by talzara »

Thesaints wrote: Sun Mar 10, 2024 10:25 pm 15% mortality reduction is for healthy retirees, if I'm not mistaken. If people retired earlier, their mortality would drop (on average)
Mortality tables are already listed by age. If you retire earlier, you start at a different row in the table.

The 15% reduction to table rates is not making you younger. It's changing the mortality rates in the tables. You still start at the same row in the table, but the mortality rates are 15% lower on average.
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Fractalleaf
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Re: University California reducing pension payout for contingent annuitants

Post by Fractalleaf »

The new factors to calculate pension options have been implemented, and more detail is provided in this message:
https://ucnet.universityofcalifornia.ed ... -2024.html

The examples provided in the link are only for spouses who are the same age. A younger contingent annuitant will result in a greater reduction in monthly income. Our pension will be reduced by 1.5% after July 1. Rather than retire before July 1 when the changes go into effect, we will probably elect to work another year or two to maximize the highest average compensation.
Thesaints
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Re: University California reducing pension payout for contingent annuitants

Post by Thesaints »

Just checked and I got a 2.5% increase on the lump sum.
Point
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Re: University California reducing pension payout for contingent annuitants

Post by Point »

Jeepergeo wrote: Fri Mar 08, 2024 7:15 pm
popoki wrote: Fri Mar 08, 2024 5:42 pm How sad for these employees who worked for less pay than their private-sector peers, with the pension benefit to themselves and their beneficiaries being the main reason to have worked in the system.

I'm sure many of the beneficiaries didn't work outside the home due to caring for children, etc. knowing that they could rely on the stable income of the pension if their spouse pre-deceased. I'd guess that most of them are women who will outlive their husbands.

Hopefully, current employees are "grandfathered" out of this negative effect.

I don't know if UC employees pay into Social Security, but if not, that just makes the situation even worse.

What an embarrassing betrayal by the politicians, trustees, or whoever made this decision.
Please, provide the proof (studies, independent analyses) that these government employees were paid less than their private sector peers. Please don't include pieces that don’t factor in everything such as paid time off, holidays, years required before one can retire, and post-retirement benefits such as health care supplements, etc.
Having worked for the UC years ago, I recall that it’s actually not part of the CA government, ie, they’re not gov employees.

https://www.ucop.edu/research-policy-an ... ornia.html
mariezzz
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Re: University California reducing pension payout for contingent annuitants

Post by mariezzz »

Jeepergeo wrote: Fri Mar 08, 2024 7:15 pm
popoki wrote: Fri Mar 08, 2024 5:42 pm How sad for these employees who worked for less pay than their private-sector peers, with the pension benefit to themselves and their beneficiaries being the main reason to have worked in the system.

I'm sure many of the beneficiaries didn't work outside the home due to caring for children, etc. knowing that they could rely on the stable income of the pension if their spouse pre-deceased. I'd guess that most of them are women who will outlive their husbands.

Hopefully, current employees are "grandfathered" out of this negative effect.

I don't know if UC employees pay into Social Security, but if not, that just makes the situation even worse.

What an embarrassing betrayal by the politicians, trustees, or whoever made this decision.
Please, provide the proof (studies, independent analyses) that these government employees were paid less than their private sector peers. Please don't include pieces that don’t factor in everything such as paid time off, holidays, years required before one can retire, and post-retirement benefits such as health care supplements, etc.
It's really a common misconception that university faculty don't work during the times that classes aren't in session. That's an absolute myth.
Tenured & tenure-track faculty typically work 50+ hours a week (some quite a bit more), including during holidays. Faculty responsibilities include teaching, research, service (committee work, etc.), advising students (and not just about classes), involving students in research, writing recommendations for students, helping students, including advising them about grad school, writing grants to bring in funding for research, or student research opportunities, and so on.
I left a tenure-track faculty position and went to the private sector, and worked far fewer hours, for far more money. And fewer headaches.

Non-faculty UC employees don't get any more holiday or vacation time than is typical in the private sector for similar jobs. There is quite a bit of research showing that these UC employees typically are paid less than similar jobs in the private sector in the same general area as each university; the UC itself has talked about how they lose employees because of this. Decent retirement benefits are part of the reason why people stay, even though pay is lower. The last couple of high inflation years have exacerbated the difference. It's not hard to find such information with an internet search.

The real issue of this thread is how the goal posts were changed for employees. (And with very little notice.)
Ependytis
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Re: University California reducing pension payout for contingent annuitants

Post by Ependytis »

popoki wrote: Fri Mar 08, 2024 5:42 pm How sad for these employees who worked for less pay than their private-sector peers, with the pension benefit to themselves and their beneficiaries being the main reason to have worked in the system.

I'm sure many of the beneficiaries didn't work outside the home due to caring for children, etc. knowing that they could rely on the stable income of the pension if their spouse pre-deceased. I'd guess that most of them are women who will outlive their husbands.

Hopefully, current employees are "grandfathered" out of this negative effect.

I don't know if UC employees pay into Social Security, but if not, that just makes the situation even worse.

What an embarrassing betrayal by the politicians, trustees, or whoever made this decision.
When I was a kid in California in the 70’s, we paid 6% sales tax and had school buses, mental health facilities, some of the best schools in the country, and sewage was paid by the state. Today we pay a minimum of 7.5% and have none of these benefits. The reason is politicians over promised benefits to state employees in the form of pensions. At some point, either the pension benefits decrease or taxes increase. I’m alright with reducing the benefits. If taxes keep increasing as people will leave the state and the benefits will have to be reduced anyway.
Last edited by Ependytis on Fri Mar 29, 2024 11:15 pm, edited 2 times in total.
OrangeKiwi
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Re: University California reducing pension payout for contingent annuitants

Post by OrangeKiwi »

popoki wrote: Fri Mar 08, 2024 5:42 pm
What an embarrassing betrayal by the politicians, trustees, or whoever made this decision.
All the voters in the past who voted for leaders that promised low taxes AND the highest level of services? Voters who voted for leaders that exempted taxpayer funded defined benefit pensions, retiree healthcare, and and other retiree compensation plans from any type of funding rules such as ERISA 1974 or PPA 2006?
ClassII
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Re: University California reducing pension payout for contingent annuitants

Post by ClassII »

Ependytis wrote: Fri Mar 29, 2024 11:01 pmI’m alright with reducing the benefits.
^To me this has always been the biggest concern of ever getting on a government pension. Yes it's bulletproof in the sense that the state can't *technically* go bankrupt but the pension is also being kept afloat at the whims of the voter.

I think at some point, perhaps in the near future, the general public is going to get fed up with paying such lavish pensions to government employees of all stripes. When the average private worker is lucky to get a 5% match on their 401k, it's not easy to live next to the fireman who retired at 35 or the UC professor that gets to collect more in retirement than the private sector employee next door ever got as a paycheck. It doesn't matter how brave the fireman was or how important good public higher education is, that goodwill only gets you so far. In California, all it takes is a proposition to be filed with enough public support and it could all change the day after the election results are certified.

If you think it's politically unconscionable, just look at this UC system change. Nobody will even notice (and many may give it standing applause).
Thesaints
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Re: University California reducing pension payout for contingent annuitants

Post by Thesaints »

mariezzz wrote: Fri Mar 29, 2024 10:39 pm The real issue of this thread is how the goal posts were changed for employees. (And with very little notice.)
On a statistical basis, they have not been reduced
student
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Re: University California reducing pension payout for contingent annuitants

Post by student »

mariezzz wrote: Fri Mar 29, 2024 10:39 pm
Jeepergeo wrote: Fri Mar 08, 2024 7:15 pm
popoki wrote: Fri Mar 08, 2024 5:42 pm How sad for these employees who worked for less pay than their private-sector peers, with the pension benefit to themselves and their beneficiaries being the main reason to have worked in the system.

I'm sure many of the beneficiaries didn't work outside the home due to caring for children, etc. knowing that they could rely on the stable income of the pension if their spouse pre-deceased. I'd guess that most of them are women who will outlive their husbands.

Hopefully, current employees are "grandfathered" out of this negative effect.

I don't know if UC employees pay into Social Security, but if not, that just makes the situation even worse.

What an embarrassing betrayal by the politicians, trustees, or whoever made this decision.
Please, provide the proof (studies, independent analyses) that these government employees were paid less than their private sector peers. Please don't include pieces that don’t factor in everything such as paid time off, holidays, years required before one can retire, and post-retirement benefits such as health care supplements, etc.
It's really a common misconception that university faculty don't work during the times that classes aren't in session. That's an absolute myth.
Tenured & tenure-track faculty typically work 50+ hours a week (some quite a bit more), including during holidays. Faculty responsibilities include teaching, research, service (committee work, etc.), advising students (and not just about classes), involving students in research, writing recommendations for students, helping students, including advising them about grad school, writing grants to bring in funding for research, or student research opportunities, and so on.
I left a tenure-track faculty position and went to the private sector, and worked far fewer hours, for far more money. And fewer headaches.

Non-faculty UC employees don't get any more holiday or vacation time than is typical in the private sector for similar jobs. There is quite a bit of research showing that these UC employees typically are paid less than similar jobs in the private sector in the same general area as each university; the UC itself has talked about how they lose employees because of this. Decent retirement benefits are part of the reason why people stay, even though pay is lower. The last couple of high inflation years have exacerbated the difference. It's not hard to find such information with an internet search.

The real issue of this thread is how the goal posts were changed for employees. (And with very little notice.)
I don't quite understand the statement "The real issue of this thread is how the goal posts were changed for employees. (And with very little notice.)" I do agree with the issue of short notice. If the pension document says it is a straight formula of x% of an amount that is based on one's your final salary (or salaries of y years), then any change to it is changing the goal post. If the pension document says the calculation depends on mortality data, then they are just updating to reflect the current situation (assuming they are using correct data). It is not clear to me which of these two situations is a closer representation of the UC system.
student
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Re: University California reducing pension payout for contingent annuitants

Post by student »

ClassII wrote: Fri Mar 29, 2024 11:16 pm
Ependytis wrote: Fri Mar 29, 2024 11:01 pmI’m alright with reducing the benefits.
^To me this has always been the biggest concern of ever getting on a government pension. Yes it's bulletproof in the sense that the state can't *technically* go bankrupt but the pension is also being kept afloat at the whims of the voter.

I think at some point, perhaps in the near future, the general public is going to get fed up with paying such lavish pensions to government employees of all stripes. When the average private worker is lucky to get a 5% match on their 401k, it's not easy to live next to the fireman who retired at 35 or the UC professor that gets to collect more in retirement than the private sector employee next door ever got as a paycheck. It doesn't matter how brave the fireman was or how important good public higher education is, that goodwill only gets you so far. In California, all it takes is a proposition to be filed with enough public support and it could all change the day after the election results are certified.

If you think it's politically unconscionable, just look at this UC system change. Nobody will even notice (and many may give it standing applause).
I won't comment on the political aspect of the pension system of public employees. So I would just comment on the personal finance side. I have the same concern for any pension. To me, I rank the systems as follow.
1) Federal government pension.
2) 401k/403b/etc.
3) State pension.
4) municipal pension.
5) private pension.

Essentially I want the money in my name. However, I feel confident enough that no real change to the federal government pension in my lifetime, so I consider it the best. (BTW, I don't have a federal government pension.)
Flashes1
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Re: University California reducing pension payout for contingent annuitants

Post by Flashes1 »

From what I understand, California's property taxes are too low creating budgetary problems. The property taxes on a multi-million dollar estate can be lower than an average house in the Midwest. It's simply unsustainable. Coupled with the massive decline in college-age Americans and we're about to see a lot of universities simply disappearing in the coming years. Middle class Americans stopped having kids.

It looks like UC is trying to get ahead of the curve. It's an unfortunate turn of event for the employees but universities are trying to survive.
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Re: University California reducing pension payout for contingent annuitants

Post by Ependytis »

Flashes1 wrote: Sat Mar 30, 2024 8:18 am From what I understand, California's property taxes are too low creating budgetary problems. The property taxes on a multi-million dollar estate can be lower than an average house in the Midwest. It's simply unsustainable. Coupled with the massive decline in college-age Americans and we're about to see a lot of universities simply disappearing in the coming years. Middle class Americans stopped having kids.

It looks like UC is trying to get ahead of the curve. It's an unfortunate turn of event for the employees but universities are trying to survive.
It’s true California property taxes are lower relative to the cost of the home compared to other states. However, California homes are double the cost of homes elsewhere. The only way taxes will decrease is, if people start moving to other states. This way, they’re voting with their feet.
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Re: University California reducing pension payout for contingent annuitants

Post by Thesaints »

CA property taxes finance cities and counties. UC pensions are not financed by the State.

As if the pension has been changed, it has not. The pension payment for individuals stays the same, calculated according to the same formula. What change on Jul 1st are the formulas for alternative payments
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Re: University California reducing pension payout for contingent annuitants

Post by Sandi_k »

Ependytis wrote: Fri Mar 29, 2024 11:01 pm
When I was a kid in California in the 70’s, we paid 6% sales tax and had school buses, mental health facilities, some of the best schools in the country, and sewage was paid by the state. Today we pay a minimum of 7.5% and have none of these benefits. The reason is politicians over promised benefits to state employees in the form of pensions. At some point, either the pension benefits decrease or taxes increase. I’m alright with reducing the benefits. If taxes keep increasing as people will leave the state and the benefits will have to be reduced anyway.
You're not paying attention. Every municipality and local government office has vastly reduced pension guarantees over the past 15 years. There are different benefit tiers, depending on when you started your employment. Current hires have 401(k)-like options that are portable.

And specifically to UC, the state of California was offered a "funding holiday" in the recession of 1992-93 because UCRP was very much over-funded. The state said "THANKS!" and has never again paid into UCRP. What was meant as a collaborative solution to a temporary problem became a huge betrayal of UC employees.

Additionally, UCRP participants pay 7.95% of gross pay into the UCRP system themselves.

Note that the state still pays matching funds into the retirement system for CSU and state teachers - CalPERS and CalSTRS.

But not UCRP.
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Re: University California reducing pension payout for contingent annuitants

Post by anagram »

Flashes1 wrote: Sat Mar 30, 2024 8:18 am From what I understand, California's property taxes are too low creating budgetary problems. The property taxes on a multi-million dollar estate can be lower than an average house in the Midwest. It's simply unsustainable. Coupled with the massive decline in college-age Americans and we're about to see a lot of universities simply disappearing in the coming years. Middle class Americans stopped having kids.

It looks like UC is trying to get ahead of the curve. It's an unfortunate turn of event for the employees but universities are trying to survive.
Please provide numbers that show that "The property taxes on a multi-million dollar estate can be lower than an average house in the Midwest."

Here is a house in Ohio:

https://www.zillow.com/homedetails/2565 ... 6599_zpid/

Property taxes are $3,422 and they increased 29% in a year!

Please show me a multi-million dollar estate in CA with property taxes of $3,422. I will purchase it today.
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Re: University California reducing pension payout for contingent annuitants

Post by Sandi_k »

Fractalleaf wrote: Thu Mar 28, 2024 5:56 pm The new factors to calculate pension options have been implemented, and more detail is provided in this message:
https://ucnet.universityofcalifornia.ed ... -2024.html

The examples provided in the link are only for spouses who are the same age. A younger contingent annuitant will result in a greater reduction in monthly income. Our pension will be reduced by 1.5% after July 1. Rather than retire before July 1 when the changes go into effect, we will probably elect to work another year or two to maximize the highest average compensation.
Fractalleaf, perhaps you can help my understanding of what's been loaded into the calculator.

Thanks to your original post, I relayed the information to my department, and to other managers on campus. Late this week, APO and the Vice Provost's office also circulated the news, and recommended that employees run the scenarios as noted below:

"If you are planning on retiring on 7/1/24, please run two different retirement estimates to see which is more financially advantageous for your particular situation:

One with a 6/27/24 separation date and a 7/1/24 retirement date
One with a 6/29/24 separation date and a 6/30/24 retirement date."


I did so, and the difference between the two is ~ a 1.2% increase for electing to stay into AY25. In other words, I get slightly MORE in the new calculations. I expected a decrease in the Option A 100% survivor benefits for my husband.

I understand that the mortality tables have been updated to reflect survivors' expanded ages, and that the model is based on employee and survivor at the same age.

Is the increase in payout because I am female, and two years younger than my contingent annuitant? Which means I really don't need to worry about a reduction?
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Re: University California reducing pension payout for contingent annuitants

Post by Thesaints »

Could it be that they have started including the 2% inactive cola in the calculator ?
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Re: University California reducing pension payout for contingent annuitants

Post by nanotom »

Thesaints wrote: Sat Mar 30, 2024 3:40 pm Could it be that they have started including the 2% inactive cola in the calculator ?
Yes, this should be it, noticed that in my own estimates. Sandi, is your basic (non-contingent-annuitant) benefit 2% higher?
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Re: University California reducing pension payout for contingent annuitants

Post by Thesaints »

My lump-sum estimate goes up 2.5% on Jul 1. That must be 0.5% from revised longevity + 2% inactive COLA.
The press release said to expect a 0.36-0.56% adjustment depending on age.
Differently from the past, they have started including that adjustment in advance. Beware not to overestimate your pension by 2% this year.
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Re: University California reducing pension payout for contingent annuitants

Post by celia »

anagram wrote: Sat Mar 30, 2024 11:29 am
Flashes1 wrote: Sat Mar 30, 2024 8:18 am From what I understand, California's property taxes are too low creating budgetary problems. The property taxes on a multi-million dollar estate can be lower than an average house in the Midwest. It's simply unsustainable. Coupled with the massive decline in college-age Americans and we're about to see a lot of universities simply disappearing in the coming years. Middle class Americans stopped having kids.

It looks like UC is trying to get ahead of the curve. It's an unfortunate turn of event for the employees but universities are trying to survive.
Please provide numbers that show that "The property taxes on a multi-million dollar estate can be lower than an average house in the Midwest."

Here is a house in Ohio:

https://www.zillow.com/homedetails/2565 ... 6599_zpid/

Property taxes are $3,422 and they increased 29% in a year!

Please show me a multi-million dollar estate in CA with property taxes of $3,422. I will purchase it today.
Our property taxes in CA are close to $3,422 due to prop 13. But our house is not for sale! (We have other assets that make our estate worth a lot more than that.)

I settled an estate in MI a few years ago and was very surprised that the $150k condo I had to sell there had the same yearly property tax as our million dollar house in CA. However, I read this statement different than you do:
The property taxes on a multi-million dollar estate can be lower than an average house in the Midwest.
This says to me that our property taxes should be less than the value of a house. I certainly hope so! Else we would be paying the government the value of a house every year.
Last edited by celia on Sat Mar 30, 2024 4:45 pm, edited 1 time in total.
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Re: University California reducing pension payout for contingent annuitants

Post by Flashes1 »

anagram wrote: Sat Mar 30, 2024 11:29 am
Flashes1 wrote: Sat Mar 30, 2024 8:18 am From what I understand, California's property taxes are too low creating budgetary problems. The property taxes on a multi-million dollar estate can be lower than an average house in the Midwest. It's simply unsustainable. Coupled with the massive decline in college-age Americans and we're about to see a lot of universities simply disappearing in the coming years. Middle class Americans stopped having kids.

It looks like UC is trying to get ahead of the curve. It's an unfortunate turn of event for the employees but universities are trying to survive.
Please provide numbers that show that "The property taxes on a multi-million dollar estate can be lower than an average house in the Midwest."

Here is a house in Ohio:

https://www.zillow.com/homedetails/2565 ... 6599_zpid/

Property taxes are $3,422 and they increased 29% in a year!

Please show me a multi-million dollar estate in CA with property taxes of $3,422. I will purchase it today.
I should probably have qualified my comment "average Boglehead" as we are the elite of the elite.

Granted a lot of my info if anecdotal from this message board. I've seen posts where the Californian said they would never leave their $2 million house because they only pay $6k/year or so in property taxes and I'm sitting here in the Midwest paying $12k for a house I paid half as much. But then my schools and social programs are top notch compared to most of California so you get what you pay for I guess.

It just goes to show that an astute employee shouldn't rely on a pension much like I don't want to rely on my SS because it can change.
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Re: University California reducing pension payout for contingent annuitants

Post by Thesaints »

Flashes1 wrote: Sat Mar 30, 2024 4:42 pm It just goes to show that an astute employee shouldn't rely on a pension much like I don't want to rely on my SS because it can change.
Applying the same philosophy, don't rely on bonds either, because their issuer can default...
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Re: University California reducing pension payout for contingent annuitants

Post by anagram »

celia wrote: Sat Mar 30, 2024 4:41 pm
anagram wrote: Sat Mar 30, 2024 11:29 am
Flashes1 wrote: Sat Mar 30, 2024 8:18 am From what I understand, California's property taxes are too low creating budgetary problems. The property taxes on a multi-million dollar estate can be lower than an average house in the Midwest. It's simply unsustainable. Coupled with the massive decline in college-age Americans and we're about to see a lot of universities simply disappearing in the coming years. Middle class Americans stopped having kids.

It looks like UC is trying to get ahead of the curve. It's an unfortunate turn of event for the employees but universities are trying to survive.
Please provide numbers that show that "The property taxes on a multi-million dollar estate can be lower than an average house in the Midwest."

Here is a house in Ohio:

https://www.zillow.com/homedetails/2565 ... 6599_zpid/

Property taxes are $3,422 and they increased 29% in a year!

Please show me a multi-million dollar estate in CA with property taxes of $3,422. I will purchase it today.
Our property taxes in CA are close to $3,422 due to prop 13. But our house is not for sale!

I settled an estate in MI a few years ago and was very surprised that the $150k condo I had to sell there had the same yearly property tax as our million dollar house in CA. However, I read this statement different than you do:
The property taxes on a multi-million dollar estate can be lower than an average house in the Midwest.
This says to me that our property taxes should be less than the value of a house. I certainly hope so! Else we would be paying the government the value of a house every year.
I guess you bought your house 40+ years ago to achieve $3,000 in property tax. I don't think most people are not in that situation.

Good point. In that case, that post is entirely correct. I don't own an estate but my property taxes are less than the cost of a house in the Midwest! :sharebeer
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Re: University California reducing pension payout for contingent annuitants

Post by anagram »

Flashes1 wrote: Sat Mar 30, 2024 4:42 pm
anagram wrote: Sat Mar 30, 2024 11:29 am
Flashes1 wrote: Sat Mar 30, 2024 8:18 am From what I understand, California's property taxes are too low creating budgetary problems. The property taxes on a multi-million dollar estate can be lower than an average house in the Midwest. It's simply unsustainable. Coupled with the massive decline in college-age Americans and we're about to see a lot of universities simply disappearing in the coming years. Middle class Americans stopped having kids.

It looks like UC is trying to get ahead of the curve. It's an unfortunate turn of event for the employees but universities are trying to survive.
Please provide numbers that show that "The property taxes on a multi-million dollar estate can be lower than an average house in the Midwest."

Here is a house in Ohio:

https://www.zillow.com/homedetails/2565 ... 6599_zpid/

Property taxes are $3,422 and they increased 29% in a year!

Please show me a multi-million dollar estate in CA with property taxes of $3,422. I will purchase it today.
I should probably have qualified my comment "average Boglehead" as we are the elite of the elite.

Granted a lot of my info if anecdotal from this message board. I've seen posts where the Californian said they would never leave their $2 million house because they only pay $6k/year or so in property taxes and I'm sitting here in the Midwest paying $12k for a house I paid half as much. But then my schools and social programs are top notch compared to most of California so you get what you pay for I guess.

It just goes to show that an astute employee shouldn't rely on a pension much like I don't want to rely on my SS because it can change.
You mean the "average Boglehead" estate in CA?

Sure, if you bought that $2 million house 50 years ago, but that is not typical.
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Re: University California reducing pension payout for contingent annuitants

Post by GAAP »

celia wrote: Sat Mar 30, 2024 4:41 pm Our property taxes in CA are close to $3,422 due to prop 13. But our house is not for sale! (We have other assets that make our estate worth a lot more than that.)
For those that don't remember or never lived there, this is the reason why Prop 13 passed. People like Celia were getting priced out of their homes by property taxes. California has plenty of other ways make revenue -- not to mention some "creative" ways around that limitation.

In any case, this discussion is getting derailed and also getting perilously close to forbidden topics and/or excessive heat.
“Adapt what is useful, reject what is useless, and add what is specifically your own.” ― Bruce Lee
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Re: University California reducing pension payout for contingent annuitants

Post by anagram »

GAAP wrote: Sat Mar 30, 2024 5:22 pm
celia wrote: Sat Mar 30, 2024 4:41 pm Our property taxes in CA are close to $3,422 due to prop 13. But our house is not for sale! (We have other assets that make our estate worth a lot more than that.)
For those that don't remember or never lived there, this is the reason why Prop 13 passed. People like Celia were getting priced out of their homes by property taxes. California has plenty of other ways make revenue -- not to mention some "creative" ways around that limitation.

In any case, this discussion is getting derailed and also getting perilously close to forbidden topics and/or excessive heat.
Discussing property taxes paid is not a forbidden topic. I was addressing a point made by a poster that I thought was incorrect. It seems like you want to get the thread shut down.
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Re: University California reducing pension payout for contingent annuitants

Post by celia »

anagram wrote: Sat Mar 30, 2024 4:55 pm Sure, if you bought that $2 million house 50 years ago, but that is not typical.
I know lots of retirees our age (in their 70s) who aren't even BHs who still live in the same house they bought 50 years ago. I think it is typical for our generation for those who were born and still live here.

Don't know anyone on a UC pension though, so I can't comment on that.
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Re: University California reducing pension payout for contingent annuitants

Post by anagram »

celia wrote: Sat Mar 30, 2024 5:33 pm
anagram wrote: Sat Mar 30, 2024 4:55 pm Sure, if you bought that $2 million house 50 years ago, but that is not typical.
I know lots of retirees our age (in their 70s) who aren't even BHs who still live in the same house they bought 50 years ago. I think it is typical for our generation for those who were born and still live here.

Don't know anyone on a UC pension though, so I can't comment on that.
NorCal and especially Silicon Valley seem to have a more mobile population so perhaps not so many people who bought 50 years ago. Lots of immigrants also.
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Re: University California reducing pension payout for contingent annuitants

Post by Sandi_k »

nanotom wrote: Sat Mar 30, 2024 3:55 pm
Thesaints wrote: Sat Mar 30, 2024 3:40 pm Could it be that they have started including the 2% inactive cola in the calculator ?
Yes, this should be it, noticed that in my own estimates. Sandi, is your basic (non-contingent-annuitant) benefit 2% higher?
It's 1.85% higher in July, rather than electing June.
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Re: University California reducing pension payout for contingent annuitants

Post by Thesaints »

UCnet post has been revised for clarity and sure enough
Also, retirement benefit estimates for July 1 retirements now reflect the 2% inactive cost-of-living adjustment (COLA) for those members who are eligible.
https://ucnet.universityofcalifornia.ed ... -2024.html
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