Phased Retirement: Negotiations Update

November 29, 2005

Dear colleague:

The Rutgers AAUP-AFT has been negotiating with the administration over a phased retirement policy since we submitted our proposal in December, 2004. Unfortunately, after meeting on several occasions to discuss our proposal it became obvious that the administration would rather have no policy while reserving the right to negotiate individual separation agreements. At this point, we will begin mediation with a third-party neutral’s assistance on Wednesday, December 14, 2005.

RETIREMENT TRANSITION AND RENEWAL PROGRAM

Our proposal can be found on our website at: http://www.rutgersaaup.com/news/Retirement_Transition_and_Renewal_Program.htm. The key feature is a standard re-employment contract upon retirement, that allows faculty members to continue to conduct 50% of their normal responsibilities for 50% of their salary over 5 years. We have dubbed this foundation of our proposal - 5@50%. The university community benefits from this proposal in many ways by:

Providing substantial new resources for hiring tenure-track faculty, including salary dollars, benefit-bearing lines, and savings from reduced pension pay-ins at minimal cost to the state and the university.
Retaining the talents of established faculty on a part-time basis at a fair salary.
Encouraging mid-career faculty to remain at Rutgers because they are assured of an excellent program for phased retirement.
Facilitating predictable, gradual adjustment by departments to changing personnel configurations, with better mentoring of graduate students and new faculty members.

Our faculty proposal should be attractive to the university administration and to our faculty members for the following reasons:

Continued health benefits (with minor modifications) are guaranteed by the state of New Jersey for all state employees who retire with twenty-five years state pension credit, regardless of age. We are proposing options, not advising faculty what will work for them.
Alternate Benefit Program (ABP) plans -- TIAA-CREF or other -- make the full value of an individual’s pension plan accessible upon retirement, which may be taken at any age.
ABP plans are defined contribution (not defined benefit), so that the amount of pension available is based on accumulated dollars, not on annual salary in the years immediately preceding retirement.
ABP plan members in New Jersey are not restricted as to the amount they may earn from post-retirement employment, even if re-employment is with the same institution where the pension was earned.

SLOAN FOUNDATION SUPPORTS STUDY ON PHASED RETIREMENT

This past spring, a report was released that links clear, uniform policies on retirement with faculty satisfaction while benefiting university administrations with predictable budgeting and smooth transitions.

Participation Period. Participation was usually limited to a three- to five-year period, after which the individual’s eligibility for further employment was terminated. (In a few cases, the phasing arrangement could continue even longer, but this was not common.)
Work Load. The most common arrangement was a 50% work load as defined by the institution. (An individual teaching four courses a term may be assigned to teach two upon entering phased retirement.) In some cases, individuals with research projects or other duties taught less. Individuals usually have the option of working full-time for a single semester or half-time for two semesters. (We found that many prefer to work full-time for one semester and take the other semester – plus the summer – off.)
Salary. Pay for phased retirees was usually pro-rated – half-pay for half-time, for example. Some institutions offered a premium, such as 70% pay for half-time work, which would be contingent on state laws, policies of retirement plan providers, and other considerations. Other institutions offered balloon payments or bonuses provided the individual completed the phased period.

Among the policy recommendations in the report, there are three that we find to be crucial to developing a strong policy at Rutgers and they are quoted below:

Faculty should be involved in developing policies.
… recommend that institutions provide for broad eligibility to phase, and terms that will encourage individuals to phase as long as mutuality can be satisfied.
Pay, benefits, and general guidelines on length of term, workload, and other conditions such as access to office or lab space and support services should be established at the institutional level; specific details about assignments should be negotiable – subject to review and approval for consistency – at the department level.

PEER INSTITUTIONS

While the administration might argue that it cannot afford such a proposal, the research tells us that uniform policies exist at most major research universities and that Rutgers University is an exception among our peer institutions. Once again, the administration talks of achieving excellence yet stands out in its lack of creativity and foresightedness.

It is no small irony that the University of Washington, formerly headed by our current President Richard L. McCormick, is among the AAU institutions with a clear policy on phased retirement; not one we would cite for practicality, but at least it recognizes the importance of providing this option.

University of Washington: "For more than 20 years, the University of Washington has, by policy, granted to tenured faculty members the prerogative of requesting reemployment. By policy, the University has vested in tenured faculty members the right, after retirement, to be reemployed up to a maximum of 40% time for instructional and/or research purposes for five years after the date of retirement. The University defines 40% as that maximum amount that it can pay a retiree from all sources (state funds, grant and contract funds, self-supporting budgets, professional/continuing education/extension funds, Summer Quarter, etc.). This amount is calculated by multiplying the individual's base salary rate at the time of retirement by 40%. Nine-month faculty members are eligible for 40% of nine months salary, and twelve-month faculty members are eligible to earn a maximum of 40% of twelve months salary . Arrangements for instructional, research, or other designated duties of reemployed retired faculty members are to be made by agreement between the Department Chair, or Dean of undepartmentalized College, and retiring faculty member. Decisions about teaching load and their equivalent percentages of support are made at the local level, taking into account traditional teaching loads within the particular units."

A sampling of the key provisions at other peer institutions:

University of Florida: “a written offer of reemployment … for one-half (0.5 FTE) of the academic year … Compensation during the period of reemployment shall be at a salary proportional to [the participant’s] salary prior to retirement … This period of reemployment obligation shall extend over five (5) consecutive academic years.”

University of North Carolina: “Half-time responsibilities may vary by institution and among departments in the same institution … receive a salary equal to fifty percent (50%) of the salary they received prior to phased retirement … may be for a period of at least one but not greater than five years.”

University of Texas at Austin: “During the periods of appointment … will be paid one-half of the nine-month academic rate that he was entitled to receive for full-time faculty service at the time of resignation and will be entitled to any salary increase mandated by the legislature and all employment benefits authorized or required by law … will receive any merit salary increase that is recommended and approved pursuant to the policies and procedures of the University

University of Colorado: “The faculty member must work a minimum average of 50% work load for minimum 50% pay during the term of the agreement. Workload agreements must be included in the phased retirement agreement and approved by the department chair (or primary unit/division head) and the Chancellor/designee. Workload agreements may include teaching, clinical, research, and service/administrative duties.

Purdue University: “In 1979, the University established the voluntary early partial retirement program. The program has provided faculty and administrative/professional staff with the opportunity for retirement prior to the normal retirement age and allowed the University to renew itself through the influx of new scholars and administrators. An additional retirement planning option, advance retirement declaration, is also available to provide additional flexibility for faculty and administrative/professional staff in preparing for retirement.

CONCLUSIONS AND MEDIATION

As we begin the mediation process with the administration, it is our hope that we can reach agreement on a policy that is fair and transparent while serving the needs of the entire university community. An immediate concern is the retirement transition of our current faculty members, but the long-range goal of our proposal is a policy that contributes to the great future of Rutgers University.

Renewal of the Faculty
We recognize that under current law, the hiring of new faculty is not subject to negotiation with the AAUP. Nonetheless, we think everyone recognizes that the replacement of retiring tenured faculty with newly hired tenure-track faculty is essential to the academic future of the university. Therefore, we call on the university administration to commit to the renewal of the faculty by hiring tenure-track faculty in numbers equal to the number of faculty members who choose phased retirement, as soon as possible, in order to maintain the university’s faculty at full strength overall. We call for a pledge to spend 100% of the dollars saved under this proposal on tenure-track faculty hiring, both the dollars from the 50% salary reductions envisioned in the program faculty and from the additional savings that come from not paying into a pension plan for them. Such new hires would be further facilitated as faculty members give up their state benefit packages as active employees and enroll instead in plans for retirees. This is truly a win-win-win proposal for students, faculty, and the administration. It is in that spirit that we urge its adoption in the very near future.

Contemplating Retirement
If you are contemplating retirement now, or in the near future, please feel free to contact either of us or any of the committee members listed below.

Comments on the proposal?

Sincerely,

Lisa C. Klein, President
Rutgers AAUP-AFT

James Reed, Chair
Phased Retirement Negotiations Committee
Rutgers AAUP-AFT

Committee Members:
Rudy Bell, History Department, New Brunswick

Ken Carlson, Graduate School of Education

Phillip Dennis Cate, Fine Arts Collection

Janet Golden, History Department, Camden

Briavel Holcomb, Bloustein School

Ted Kruse, Physics, New Brunswick

Peter Simmons, School of Law, Newark

Shirley Smoyak, Office of Continuous Education & Outreach