Mar. 13, 2009
Retirement plans need careful consideration, HR leaders tell forum
At the first of four open forums to discuss the new Staff Retirement Incentive (SRI) program, Vice President for Human Resources Mary Opperman stressed that the SRI was designed to help those long-service staff members who would like to retire from the university to do so. Those who volunteer for the program will be required to retire by June 30. The program, she said, will reduce overall spending at the university over the longer term.
Speaking to more than 70 people in 700 Clark Hall on March 6, Opperman fielded questions ranging from the possibility of returning to Cornell to work in a casual position after retiring to whether applications will be accepted on a first-come, first-served basis. Applications, she said, will be accepted through March 31, and staff with the greatest years of service will have the highest priority. Staff members, she added, can change their minds and withdraw their applications until March 31 by retrieving their application in person at Benefit Services, 130 Day Hall.
In terms of returning to work at Cornell, Opperman reminded her audience that the program provides incentives for retirement, and that those who take the incentive should be ready to make this move to the next stage in their lives. Although the program bars staff from returning to full- or part-time work at Cornell in a benefits-eligible capacity for three years, it does allow staff to return to Cornell in a casual, non-benefits-eligible position. However, with the university experiencing financial challenges, there is no way to predict how many of these kinds of positions will be available in the future, she said, or in what areas. Opperman reminded staff that the lump-sum payment of base pay is subject to tax withholdings.
Opperman also reviewed the Staff Phased Retirement Program, which provides a gradual easing into retirement. The program allows staff members who are working at least 30 hours per week to work for 20 hours a week, for up to three years. This program, which requires a supervisor's approval, is a good way for Cornell to retain the experience of its long-serving staff members while reducing costs, Opperman said. However, a person's position must lend itself to such part-time work and benefit that staff person's department. Not all positions or departments can reconfigure work to take advantage of this program, she noted.
The phased retirement program will be open to long-service staff indefinitely.
The article below reviews answers to some commonly asked questions about both programs. Additional FAQs are on the Web site at http://ohr.cornell.edu/newRetirement.
The remaining open forums will be held Friday, March 13, 10:30 a.m. to noon, G10 Biotechnology Building; March 20, 2-3:30 p.m., G10 Biotechnology Building; and March 27, 2-3:30 p.m., Robert Purcell Community Center Auditorium.
More information can be found at http://www.ohr.cornell.edu/newRetirement/.
Questions and answers on the two new retirement programs
The following Q&A is based on the questions posed last week at the open forum with Vice President Mary Opperman on the Staff Retirement Incentive Program and the Staff Phased Retirement Program.
The online Q&A is updated weekly at http://www.ohr.cornell.edu/newRetirement/.
Staff Retirement Incentive Program
The SRI materials state that if you apply and are accepted under SRI, you will receive the equivalent of one year of your base pay, less applicable tax withholdings, as a lump sum. Can you have some of the lump sum salary amount shielded from current taxation by placing it into a tax-deferred annuity (TDA)?
Yes, you may put up to the current Internal Revenue Service limits into your voluntary TDA by sheltering part of your lump-sum payment even if you do not currently have a TDA account set up. The IRS contribution limit for 2009 is $22,000 for people over age 50. So, you can add to your account in any amount up to a total of $22,000. However, you should be aware that you must pay FICA tax on your total 2009 income, including any amounts contributed to the TDA. Income taxes will not be due on your TDA accumulations until you withdraw the funds from your retirement accounts.
What about the university's contribution to a Cornell University Retirement Plan (CURP) account. I work in a statutory college position. Do I get a CURP contribution, too?
Yes, statutory college staff will also get a CURP contribution. Benefit Services will help you set up a new CURP account with TIAA-CREF or Fidelity Investments, and you will receive the same benefit as endowed staff, 10 percent of your lump-sum incentive payment times three, or 30 percent.
When will my incentive payments be made?
You will receive your final regular paycheck at the end of your employment. The accrued vacation you are owed will be paid in that final regular paycheck also. In the same payroll cycle, most SRI participants will receive the lump-sum incentive payment in a separate check, and the CURP contributions will be sent to the preferred vendor(s) at that time, too. Some incentive payments may be delayed to the next regular payroll cycle due to the complexity of some arrangements.
If my application is not accepted and I get laid off, can I still officially retire with benefits?
Yes, if your application is not accepted, you will return to your previous employment status. If you then receive a layoff notice, you can officially retire from the university with benefits, either during the notice period or once you are on layoff status. Once you are on official layoff status, you will receive the benefits that come with layoff, including severance (see Policy 6.12: Separations, Voluntary and Involuntary [including Layoff], http://www.policy.cornell.edu/vol6_12.cfm). You may retire from the university while on layoff status, but no later than the last day of layoff status (usually one year from the day you receive layoff notice), in order to preserve your retiree benefits. You will want to talk with a Benefit Services counselor if you are eligible for retirement and are placed on layoff status in order to decide what is right for you.
I am already on layoff status. Am I eligible for the SRI?
To be eligible for the SRI, you must have been on the active payroll as a benefits-eligible employee on March 1, 2009, apply to the SRI by March 31, and be 55 years old by June 30 with 10 years of credited service. If you are placed on layoff status after March 1, you may apply for the SRI up through March 31.
Staff Phased Retirement Program
If you apply for the Staff Retirement Incentive Program but then decide that the Staff Phased Retirement Program would be better for you, can you switch before March 31?
It depends. These two programs work differently. The Staff Retirement Incentive Program is designed to give staff members who are ready to retire a one-time incentive to do so. It has a set period for application, through March 31, after which this option will not be available. You do not need supervisory approval to apply to the SRI, and you must retire by June 30, after which you will no longer be on Cornell's regular payroll.
The Staff Phased Retirement Program is designed to help staff ease into retirement while still remaining employed part time at Cornell. The arrangement must be beneficial for your department as well as for you. Your supervisor must draw up a reasonable business plan for a part-time position with you in mind and seek approval of the department, dean or vice president, depending on your location. Only if the business plan is approved and you otherwise agree to the terms of the phased program will this work for you. There is no set period for making these arrangements. You will reduce your hours down to 20 per week, or the exempt equivalent, and you will remain on Cornell's payroll. Your benefits will continue (See Q&A at http://www.ohr.cornell.edu/newRetirement/Phased_Retirement_QA.pdf.).
Will medical coverage continue under the phased retirement program?
Yes. Benefits that you currently have that will change are the plans directly linked to the actual wage or salary you are earning, short- and long-term disability and workers' compensation. See the Retirement and Beyond brochures, http://www.ohr.cornell.edu/benefits/programs/retire.html, for more detailed information.