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 includes a monthly pension benefit under the University of California Retirement Plan (UCRP), for predictable lifetime retirement income based on your eligible pay (up to the PEPRA maximum), service credit and retirement age.
 
Along with the pension benefit, some faculty and staff are eligible for a supplemental 401(k)-style account, with contributions from you and UC.
 
UC makes decisions about the investments of the UCRP and assumes the investment risk. For the supplemental account, you choose from a menu of funds and you assume the investment risk.

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.

You choose your investments from a menu of available funds, and you assume the investment risk. UC provides educational tools and resources to help you plan.

Employees who choose Savings Choice will have a one-time opportunity, beginning on the fifth anniversary of the calendar year in which they made their initial election, to switch to Pension Choice prospectively.
Shared Contributions2

New to UC?

  • You contribute 7% of annual eligible pay1, before taxes. Contributions on pay above the 2013 California Public Employees’ Pension Reform Act (PEPRA) maximum ($146,042 in 2023) above the annual IRS pay maximum go into your supplemental account.
  • UC contributes a percentage of eligible pay (determined by the UC Regents), up to the PEPRA maximum.2
  • For the supplemental account for eligible faculty3, 5% on all eligible pay up to the annual IRS pay maximum.
  • 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 maximum.

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 a percentage of eligible pay (determined by the UC Regents), up to the annual IRS pay maximum.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.

UC contributes 8% of your eligible pay, up to the IRS pay maximum.
Your retirement income

When you vest in (become eligible for) benefits: Your contributions to your pension and to your supplemental account (if you have one) are always yours. You vest in your pension benefits and in UC’s contributions to your supplemental account 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.
 
Income: You receive lifetime monthly retirement income based on your highest average 36 months of eligible pay (up to the PEPRA maximum), the amount of your service credit in UCRP, and your age at retirement. You can choose a “contingent annuitant” to receive monthly lifetime income upon your death.
 
Distributions from your supplemental account are governed by plan rules. The balance will depend on the amount contributed by you and UC and your investments’ performance and can be left to your designated beneficiary.
 
Additional benefits: You may be eligible for retiree health benefits from UC and continuing health benefits for your contingent annuitant (if eligible) after your death. If you become disabled before retirement, you may be eligible for a percentage of your income and continuing health benefits.

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.

When you vest in (become eligible for) benefits: Your contributions to your account are always yours. UC’s contributions will vest after one year.
 
Income: You draw money from your account; distributions are governed by plan rules. The balance will depend on the amount contributed by you and UC and your investments’ performance, and can be left to your designated beneficiary.
 
Additional benefits: You may be eligible for retiree health benefits from UC. Savings Choice does not include disability benefits or continuing health benefits for your survivor, but you can choose employee-paid disability and supplemental life insurance.

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 2023, the limit is the first $146,042 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 2023, this limit is $330,000.

Switching from Savings Choice to Pension 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 workplace financial consultant for help with your options. Schedule a one-on-one session, or call 1-800-558-9182.

Note: 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 than the benefits outlined here. Please refer to your collective bargaining agreement for details.

This information is intended to be educational and is not tailored to the investment needs of any specific investor.

1 Retirement benefits are calculated based on “eligible pay,” which does not include certain types of compensation, such as: Pay that exceeds the full-time rate or established base pay rates for regular, normal positions; overtime pay (unless for compensatory time off); pay that exceeds the base salary (X+X’) under the Health Sciences Compensation Plan.

2 Employer and employee contribution rates are set periodically by the UC Regents. Because UCRP is a defined benefit plan, a member receives a specified payment amount at retirement (based on UCRP service credit, retirement age and eligible annual pay, up to the applicable maximum), irrespective of the amount the individual or UC contributes. 

3 The 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: Ladder-rank faculty and equivalent titles (Professorial and Equivalent titles, which include Agronomists, Astronomers, Clinical Professor of Dentistry [over 50%] and Supervisor of Physical Ed); Professor in Residence series; Professor of Clinical (X) series; Acting full, associate and assistant professors; Lecturers/Senior Lecturers (full-time) with Security of Employment or Potential Security of Employment (excluding UC Hastings Lecturers/ Senior Lecturers); Adjunct Professor series; Health Science Clinical Professor series.

4 You 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. Qualifying employees who are eligible for Reciprocity and who are Classic CalPERS members may self-identify by submitting the UBEN 300 form (within 90 days of a Pension Choice election) to the UC Retirement Administration Service Center.

5 If you take a full withdrawal or rollover of your Savings Choice accumulations prior to your retirement with UC, your associated retiree health service credit will be forfeited (and you will not have the option to restore the service credit if you return to UC employment).

Investing involves risk, including the risk of loss.

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