Supplemental Benefits Plan

• Updated: February 2009
• Primary Contact: See Contacts Section.

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 Faculty Retirement Plan (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.

Scope

The following groups of individuals are eligible for benefits in the plan:

1. Participants in the FRP prior to October 1, 1963; and
2. 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
3. Female participants in the FRP for whom contributions to the plan were made at any time prior to July 1, 1982.

Benefits

Additional Benefits

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.

Benefit Limitations

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.) All potential participants in this plan have been identified and, given the groups participating, no additional participants are expected. The eligible population under the plan is a closed group.

Benefit Cessation

Benefits in this plan cease upon the death of the FRP participant, or in the case of those pre-63 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.

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.

• Implementing the Supplemental Benefits Plan

There are no forms associated with this policy.

COLA Amount

The Cost of Living Adjustment Amount, which was set at $20,500 on July 1, 1994, and is increased each July 1 by the cost-of-living increase applied to Social Security the previous January.

Eligible Participants

Pre-10/1/63 participants who retired no later than one year prior to each July 1 increase, excluding those vice presidents who qualified for special benefits, but including surviving spouses of retirees who elected the survivorship option. Eligible Participants will also include female Faculty Retirement Plan participants for whom contributions were made prior to July 1, 1982.

Estimated Life Annuity

The individual's accumulated cash value of funds in the FRP at retirement, converted to a fixed dollar life annuity, using the fixed annuity factor under FRP. Variable accumulations are converted on a fixed basis for this purpose. Prior endowment accumulations are treated as annuities in this calculation.

Faculty Retirement Plan (FRP)

A defined contribution plan sponsored by Board of Regents of the University.

Final Five Year Average Salary

The sum of the individual's base salary for the final five years of employment, divided by 5, and subject to the following maximums of the indicated retirement years:

Year	Maximum	Year	Maximum	Year	Maximum
1976-77	$37,200	1985-86	$53,000	1994-95	$75,400
1977-78	$38,700	1986-87	$55,100	1995-96	$78,400
1978-79	$40,300	1987-88	$57,300	1996-97	$81,600
1979-80	$41,900	1988-89	$59,600	1997-98	$84,800
1980-81	$43,600	1989-90	$62,000	1998-99	$88,200
1981-82	$45,300	1990-91	$64,500	1999-00	$91,700
1982-83	$47,100	1991-92	$67,000	2000-01	$95,400
1983-84	$49,000	1992-93	$69,700	2001-02	$99,200
1984-85	$51,000	1993-94	$72,500	2002-03	$103,200

Primary Social Security Amount

The benefit a person would receive if he or she elects to begin receiving benefits at his or her normal retirement age.

Unisex Supplement

The benefit calculated in Section E under BENEFITS.

University Supplement

The benefit calculated in Sections C and D under BENEFITS.

Retired Participant

• Notifies the Office of Human Resources upon retirement.
• Files tax withholding form with Employee Benefits and updates as necessary.
• Completes a direct deposit form if desired.
• Ensures that other family members or executors know to notify Employee Benefits immediately upon the Participant's death.

Office of Human Resources – Employee Benefits

• Ensures proper calculation and payment of University supplement amounts throughout the year.
• Coordinates the preparation of the annual actuarial report.
• Funds the plan, based on requirements detailed in the actuarial report.
• Completes the annual budget process to adequately plan for contribution payments.

There are no appendices associated with this policy.

1. How does one apply for a Supplemental Retirement Plan benefit?

   Employee Benefits maintains a listing of all faculty and staff eligible for a benefit calculation. Upon retirement, the listing is reviewed and the individual is notified if a benefit is payable. No application is required.

2. What happens to the payment upon death of the retired employee?

   If the retired employee elected a life-only payment, the benefit stops at time of death. If the retired employee elected a survivor benefit, and the beneficiary is alive at time of death, benefits will continue to be paid to the beneficiary according to the election on file.

3. How does the retired employee file a tax election, elect direct deposit of benefits, or change a direct deposit account?

   Forms are available from Employee Benefits.

4. Does anyone who participated in the Faculty Retirement Plan prior to October 1, 1963 receive a benefit in the Supplemental Benefits Plan?

   No. In general, if the combined income from the Faculty Retirement Plan account and Social Security exceeds $36,000 annually, the retired employee does not receive a benefit in the Supplemental Benefits Plan.

• Board of Regents Policy: Faculty and Staff Retirement

Amended:

February 2009 - Minor edits were made. Procedure language in policy moved to the procedure document. Additional language was added to the reason.

Amended:

December 2008 - Policy converted to the new University-wide format for administrative policies.

Adopted:

July 1977

Effective:

July 1977