UAPD Lobbies Against UC Pension Attacks

On Wednesday April 20, UAPD joined AFSCME 3299, the California Nurses’ Association, and the Teamsters in a united lobbying effort against a proposed attack on the University of California pension. Ten teams of employees and staff met with 54 legislators and key staffers, explaining the problem and urging them to sign a letter demanding that UC’s proposition 2 funding for fiscal year 2016-2017 be contingent on elimination of the 401(k) opt-out.  Since the Assembly Speaker, Senate President, and Lt. Governor all signed letters opposing the opt-out, we are hopeful that with continued pressure, the legislature will agree to compel UC to do the right thing.

UAPD members will remember that the Coalition of UC Unions strongly oppose UC president Janet Napolitano’s Task Force’s recommendation to introduce caps on pensionable salary for all employees hired on or after July 1, 2016. You can read the emails describing those efforts and see UAPD President Stuart Bussey’s testimony here: January 15 email and January 29 email.

Shockingly, Napolitano’s proposal to the UC Regents on March 23 was even worse than her Task Force’s recommendation. In addition to implementing a cap on the amount of salary eligible for pension and lowering multiplying factors for determining benefits for employees hired on or after July 1, Napolitano proposed a more generous retirement plan exclusively for faculty, and an opt-out provision, whereby new employees would be able to choose a 401(k) instead of the pension.

Aside from the elitist nature of the faculty-only plan and the recruitment/retention problems associated with the pensionable salary cap, the 401(k) option is a direct threat to the UCRP’s long-term solvency. This flyer details the problem. In short, employees who do not intend to build a career with UC are incentivized to opt-out of the pension. When they leave, UC’s matching contribution will leave with them. In contrast, when an employee leaves UC before vesting in the pension plan, the employee’s UCRP contributions are returned, while the employer’s contributions remain in the plan. Actuaries projecting the long-term health of the pension plan factor these employer contributions into the unfunded liability status.