Unions Respond to Proposed Pension Changes

A coalition of UC unions has put together a set of shared principles regarding the UC pension system (UCRP). We plan to present the following at the next Regents meeting November 16-18:

1. Since unions represent 45% of the employees currently covered by UCRP, any changes to our pension plans will have to be accepted by represented workers. Collective bargaining on proposed benefit changes must precede, not follow, such changes for unrepresented workers.


2. The Union Coalition of the University of California (UCUC) is united in our rejection of the proposed pension benefit cuts: the second tier and UCRP opt-out/DC plan choice. The proposed pension changes do not improve the fiscal health of UCRP, are divisive and unfair, and target low- and middle-income workers disproportionately. Similarly, we reject the eligibility and cost-shifting changes to the retiree health benefit as premature because plans to pre-funding the benefit have not been fully explored.


3. We are willing to consider a plan that would make UCRP more secure and continue its tradition of fair treatment. We are also willing to consider a plan to prefund the retiree health benefit to maintain the current level of benefits and the current eligibility criteria.


4. Keeping the UCRP adequately funded is the key issue. We suggest that the university moves quickly to fully funding the normal cost of UCRP in 2011, using employer and employee contributions. Restarting a higher level of contributions earlier will keep future costs down and capture available funding from the medical centers and contracts and grants. Total contributions must then gradually increase at levels needed to keep the plan healthy. Because of currently underfunding, we realize the plan can not to go to 100% funding in the near future, so the goal should be to keep it at healthy funding levels. Since none of the proposed plans by the task force will reach 100% funding in the next ten years, we believe the university should change its funding policy to reflect this reality. We support borrowing from STIP if necessary to fund the normal cost in 2011 and beyond. We request an adjustment of several of the actuary assumptions to more
 accurately reflect current and future employment statistics (i.e. the predicted salary increases, inflation rate).


5. How much of the total contribution is borne by the employee is the subject of collective bargaining. However, we believe the university should return to the historical ratio between employer and employee contributions (5:1). Further, any increase in employee contributions should be coupled with salary increases.


6. If the Unions are fully involved partners in shaping funding plans and preserving benefits, we would commit to partnering with UC in Sacramento to secure state funds for the UCRP.


7. We demand joint governance for the pension plan through the creation of a pension board of trustees with equal numbers of current and retired plan participants and Regents or their appointees. Placing a union representative on the Investment Advisory Board only deals with one, albeit very important, arena of concern. The Union Representative to the IAB and an alternate must be chosen by the UCUC.


8. To cut costs and promote fairness, the university must eliminate all supplemental retirement for highly compensated UC employees, including the following: The Senior Management Supplemental Retirement Program that puts an extra 5% into retirement savings accounts, along with any plan that would replace it; the 415(m) “restoration” plan that increases retirement income for employees whose UCRP income exceeds $195,000; and 401(a)(17) “restoration” plan that increases retirement income for 200 employees whose salaries are greater than $245,000.

It is clear from these principles that the unions are not just saying no to any new pension changes; rather, we are providing a more effective and fair solution. The simple fact of the matter is that the proposed changes by the PEB Task force do not address the central problem of funding the shared pension system.

On another front, several unions (AFT, AFSCME, UPTE, CNA) in consultation with CUCFA and members of the senate faculty welfare committees have put together an additional joint set of principles regarding possible pension changes:

1. We need to move to a full funding of the normal cost of UCRP. The suggested new tiers do not address this issue.

2. There has to be a credible plan for total remuneration approved by the regents.

3. We must begin paying down the UCRP liability now. This can be done in part from borrowing from STIP or Pension Obligation Bonds.

4.We need more people paying more into UCRP and not fewer people paying less.

5. There should be a full discussion of alternative plans with the inclusion of faculty, unions, and staff at all levels of the process.

6. We need a plan to pre-fund retiree healthcare.

7. We will work together to get the state to pay its share of the employer contributions.

8. The university should end supplemental retirement packages for Senior Managers.

9. Any changes to the pension plan and retiree health should not discriminate against low- and medium-wage employees.

10. We oppose raising the employee contributions to a high level in order to induce current employees to opt into a new system.

Please let me (bobsamuels_us@yahoo.com) know if you would like to sign on to these principles. We need to submit our documents to President Yudof by Oct. 13th.