PENSION CHOICE VS SAVINGS CHOICE

HOW EACH OPTION WORKS

Here is a side-by-side comparison. Click on each feature on the left to see the differences. This website only provides general information about choosing your retirement benefit option. Each UC employee’s situation is unique. For details, please see the Complete Guide to Your UC Retirement Benefits booklet or the Summary Plan Descriptions.

Pension Choice

Savings Choice

Pension Choice

New to UC?

Pension Choice includes a pension benefit under the University of California Retirement Plan (UCRP), offering a predictable level of lifetime retirement income. Your pension benefit is based on eligible annual pay up to the PEPRA maximum.Tooltip 3

Along with the pension benefit, all designated faculty, and employees whose eligible annual pay is higher than the PEPRA maximum, build retirement savings through a supplemental 401(k)-style account.Tooltip 4

Previous UC employee or eligible for UCRP/CalPERS reciprocity?Tooltip 1

Pension Choice is a pension benefit under the University of California Retirement Plan (UCRP), offering a predictable level of lifetime retirement income. Contributions and benefits are based on eligible annual pay up to the annual IRS maximum.Tooltip 2

Some types of compensation not considered “eligible pay” when calculating retirement benefits are: pay that exceeds the full-time rate or established base pay rates for regular, normal positions; overtime pay (unless for compensatory time off); and pay that exceeds the base salary (X+X’) under the Health Sciences Compensation Plan. For more about eligible pay, see the Complete Guide to UC Retirement Benefits on UCnet.

Savings Choice

Savings Choice works much like a 401(k) plan. Your individual pretax contributions, and contributions from UC (based on your eligible pay), accumulate in a tax-deferred retirement account. Contributions are based on eligible annual pay up to the IRS maximum.Tooltip 2

Some types of compensation not considered “eligible pay” when calculating retirement benefits are: pay that exceeds the full-time rate or established base pay rates for regular, normal positions; pay that exceeds the base salary (X+X’) under the Health Sciences Compensation Plan; and overtime pay (unless for compensatory time off). For more about eligible pay, see the Complete Guide to UC Retirement Benefits on UCnet.

Pension Choice

New to UC?

You contribute 7% of your eligible pay before taxes.

  • Contributions on eligible pay up to the PEPRA maximum will go toward the UCRP pension benefit.Tooltip 3
  • Contributions on eligible pay above the PEPRA maximum, up to the annual IRS pay maximum, will go into your supplemental account.Tooltip 2

UC contributes:

  • Pension: 8% of eligible pay up to the PEPRA maximum.
  • Supplemental account for designated faculty: 5% on all eligible pay up to the annual IRS pay maximum.Tooltip 4
  • Supplemental account for staff and other academic employees: 3% on eligible pay above the PEPRA maximum, up to the annual IRS pay.

Previous UC employee or eligible for UCRP/CalPERS reciprocity?Tooltip 1

  • You contribute 7% of your eligible pay, before taxes, up to the annual IRS pay maximum. Your contributions will go toward the UCRP pension benefit.
  • UC contributes 8% of your eligible pay up to the annual IRS pay maximum.
  • No supplemental account, since eligible pay is not subject to the PEPRA maximum.
Employer and employee contribution rates are set periodically by the UC Regents. The total UC contribution rate to UCRP is currently 14%, which includes 6% toward the UC's unfunded pension liability. Employee contributions and the provisions of Pension Choice and Savings Choice are subject to collective bargaining for represented employees. Please refer to the appropriate collective bargaining agreement, as benefits and other provisions may vary.

Savings Choice

You contribute 7% of your eligible pay before taxes, up to the annual IRS pay maximum.Tooltip 2

UC contributes 8% of eligible pay, up to the annual IRS pay maximum.

Employer and employee contribution rates are set periodically by the UC Regents.  Employee contributions and the provisions of Pension Choice and Savings Choice are subject to collective bargaining for represented employees. Please refer to the appropriate collective bargaining agreement, as benefits and other provisions may vary.

Pension Choice

UC makes decisions about the investments of the UCRP and assumes the investment risk. The lifetime monthly retirement income you earn is the same regardless of investment returns.

If you are eligible for the supplemental account, you select the investments from available fund options and you assume the investment risk. The value of your account can go up and down. UC provides tools, resources, and one-on-one guidance to help you understand how to plan and invest for retirement.

 
Guidance provided is educational.

Savings Choice

You select investments from available fund options and assume the investment risk for all the funds in your account. The value of your account can go up and down. UC provides tools, resources, and one-on-one guidance to help you understand how to plan and invest for retirement.

 

Guidance provided is educational.

Pension Choice

When you retire, you will receive lifetime monthly retirement income from UCRP based on your highest average 36 months of eligible pay (up to the PEPRA maximum, as appropriate), the amount of your service credit in UCRP, and your age at retirement.

UCRP also includes benefits for your eligible survivors, as well as disability income if you become totally and permanently disabled before retirement.

If you are eligible for the supplemental account, you can draw retirement income from your account when you retire. Your account balance will depend on the amount contributed by you and UC and on the performance of your investments. Distributions are governed by plan rules.

You can designate a beneficiary for your supplemental account balance.

 

Savings Choice

When you retire, you can draw retirement income from your account. Your account balance will depend on the amount contributed by you and UC and on the performance of your investments. Distributions are governed by plan rules.

Savings Choice does not include disability or survivor benefits, but you can designate a beneficiary for your account balance. Employee-paid disability coverage and employee-paid supplemental life insurance coverage are available.

 

Pension Choice

You will “vest” in UCRP (become eligible to receive pension benefits, subject to plan rules) once you have earned five years of UCRP service credit. You begin to earn service credit for your time worked when you start making contributions.

Your contributions to your supplemental account will vest immediately. UC’s contributions will vest after you have earned five years of UCRP service credit.

Savings Choice

Your contributions to your account will vest immediately. UC’s contributions will vest after one year.

Pension Choice

If you leave UC, your UCRP benefit is not portable. If you are vested and leave employment, you must leave your UCRP accumulations on deposit to ensure that you remain eligible for lifetime monthly benefits upon attaining retirement age. If you leave and are not vested, you are only eligible to receive a return of your own UCRP contributions (plus interest), which can be rolled over to an IRA or another retirement plan that will accept them.

The supplemental account is portable, so you can roll over the vested balance into another employer’s retirement plan or an IRA.

Savings Choice

If you leave UC, your account is portable. That means you can roll your vested account balance into another employer’s retirement plan or an IRA.

Pension Choice

Pension Choice may allow you to continue some health and other insurance plans into retirement, subject to the rules in effect at the time you retire.

If you leave UC and take a distribution of your vested accumulations, you will forfeit retiree health eligibility.

Savings Choice

Savings Choice may allow you to continue some health and other insurance plans into retirement, subject to the rules in effect at the time you retire.

If you leave UC and take a distribution of your vested account, you will forfeit retiree health eligibility.

Pension Choice

The decision to participate in Pension Choice is irrevocable—you cannot change your participation to Savings Choice later.

Savings Choice

UC is requesting IRS approval to offer you a one-time future opportunity to change your participation from Savings Choice to Pension Choice prospectively.Tooltip 5

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