How the UC Retirement Choice program works

If you are newly hired or newly eligible for the UC Retirement Choice Program, you have an important decision to make. You’ll need to decide which UC primary retirement plan you want to participate in—Pension Choice or Savings Choice. The sooner you make your choice, the sooner you start receiving UC contributions (and service credit under Pension Choice).

Here’s an overview of each option.

Eligibility

You are eligible for a choice of primary retirement benefits if you:

  • Were hired into an eligible faculty or career staff appointment on or after July 1, 2016; OR
  • Completed an hours requirement on or after July 1, 2016—generally, 1,000 hours worked within a 12-month period; OR
  • Were rehired into an eligible faculty or career staff appointment on or after July 1, 2016, following a break in service. Generally, a break in service occurs if you have left UC employment for one full calendar month or more.

If you were participating in the UC Retirement Plan (UCRP) on June 30, 2016, you will continue to participate in your current plan and will not need to choose a primary retirement benefit option. Also, if you’re represented by a union, your retirement benefits are governed by your union’s contract with UC. As a result, your benefits may be different from the benefits outlined here. Please refer to your collective bargaining agreement for details.

Your primary retirement benefit options

Both Pension Choice and Savings Choice can help you build valuable retirement income, in addition to Social Security benefits and any other retirement income you may have.

What you need to do

If you're eligible for the UC Retirement Choice Program, it pays to enroll as soon as you've made your choice—within 90 days of your hire date or qualifying appointment eligibility date. (If you are uncertain about your eligibility date, please call the UC Retirement Administration Service Center at 1-800-888-8267.)

You can compare options and make your selection at myUCretirement.com/choose

If you don't make an active choice, you automatically will be enrolled in Pension Choice when your 90-day selection window ends.   

Here’s a snapshot of your options

For complete details, see your Summary Plan Description.

Pension Choice Savings Choice
How it works

Pension Choice is a pension benefit under the UCRP, offering a fixed monthly income payable in retirement.

Along with the pension benefit, some faculty and staff are eligible to build retirement savings through a supplemental 401(k)-style account.

UC invests the money in the UCRP. If you are eligible for the supplemental benefit, you select the investments from available fund options.

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

Savings Choice works much like a 401(k) plan.

Your individual pretax contributions, plus contributions from UC (based on your eligible pay1), accumulate in a tax-deferred retirement account that you draw from in retirement.

Under Savings Choice, you select how you want to invest the contributions made to your account from a menu of available funds, and you assume the investment risk.

UC provides tools, resources and one-on-one guidance to help you understand how to plan and invest for retirement.

Under Savings Choice, you may be offered an opportunity to change your participation to Pension Choice.

Shared Contributions2

New to UC?

You contribute 7% of annual eligible pay1, before taxes, up to the annual IRS pay limit ($290,000 for the current plan year). Your contributions on pay up to the 2013 California Public Employees’ Pension Reform Act (PEPRA) limit ($128,059 in the current plan year) will go into the UCRP; your contributions on pay above the PEPRA limit will go into the supplemental account.

UC contributes:

  • For the pension, a percentage of eligible pay, as determined by the UC Regents, up to the PEPRA limit.2
  • For the supplemental account for eligible faculty3, 5% on all eligible pay up to the annual IRS pay limit.
  • For the supplemental account for eligible staff and other academic employees, 3% on eligible pay above the PEPRA limit, up to the annual IRS pay limit.

Previous UC employee in an eligible appointment for UCRP/CalPERS reciprocity?4

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

UC contributes:

  • For the pension, a percentage of eligible pay, as determined by the UC Regents, up to the annual IRS pay limit.2
  • No supplemental account contributions.

Note: Contributions are made only on pay you earn after you are enrolled, subject to payroll processing cycles.

You contribute 7% of your eligible pay1, before taxes, up to the annual IRS pay limit ($290,000 for the current plan year).

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

Your retirement income

You will vest (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 (based on your time worked) when you start making contributions.

New to UC?

  • Pension benefit is based on UCRP service credit, highest average 36 months of eligible pay (up to the PEPRA maximum) and age at retirement.
  • Balance of supplemental account, if applicable, depends on contributions from you and UC, plus investment performance.

Previous UC employee or eligible for UCRP/CalPERS reciprocity?4

  • Pension benefit is based on UCRP service credit, highest average 36 months of eligible pay (up to the IRS pay maximum) and 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.

Your contributions to your supplemental account, if any, will vest immediately. UC’s contributions will vest after you have earned five years of UCRP service credit or, if earlier, on the date of your death, provided you are actively employed on that date.

When you retire, you will be able to draw retirement income from your supplemental account. The balance of your account will depend on the amount contributed by you and UC and on the performance of the investments you select.

You can designate a beneficiary for your supplemental account balance.

Your contributions to your account will vest immediately. UC’s contributions will fully vest after one year if you are actively employed one year after your eligibility date or, if earlier, on the date of your death, provided you are actively employed on that date. Distributions are governed by plan rules.

When you retire, you will be able to draw money from your account or take the vested benefits with you if you leave UC. The balance in your account will depend on the amount contributed by you and UC and on the performance of the investments you select.

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

 About retirement benefit limits

UC pension benefits are limited, consistent with the cap on pensionable earnings under the 2013 California Public Employees’ Pension Reform Act (PEPRA). This limit applies to other California public pension plans and is calculated and reviewed annually. For the current plan year, the limit is the first $128,059 of annual pay.

In addition, the IRS sets a dollar limit for annual earnings upon which retirement benefits and contributions may be based. The limit is reviewed and adjusted annually. For the current plan year, this limit is $290,000.

Switching from Pension Choice to Savings Choice

Savings Choice participants have a window of opportunity to switch prospectively from Savings Choice to Pension Choice, and become members of the UC Retirement Plan (UCRP). The second choice window for Savings Choice participants opens on the fifth anniversary of the calendar year in which they made their initial election (if you're represented by a union, your Second Choice Window is governed by your union's contract with UC).

A move from Savings Choice to Pension Choice is effective on July 1 (the beginning of the plan year) following your election, if your election is made on or before May 31.

A switch from Savings Choice to Pension Choice is a change in your primary retirement benefits going forward; it is not retroactive. A switch to Pension Choice during your second choice window means:

  • Your Savings Choice account balance will remain yours. Contributions (from you and UC) to your Savings Choice account will stop on the date the change takes effect.
  • The service credit you earned as a participant in Savings Choice will count toward vesting in UCRP and toward your retiree health service credit.5 You will begin earning UCRP service credit toward the calculation of your pension benefit on the date your switch to Pension Choice takes effect.
  • You will remain in the pension plan for the remainder of your career, even if you separate and return.

Want help with your decision?

Speak with a UC-dedicated Fidelity Workplace Financial Consultant for help with your options. Schedule a one-on-one session, or call 1-800-558-9182.