COLUMBIA — The University of Missouri System is looking at the employee benefits of 15 peer institutions to help shape a new retirement plan.
The system has updated a 2008 benefits index that compares UM and those 15 schools to see which elements from their plans could be applied. The updated index includes data about staff for the first time.
Iowa State University
Michigan State University
Ohio State University
Pennsylvania State University
Texas A&M University
University of Colorado
University of Illinois
The University of Iowa
University of Kansas
University of Michigan
University of Minnesota
University of Nebraska
University of Texas
Of the 15, UM is the only one with only a defined-benefits plan. Eight others offer only defined contributions, and seven offer a choice between the two plan styles.
Six of the schools are in the Big 12, and the rest are in the Big 10.
Under a defined-benefits plan, employees are guaranteed a pension for life after retirement, and the university assumes the market risk. Last year, UM employees began to pay a mandatory 1-to-2 percent into the plan.
Although the plan is fully funded, UM administrators worry about its future financial security because of fluctuations in the economy.
They are looking to move away from pensions to defined contributions, where the market risk shifts from the university to employees, similar to a 401(k).
UM manages the features and funding of its current retirement plan, but other schools with defined benefits do not — the states do.
UM Curator David Wasinger has suggested rolling benefits into the Missouri State Employees' Retirement System, but UM System President Gary Forsee has said that is not on the table for consideration.
“They (at MOSERS) aren’t particularly interested,” Forsee said at a Nov. 1 meeting of the Board of Curators. “We’ve got a little more work to do with them down the road, but it’s not a current plan.”
There are other qualities of peer institutions that UM could apply to its employees. Betsy Rodriguez, UM vice president for human resources, presented an overview of these features in a presentation during the Nov. 1 meeting.
For example, 14 of the 15 institutions mandate employee contributions of 5 percent into direction-contribution plans. The universities themselves contribute 6 to 13 percent; the average is 9 percent.
Applied to the UM System, a new retirement plan could include a maximum 9 percent contribution from the university, Mary Ann Dutemple, a senior consultant from Towers Watson, said in the presentation.
Additionally, UM could take elements of peer institutions’ plans to best accommodate its objectives in creating a new benefits plan.
No single retirement plan design from peer institutions completely meets all UM's goals*, Rodriguez said at the meeting.
“We have to decide which objectives are most important, and what if any changes, have the least negative impact,” she said in an e-mail.
Also included in her presentation was a review of UM faculty salaries, which for the past few years have consistently ranked low, according to figures from the American Association of University Professors.
The benefits index includes rankings from 2008, at which time UM ranked second to last with a combined faculty average of $63,864 per year — roughly $2,000 less than Big 12 peer Iowa State University and $8,000 more than the University of Oregon.
The benefits index shows, however, that overall UM benefits rank in the “middle of peers.” Data for staff took into account more than 25 factors, which in total show that UM ranks slightly below average among the 15 peers.
The next step for UM administrators is to take this data, combined with faculty and staff input and additional research, and craft a recommended retirement plan to present to the Board of Curators at its December meeting.
At the Nov. 1 meeting, Forsee suggested the December deadline has become more fluid, contingent on whether there is a worthwhile plan to recommend. Curator Warren Erdman said he is confident in the timeframe but added, “We’re not bound by it.”
Meanwhile, the UM System also will create a special committee to provide what Rodriguez called faculty and staff voice regarding the retirement-plan discussion. It likely will include the Retirement and Staff Benefits Committee*, as well as faculty and staff, and will report to Rodriguez.