Retirement Programs & Services Update CUCRA/CUCEA Spring 2017 Meeting

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1 Retirement Programs & Services Update CUCRA/CUCEA Spring 2017 Meeting Gary Schlimgen, Executive Director Retirement Programs & Services April 27, 2017

2 $ in Billions UCRP Historical Funded Status and Funded Ratio (5 year smoothing) as of July 1 $70 120% $60 $50 $40 $30 $20 105% 103% 95% 86% 82% 78% 76% 79% 81% 81% 100% 80% 60% 40% $10 20% $ Campus/Medical Centers Only 0% Actuarial Accrued Liability (AAL) Actuarial Value of Assets (AVA) 2

3 Percent of Covered Payroll UCRP Contribution Illustration 35% UCRP Contribution Illustration Campus and Medical Centers Only ($ in millions) 30% 25% 20% $564 $481 $392 $96 $171 $171 $595 $623 $720 $782 $750 15% 10% 14% 14% 14% 14% 14% 14% 14% 14% UC Normal Cost for all Members (~18%) 5% 8% 8% 8% 8% 8% 8% 8% 8% 0% Plan Year Beginning July 1, -Assumes active member population grows by 0.7% per year. -Assumes a 7.25% market value return per year starting July 1, Assumes no future changes in actuarial assumptions. -Includes approved STIP transfers and State Funding through 2017/ Includes 2016 Tier (20% Savings Choice Election). -Assumes employer contribution remains at 14%, but includes Savings Choice UAAL Surcharges. -Assumes Total Funding Policy Contribution made each year starting July 1, 2018, with any funding -shortfall paid by transfers, borrowing and/or State Funding. Funding Shortfall STIP Transfers State Funding Employer Contribution Employee Contribution Normal Cost 3

4 New UC Retirement Choice Program Two new retirement options for employees hired on or after July 1, 2016 Option 1 Pension with PEPRA cap + Defined Contribution (DC) supplemental plan UC pension (2016 Tier) capped at PEPRA limit ($117,020) PLUS A supplemental DC plan on pay up to IRS limit ($265,000) Eligible Faculty: 5% UC contribution on all pay up to IRS limit Staff/Other Academic: 3% UC contribution on pay above PEPRA limit up to IRS limit Option 2 New stand-alone Defined Contribution (DC) plan Faculty/Staff: 8% UC contribution on all pay up to IRS limit ($265,000) 4

5 UC Retirement Savings Program (RSP) Fee Allocation Methodology Project CUCRA/CUCEA Spring 2017 Meeting Gary Schlimgen, Executive Director Retirement Programs & Services April 27,

6 Methodology Considerations Considerations in evaluating options for updated methodology o Fee Transparency o Equitable Allocation o Fee Subsidization o Fee Levelization Decision: a flat administration fee (rather than asset-based) will be charged to each participant o Effective June 1, 2017: $35 per year / $8.75 per quarter one fee per participant, regardless if in more than one plan first fee to be deducted October 2017 o Postcard announcement to be mailed May 2 to all RSP participants Note: An expense ratio will continue to be charged by each fund for investment management services 6

7 RASC Update, Family Member Eligibility & Interface with UCPATH CUCRA/CUCEA Spring Meeting Michael Waldman, Manager Retirement Administration Service Center April 27,

8 Retirement Season Snapshot as of April 19 Personal Retirement Profiles (PRPs): , ,100 Key Metrics Retirement Counseling Service Level is at or above goal of 80% of calls answered in 90 seconds 88% of customers are Satisfied or Better with their overall experience 8

9 Preparing for Retirement RASC Presentations On-site, in-person Spring 2017 Delivered 23 presentations reaching 1,800 employees 93% of respondents were either Very Satisfied or Satisfied with the presentation (20% response rate) Webinar (hosted) Offered on second and fourth Tuesdays of every month from 10:00 a.m. to 12:30 p.m. Pacific On-demand web Available on UCnet (Compensation & Benefits, Preparing for Retirement) 9

10 UC Path / RASC UC Path Payroll Academic Personnel Timekeeping Human Resources RASC Retirement Administration Service Center 10

11 Family Member Eligibility Health & Welfare Triennial Recertification 11

12 What is a Health and Welfare Eligibility Recertification? A request for verification of current relationship status for those family members whose relationships can change over time. 12

13 Why are we conducting the Recertification? It is industry standard to conduct a recertification of previously verified eligible spouses, domestic partners, and Parent Child Relationships that are subject to change. Some organizations conduct an annual recertification (CSU, CalPERS). We have a fiduciary responsibility under public trust laws and according to our vendor contracts to maintain enrollment only for eligible dependents. 13

14 Who are we Verifying? In addition to the approximately 44,000 employees currently undergoing recertification, UC will recertify a random selection of 5,000 retirees spouses, domestic partners, grandchildren & legal wards enrolled between January 2012 and December Many retirees in the initial 2012 verification effort will be captured in this recertification. 14

15 What is the Expected ROI? Based on industry data, most organizations expect 2-4% of the dependents who were initially verified eligible may no longer be eligible for coverage due to a change in relationship. From a population of 5,000 retirees in the recertification effort we estimate 1.32% (below the industry standard), or 160 dependents, will have a status change. Per member per year average benefits costs are estimated at $6,920. Estimated savings to UC: $1,100,000 15

16 What documents will we require? We are only requesting one document that shows the relationship is current. Spouses & Domestic Partners Examples: Federal Income Tax Return listing both spouses/domestic partners; Mortgage statement listing both; current credit card statement with both names listed, utility bill, etc. Grandchildren & Legal Wards Federal Tax Return showing child listed as a dependent. 16

17 UC Systemwide Vendor UC Systemwide Proposed Timeline Include heads up in employee & retiree 2016 Open Enrollment Booklets (complete) Consult with CHROs 1/9/17; APDs 1/12/17; Faculty Health Care Task Force 1/20/17 Include articles on UCNet (Jan & Feb 2017), Campus websites & newsletters (Feb & Mar 2017) Targeted letters to CHROs, APDs, Unions, (Early 2017) Launch Employee Recertification (April 2017) Publish Article in New Dimensions (May 2017) Targeted to retirees selected for the recertification (Mid- May) Early June: Mail Verification Packet to all selected retirees. Package includes: Cover Letter introducing Secova, Cover Sheet for FMEV, Eligibility Definitions & Required Documents, Detailed Instructions for all aspects of the process, and FAQ s August: Follow-up communications, including & phone calls, reminders to send in documents September: Appeals. Handled by a review team at UCOP 17

18 Questions? 18

19 The Redwood Pension Administration System & Introducing UCRAYS

20 REDWOOD: A multi-year project to improve operations and your experience with the Retirement Administration Service Center Expected to be live in

21 Redwood Objectives: Modernize the University s pension administration technology Adapt to the changing landscape of retirement programs Enhance the member experience 21

22 Current System: 22

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24 Modern interface Reduced training time Modern technology Weekly vs. monthly updates with health & welfare vendors, including Medicare Workflow Increased visibility and better tracking of work Faster processing of retirements and survivor benefits Enhanced member portal More transactions via the web 24

25 Introducing UCRAYS: UC Retirement At Your Service 25

26 More information to come!

27 Thank you! 27