Anonymous said:
Another pay cut for TCP-1's coming soon. Could the16% that was talked about during the transition finally to become true. After all the stock market lost $700B in one day what better way to make up those loses but on the backs of those who chose TCP-1.
[September 12, 2008]
The following is a letter to UC employees from Judy Boyette, Associate Vice President, Systemwide Human Resources and Benefits.
Dear Colleague:
The purpose of this letter is to update you regarding the restart of employer and employee contributions to the UC Retirement Plan (UCRP).
As you know, the University has been engaged in a multi-year process concerning the need to keep UCRP fully funded in order to ensure the plan remains able to pay retirement benefits to employees in the future, and that UC’s benefits remain competitive in the marketplace. At their July meeting, the Regents discussed a proposed funding policy for the UCRP to accomplish these objectives.
This proposal, which includes restarting employer and employee contributions, is now being brought to the Regents for approval at their September 16-18 meeting. If you have not already seen the proposal and would like to, it is available online.
As it states, the proposal establishes the date of July 1, 2009, subject to collective bargaining where applicable, for the resumption of employer and employee contributions to the UCRP. However, the actual amounts of employer and employee contributions will not be decided at the September meeting – that is expected to happen at a future meeting. In November, UC’s actuary will present the Regents with the annual valuation for UCRP, and information regarding the total recommended level of contributions required from both UC and employees to keep UCRP fully funded. Then, at one of their 2009 meetings, Regents are expected to determine the amount of resources available, and how contributions should be divided between the University and employees (i.e., the amounts UC will contribute and the amounts employees will contribute). As the proposal also indicates, the level of employer contributions from the UC will never be lower than what employees are contributing.
Although, we won’t know specific contribution amounts for several months, as previously announced the University’s expectation is that there would be no impact on employee net take-home pay in the first year of contributions, because employee contributions could begin in the form of a redirection of mandatory employee contributions currently going into the UC Defined Contribution Plan. Additionally, the university expects that its long-term approach to how UC and employees share the cost of UCRP benefits will be consistent with the State’s approach to contributions to CalPERS (see below websites for current CalPERS rates).
As you know, the University has been very fortunate in that it has enjoyed a UCRP funding surplus since the early 1990s which has allowed the Regents to suspend UCRP contributions. This has meant that, unlike the vast majority of employees at other institutions, UC employees have not been required to contribute to the cost of their pension benefits for the last 18 years.
At the same time, it was understood that this “contribution holiday” would end at some point and that contributions, from both UC and its employees, would be needed to keep UCRP fully funded. The market returns on UCRP have declined over the 2007-08 year, due to the performance of the financial markets. In addition, we are seeing the impact of delaying the restart of contributions.
We will continue to update you about the restart of contributions as decisions are made. Meanwhile, you are encouraged to visit the following websites to learn more about the process the University has been engaged in concerning this issue, and the CalPERS approach to contributions:
The Future of the UC Retirement Plan
CalPERS – Employer Contribution Rates
CalPERS – Employee Contribution Rates (Cal State University example)
Sincerely,
Judith W. Boyette
Associate Vice President
Systemwide Human Resources and Benefits
8 comments:
It looks like those who chose TCP-1 in some cases not only had to contribute 6% towards social security but are no shortly going to have to donate 6 -16% more of their pay to the pension plan. Compound that with crappy a-- pay raise and an economy that putting all of us behind about 20% and I say these people are getting the royal shaft up the ying-yang and it's going to hurt big time. They were all warned during the transition that this could happen but of course LLNS said it would never happen. They also said just because UC does it doesn't mean LLNS will, but so far it's been monkey see, monkey do around here, so lets see how they're going to make up the $700B loss in the pension plan due to the frequent stock market crashes that are going to continue for many years to come. If I were LLNS or UC I'd be looking for a lot of donors real quick and what better ones to take money from but those who I have by the crotch. welcome to corporate America and a for profit at will organization. Isn't this fun people.
I would actually be more worried if I went with TPC2. The year to date returns for my three LLNS 401k funds are between -14% and -17%.
The lab will probably wait until the UC decison is made to make their change. What will be different at the outset is that amount currently paid into the Defined Contribution Plan by the UC employee will be shifted towards the UC plan. Since I chose TCP 2, I can't say for certain but I don't believe there is anything like the DCP deduction currently being taken out for TCP1. So when UC does pull the trigger on this, a small mitigation will be seen for the UC employee, but not a LLNS person. But then again, as a LLNS employee, you haven't had that small percentage being pulled out since the transition.
July of 2009 will be when the sticker shock hits, but it would have been a more palatable hit if we were still in the UC system.
September 20, 2008 8:36 PM
There is no DCP deduction for TPC1. Also, TPC1 is a closed plan unlike UCRP which continues to add employees to its pension liabilities. TPC1 is actually in very good shape - remember that it was fully funded by transfer of UC and DOE as part of the transition, based on an assumption that more employees were going to take it than actually did. Its not as if every LLNS employee that took TPC1 is going to retire in the next 2 years and start drawing on TPC1. In fact most employees close to retirement took TPC2 so they could locked in their UCRP pension. If you are 10 to 15 years from a TPC1 retirement - the fund will have less members drawing on it (employees do die) and have seen some growth in its assets (the market does bounce back over time). Bottom line - there is no direct connection between what UC does to UCRP and LLNS does for TPC1. The underlying fundamentals of each pension program are very different.
I don't think there will be any contributions necessary with TCP-1. It started 160% overfunded whereas UCRP was nowhere near as well funded at the time. I also thought that a good percentage of TCP-1 funds were invested in interest bearing accounts, thereby unaffected by the drop in the stock market.
September 21, 2008 11:25 AM
You have no clue where they're invested and I haven't seen any reports come my way lately. I'd love to see how that $700B loss in one day affected them. Come on LLNS how about keeping the people informed.
The UCRP has the backing of California and DOE is required to help sustain the UCRP for LLNL and LANL workers that have or will retire. The UCRP is more open and subject to scrutiny by highly educated people within the UC system. As California’s population increases there will be more workers hired by the UC system that can pay into and support the retirement program.
TCP1 is over funded because a lot of money went into a system without anyone (perhaps a few) drawing off the system. As it ages and people retire it will become under funded unless it does well in the stock market, and no matter where they have invested the money it is being impacted by the losses and low interest rates of the markets. In addition, it is only required to be fully funded for those who have not retired. Once you retire from TCP1 you are under the same government operated pension retirement program that insures most of the other private retirement plans. When retirement plans fail the government back insurance program typically pays out about thirty cents on the dollar whether you take it as a restructured annuity or a lump sum. Good retirement programs have failed and TCP1 is not immune from the effects of poor management or the market. The only problem is that no one will know until it happens, which if it does, will be years from now after most of the workers have retired.
The PBGC pension insurance only pays out about 35 cents on the pension dollar if you retire after the age of 65. Those who leave LLNL at age 60 will be in far worse shape if TCP1 ever fails.
When you retire at 60, PGBC only pays out something like 20 cents on the dollar. That's far too little to live on and it would happen too late in your life to recover from the disaster.
Of course, with TCP1 being so small, it wouldn't even make the news and no one would care about its sudden demise, would they?
It is my understanding that if you are in the UCRP and it fails, then DOE would have a requirement to make up for all the lost money. The idea pushed by NNSA that TCP1 was "substantially equivalent" to UCRP was a big joke.
So far this year we've seen a lot of "un-think-ables" occur. Fannie and Freddie went under and now the whole banking systems is about to collapse and require a massive $700 billion bailout. When people say "Don't worry, the pension will be OK", I suggest you think about the "un-think-able" events that have occurred during just the last few months.
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