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.
For a list of types of compensation that are not considered "eligible pay" when calculating retirement benefits, see A Complete Guide to Your UC Retirement Benefits.
Eligible Earnings Maximums
The maximum amount of your compensation that counts toward your retirement benefits may be affected by the 2013 California Public Employees’ Pension Reform Act (PEPRA) maximum and/or the IRS dollar maximum.
- PEPRA Pensionable Earnings Maximum: If you were hired on or after July 1, 2016, the maximum salary that counts toward your pension benefits is consistent with the maximum on pensionable earnings under PEPRA.* This maximum applies to most other California public pension plans and is reviewed annually and may be adjusted. For the current plan year, the maximum is $126,291.
- IRS Maximum: The IRS sets a dollar maximum for annual earnings upon which retirement benefits and contributions may be based. This maximum is also reviewed and may be adjusted annually. For the current plan year, this maximum is $285,000.
*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 800-888-8267.
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
Employer and employee contribution rates are set periodically by the UC Regents. The total UC contribution rate to UCRP is currently 14%, which includes approximately 6% toward UC’s unfunded pension liability.
Switching from Savings Choice to Pension Choice
UC is requesting IRS approval to offer employees who initially select Savings Choice a one-time future opportunity to change prospectively from Savings Choice to Pension Choice. Enrollment in Pension Choice is irrevocable. If UC’s request is approved, it’s important to understand that, if an employee switches from Savings Choice to Pension Choice:
- The time spent in Savings Choice will count toward vesting in future Pension Choice benefits. Service credit toward Pension Choice benefits will begin to accrue prospectively at the point the employee switches to Pension Choice.
- Accumulated balances in the Savings Choice account will remain in the employee’s account until retirement. Distributions are governed by plan rules.
- The timing of the one-time future opportunity to switch to Pension Choice may depend on job type, length of service, timing of a tenure decision, or other factors.