Changes and clarifications to the retirement plan for UM System employees were forwarded Wednesday to the Board of Curators by the Compensation and Human Resources Committee.
The changes correct language that governs employee payments and payouts under a revised defined contribution plan, as well as continuation of benefits if an employee leaves and then returns to work for the university.
The plan also broadens the type of employee compensation eligible for a match. Changes to the defined contribution plan would be effective Jan. 1, 2020, subject to board approval.
Marsha Fischer, who oversees human resources for the UM System, outlined the changes for the committee.
Fischer said there was a chance under the defined benefit portion of the Employee Retirement Investment Plan that an employee could pay more than they would recover when they cashed out. That has been addressed so it won’t be an issue, she said.
“It was not an intended consequence,” Fischer said. “That was just something that under certain circumstances could come up.”
Next, under the defined benefit plan, if someone retired and returned to work full time with the university, the retirement plan was suspended.
The defined contribution plan removes that suspension of benefits, Fischer said. Theoretically, someone could retire under the original plan but if they’re hired back full time, they could go into the defined contribution plan.
Finally, under the defined benefit language, it would be common not to calculate additional types of compensation, such as incentive plans, into the package, she said.
Under the new plan, that language is being expanded to include additional types of compensation so that employees can take advantage of a full match.
Additionally, administrative leave will count toward service credit.