1/18/2021 update: After years of paying buy-outs to fired coaches like Mark Helfrich, you’d think our General Counsel’s office would have a clue. But, in response to complaints, they’re claiming they’ve just now identified “a tax compliant way” to split the payments:
NEW: Retirement Incentive may be split into two payments.
Based on feedback received from eligible employees and other stakeholders, HR requested UO legal counsel revisit the option of offering split payments to program participants. After further review, legal counsel was able to identify a tax compliant way to divide the payment over tax years 2021 and 2022.
When signing their formal Participant Agreement and Release, participating employees will be asked to indicate whether they would like to receive their incentive in one lump sum payment or split into two payments by choosing one of the following three options:
Option 1: The entire payment will be issued in one lump sum in July 2021.
Option 2: 50% of the total payment will be issued in July 2021 and the remaining 50% will be issued in February 2022.
Option 3: 25% of the total payment will be issued in July 2021 and the remaining 75% will be issued in February 2022.
11/23/2020 update: The second email from HR is below. No, JH hasn’t raised their offer yet.
I thought the HR staff’s video presentation was pretty helpful, although Director Mark Schmelz’s attempt to explain why UO wouldn’t split the payments over two tax years made no sense given that UO’s FY runs from July to June. Maybe it has something to do with our General Counsel’s demand that employees taking this offer first sign away their rights to everything?
g. Return of University property. Employee agrees to return to the University any and all University property in Employee’s possession on or before the Resignation Date. [In the past Emeritii faculty have kept their computers, since they’e still writing letters for students, doing research, etc. Hard to do if UO has all your files.]
Age Discrimination Release: Because Employee is over forty (40) years old, Employee has certain rights under federal law, including the Age Discrimination in Employment Act (ADEA) and the Older Workers Benefit Protection Act (OWBPA), and state law, including ORS 659A.030, all of which prohibit discrimination based on age. Employee acknowledges:
The release in this Agreement includes, but is not limited to any claims based upon age; …
Tenure Release:In exchange for the consideration of the mutual covenants set forth in this Agreement, Employee relinquishes tenure as of June 30, 2021. By participating in this 2021 Retirement Incentive, Employee agrees they are ineligible to participate in, and waive all rights related to participation in, the University’s Tenure Reduction Program (TRP). TRP agreements executed after September 16, 2020 are null and void upon execution of this Agreement.
Severability: This Agreement constitutes the entire agreement between the Parties, and there are no other understandings, oral or written, other than those stated herein. If any portion of this Agreement is determined to be unenforceable as a matter of law, the remaining portions of this Agreement shall remain in full force and effect.
[You had an agreement with your chair and dean? Forget about it.]
Jurisdiction and Amendment: Oregon law applies to any and all claims or disputes arising out of or relating to this Agreement and those disputes or claims shall be exclusively brought in courts located in Lane County Oregon (“Oregon Courts”). The parties explicitly consent to the personal jurisdiction of the Oregon Courts. This Agreement can only be amended or modified by a writing signed by both Parties.
[Really? You give up your rights under Federal law? Is that enforceable?]
Attorney Fees: If either Party is required to enforce this Agreement, the prevailing party shall be entitled to reimbursement of attorney fees by the other Party.
[Huh? UO’s lawyers have already demanded that employees who take this deal give up all their rights. This suggests they’re worried that won’t hold up in court. So why all the pretense?]
The HR email:
From: Retirement Incentive <firstname.lastname@example.org>
Subject: UO 2021 Retirement Incentive Update — Info session recording, retirement planning webinars, and election deadline reminder
Date: November 23, 2020 at 5:22:05 PM PST
UO Information Session recording now available.
Human Resources held a virtual information session on Thursday, November 19. Topics included an overview of the Retirement Incentive Offer, process, and action steps, tools and resources available, as well as a Q&A session.
A recording of the session is available on the HR website: View recorded session.
Retirement planning webinars scheduled for December.
As part of reviewing and evaluating the 2021 Retirement Incentive Offer, attend a retirement planning webinar or counseling session with a trusted advisor. A credentialed Financial Advisor can provide advice and insight to assist you as you estimate your retirement income and make retirement decisions.
2021 Retirement Incentive election deadline is 5:00 p.m. on February 5, 2021.
After you review and evaluate the 2021 Retirement Incentive offer, your retirement income benefits, and healthcare coverage options, complete theretirement incentive election form if you wish to participate in the program. Election forms received after the deadline will not be accepted.
Support and Assistance
Please check the web resources often for the latest information and before reaching out to the HR project team. Many of your questions will be answered in these resources:Ø 2021 Retirement Incentive Offer guide
HR is regularly making updates and changes as more information becomes available. If you are unable to find an answer in the web resources to your question, please email your question or concern to the HR project team at email@example.com. Please note that we are experiencing a high volume of emails currently and that we will respond to your inquiry as quickly as we can.
11/18/2020: UO offering retirement buyouts to faculty and OAs – if they sign away all rights
Apparently the email below went out to all eligible TT and Career faculty as well as OAs, on Monday. The email explains whose is eligible – basically age 62 by June 30 2021 and at least 15 years at UO. Keep in mind that I’m just an economist, not an accountant or financial planner or lawyer, and you would be wise not to use my thoughts below to make any decisions.
The employer’s goal with plans like this is to target highly paid employees who would otherwise keep working for many years, thereby cutting their costs by more than the buyout amount. The employer’s worry is that the people taking up the offer will tend to be those who would have retired anyway – meaning that the employer is giving them money for doing what they would have done anyway. (The economic term for them is inframarginal, as opposed to the marginal employees who retire earlier because of the incentive). This is why universities typically offer buyouts only to tenured faculty, who are giving up secure jobs and therefore need more compensation to persuade them to do so. It’s very unusual to see a university make the same proposal to career faculty and administrators.
My guess is that this plan will not encourage many people to retire earlier than they otherwise would have, and that most people taking this offer would have retired even without it, meaning that the net benefit to UO may well be negative, even when considering UO’s savings on PERS/ORP which they do not plan on passing on to the participants. This plan would have been more effective with faculty if it had been offered before the summer, before we’d paid the sunk costs of investing in converting our classes to online. I mean remote.
The buyout gives participants a year of salary plus $880 for each month between now and age 65 to help pay for their own health care, all as a lump-sum. ($880 is the current cost to UO of PEBB health insurance for a single person). I believe that this is all taxable (though perhaps you can shelter some in an IRA). The one-year income spike will mean the after-tax amount will be reduced by roughly 33% to 42% of the buyout.
This buyout payment will not increase people’s PERS salary or basic PERS benefit. For those faculty on the ORP, UO will not make any contributions to your ORP account from this buyout, which are currently about 33% of pay. UO plans to keep those savings – but of course by doing so they they make it less likely marginal faculty and staff will take the buyout offer.
Here are some more specific thoughts:
For Careers and OA’s, who are not eligible for the TRP, this plan is a gift to those already planning on retiring outright next year or staying on less than one additional year. Is it enough to persuade many of those planning to retire in say 3 years to retire now? I sort of doubt it, but those most worried about their job security may decide differently.
For TTF already planning to retire outright at the end of this academic year, this is again a great offer. If you were planning to retire this AY and then go on the TRP, which you could do for 5 years at 1/3 salary, keep in mind that, JUST like the buyout money, TRP pay does not count for PERS or produce ORP contributions, and most people on the TRP really only stay on it for about 3 years. They do get free PEBB insurance while teaching 0.5 FTE (and potentially summer). So net, ignoring your personal utility or disutility of teaching part time, the buyout is probably a modest financial loss relative to the TRP.
For those TT faculty currently planning on retiring outright but not until after another year or two or three of full time work after June 2021, the buyout makes less and less sense, and even less so for those planning on going on the TRP after a few more years full-time. This of course assumes that the faculty union will be able to keep the TRP in the upcoming contract negotiations.
For those on PERS Tier 1/2: Keep in mind that the buyout will not count to boost your highest 3 years pay or benefits. Additionally, under the Full Formula, your retirement income goes up by 1.67% (roughly) for every year you work and 1.67% of any increase in your highest three years salary. Additionally, you get about 4.5% of regular pay put into your IAP. This gives PERS faculty a modest additional incentive to take TRP over the buyout.
Corrections and other thoughts welcome. Maybe I should put all this into a spreadsheet?
Oh yeah, one more twist, from the FAQ:
Why do I have to sign a Participation Agreement and Release? Isn’t my election form sufficient?
UO has designed a formal Participation Agreement and Release, which details the terms of the participant’s voluntary retirement. Since part of UO’s overall objective this program is to manage financial liability, we have included in the Participation Agreement a waiver and release of any [emphasis added] possible claims against UO. We want this agreement to represent the full understanding between UO and the participant. A legally binding document is the best way to accomplish this.”
I’m a bit unclear on why a “full understanding” requires “a waiver and release of any possible claims” by the employee.
From: Retirement Incentive <firstname.lastname@example.org>
Subject: Your UO 2021 Retirement Incentive Offer- Action required by February 5, 2021
Date: November 16, 2020 at 2:52:57 PM PST
The University of Oregon has packaged a voluntary retirement incentive offer to provide eligible employees an opportunity to retire sooner than they may have planned. You have been determined to meet the eligibility requirements, and I am pleased to extend to you a 2021 retirement incentive offer. This retirement incentive package offers a benefit to eligible employees while also providing opportunities for the university as we continue to navigate and respond to financial uncertainty. This offer is available to tenure-related faculty, career faculty, and officers of administration who are age 62 and older, have worked at the UO for 15 years or more, and meet all other eligibility requirements.
Through this one-time offer, you would elect to retire on June 30, 2021 and receive a lump sum incentive payment representing one year of compensation. A lump sum payment intended to provide funds for health insurance as a bridge to Medicare eligibility at age 65 will also be issued to participants under the age of 65. Total gross payments are capped at $250,000.
Your 2021 retirement incentive offer is:
Ø Estimated lump sum gross compensation-based payment: [one year salary]
Ø Estimated lump sum gross healthcare bridge payment: [~$880 for each month you are from age 65]
Ø Estimated lump sum total gross payment: [redacted]
To receive this retirement incentive, you will need to:
Ø Submit the Retirement Incentive Election Form no later than 5:00 p.m. on February 5, 2021. This election form is non-binding and sets in motion action steps to finalize the agreement.
Ø Sign a formal Participant Agreement and Release with the university and relinquish your tenure, if applicable. Refer to the HR website for a complete overview of the terms included in the Participant Agreement and Release.
Ø Retire from the UO effective June 30, 2021.
You are also invited to attend an information session this Thursday, November 19, from noon to 1:00 p.m. HR will provide an overview of the offer, process and action steps, and be available to answer your questions. Please use this Zoom link to join the meeting.
Action steps are detailed on the HR website with explanations, step-by-step guidance, and resources you will need to consider this offer. Please refer to the HR website for a complete overview of the offer, process, timeline, and important dates, and frequently asked questions to help you better understand and evaluate the 2021 Retirement Incentive offer.
Ø Your retirement plan: ORP with TIAA, Tier 1
PERS members should request a retirement estimate immediately, if you are at all interested in the 2021 retirement incentive, as it can take 60 days or more to receive.
Ø Submission of the Retirement Incentive Election Form is an important step that notifies HR that you are interested in pursuing this offer; signing of the formal Participant Agreement and Release will occur in winter 2021. There will be opportunities for you to withdraw your decision after submitting the election form, if you change your mind. Election forms will not be accepted after 5:00 p.m. on February 5, 2021.
I would like to add that this is your individual decision and does not require approval from a dean, department head, or supervisor. Please reach out to a member of my team by emailing email@example.com should you have any questions or need further assistance.
I appreciate you taking the time to seriously consider the 2021 retirement incentive offer, and I am hopeful that this unique opportunity could provide a path to retirement that may appeal to you. Thank you again for your time and consideration.
Chief Human Resources Officer and Associate Vice President