Future faculty hired by the University of Minnesota will have to pay more toward their retirement funds than current members according to a decision made today by the Board of Regents, my MPR colleague Tim Post reports:
The payments will more than double. Currently U faculty put 2.5 percent of their salaries into retirement, while the U pays 13 percent — an arrangement in place since 1992. The new plan requires faculty hired after the first of the year to pay 5.5 percent, and the U’s contribution will drop to 10 percent.
Current faculty won’t be affected by the change.
The plan is expected to save the university $3 million dollars in the first year, and possibly more than $10 million by its fourth year, according to a university estimate.
Regent Patricia Simmons says the move puts the U’s retirement contributions more in line with other universities:
“It strikes me that this achieves a reasonable balance. It should not compromise recruitment, it doesn’t affect retention. It is respectful of people and it’s good for the university.”
Jackie Singer, director of retirement programs at the U, says faculty groups on campus didn’t want employees contributions to go any higher than 5.5 percent.
“They felt that increasing it at this time might really have an issue with recruiting efforts. Requiring more of a contribution could have some recruiting issues.”
The increase puts the U more in line with what other universities contribute to their faculty members’ retirement funds, but remains more generous than most private sector employees’ retirement plans.