Retirement Programs &

Services Update CUCRA/CUCEA Spring 2017 Meeting

Gary Schlimgen, Executive Director

Retirement Programs & Services

April 27, 2017

Campus/Medical Centers Only

UCRP Historical Funded Status and Funded Ratio (5 year smoothing) as of July 1

105% 103% 95%

86% 82%

78% 76% 79% 81% 81%

0%

20%

40%

60%

80%

100%

120%

$0

$10

$20

$30

$40

$50

$60

$70

2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

$ in

Billi

on

s

Actuarial Accrued Liability (AAL) Actuarial Value of Assets (AVA)

2

8% 8% 8% 8% 8% 8% 8% 8%

14% 14% 14% 14% 14% 14% 14% 14%

$96 $171 $171

$564 $481 $392 $595 $623 $720 $782 $750

0%

5%

10%

15%

20%

25%

30%

35%

2015 2016 2017 2018 2019 2020 2021 2022

Pe

rce

nt o

f C

ov

ere

d P

ayr

oll

Plan Year Beginning July 1,

UCRP Contribution IllustrationCampus and Medical Centers Only ($ in millions)

Funding Shortfall

STIP Transfers

State Funding

Employer Contribution

Employee Contribution

Normal Cost

-Assumes active member population grows by 0.7% per year.

-Assumes a 7.25% market value return per year starting July 1, 2016.

-Assumes no future changes in actuarial assumptions.

-Includes approved STIP transfers and State Funding through 2017/2018. -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.

UC Normal Cost for all Members (~18%)

UCRP Contribution Illustration

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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)

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Gary Schlimgen, Executive Director

Retirement Programs & Services

April 27, 2017

UC Retirement Savings Program (RSP)

Fee Allocation Methodology Project CUCRA/CUCEA Spring 2017 Meeting

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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

Methodology Considerations

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RASC Update,

Family Member Eligibility &

Interface with UCPATH

CUCRA/CUCEA Spring Meeting

Michael Waldman, Manager

Retirement Administration Service Center

April 27, 2017

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Retirement Season Snapshot as of April 19

Personal Retirement Profiles (PRPs):

• 2017 1,300

• 2016 1,100

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

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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)

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UC Path

• Payroll

• Academic Personnel

• Timekeeping

• Human Resources

RASC

• Retirement Administration Service Center

UC Path / RASC

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Family Member Eligibility

Health & Welfare Triennial Recertification

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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.

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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.

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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 2014.

• Many retirees in the initial 2012 verification effort

will be captured in this recertification.

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$1,100,000

What is the Expected ROI?

Estimated savings to UC:

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.

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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

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 email 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 email & phone

calls, reminders to send in documents

September: Appeals. Handled by a review team at UCOP

UC

Systemwide

Vendor

UC

Systemwide

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Questions?

18

The Redwood Pension

Administration System &

Introducing…

UCRAYS

REDWOOD: A multi-year project to improve operations and your experience with the Retirement Administration Service Center

Expected to be live in 2019

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Redwood Objectives: • Modernize the University’s pension

administration technology

• Adapt to the changing landscape of retirement programs

• Enhance the member experience

21

Current System:

22

23

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

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Introducing UCRAYS: UC Retirement At Your Service

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More information to come!

Thank you!

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