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.
You are eligible for a choice of primary retirement benefits if you:
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.
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.
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, subject to IRS approval, you may be offered an opportunity several years from now to change your participation to Pension Choice.2
New to UC?
You contribute 7% of annual eligible pay1, before taxes, up to the annual IRS pay limit ($275,000 for 2018). Your contributions on pay up to the 2013 California Public Employees’ Pension Reform Act (PEPRA) limit will go into the UCRP; your contributions on pay above the PEPRA limit will go into the supplemental account.
Previous UC employee in an eligible appointment for UCRP/CalPERS reciprocity?5
You contribute 7% of annual eligible pay, before taxes, up to the annual IRS pay maximum.
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 ($275,000 for 2018).
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?
Previous UC employee or eligible for UCRP/CalPERS reciprocity?5
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.
1Retirement benefits are calculated based on “eligible pay,” which does not include certain types of compensation, such as:
2Subject to IRS approval, employees who initially choose Savings Choice may have a one-time opportunity to switch to Pension Choice.
3Employer 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 UC's unfunded pension liability.
4The designated faculty eligible for a 5% UC contribution to the supplemental benefit (on all eligible pay up to the annual IRS maximum) are as follows:
5You are not subject to the PEPRA maximum (and your retirement benefits may differ) if you: previously worked for UC in an eligible appointment (i.e., were previously a UCRP member before 7/1/16); were hired before July 1, 2016, and became eligible for retirement benefits after July 1, 2016; or were a “Classic Member” under CalPERS and are eligible for reciprocity with UC. Employees in the latter group need to self-identify by contacting the UC Retirement Administration Service Center at 1-800-888-8267.
This information is intended to be educational and is not tailored to the investment needs of any specific investor.
Keep in mind that investing involves risk. The value of your investment will fluctuate over time and you may gain or lose money.
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