How the UC Retirement Choice program works

If you are newly hired or newly eligible for the UC Retirement Choice Program, you have an important decision to make. You’ll need to decide which UC primary retirement plan you want to participate in—Pension Choice or Savings Choice. The sooner you make your choice, the sooner you start receiving UC contributions (and service credit under Pension Choice).

Here’s an overview of each option.

Eligibility

You are eligible for a choice of primary retirement benefits if you:

  • Were hired into an eligible faculty or career staff appointment on or after July 1, 2016; OR
  • Completed an hours requirement on or after July 1, 2016—generally, 1,000 hours worked within a 12-month period; OR
  • Were rehired into an eligible faculty or career staff appointment on or after July 1, 2016, following a break in service. Generally, a break in service occurs if you have left UC employment for one full calendar month or more.

If you were participating in the UC Retirement Plan (UCRP) on June 30, 2016, you will continue to participate in your current plan and will not need to choose a primary retirement benefit option. Also, if you’re represented by a union, your retirement benefits are governed by your union’s contract with UC. As a result, your benefits may be different from the benefits outlined here. Please refer to your collective bargaining agreement for details.

Your primary retirement benefit options

Both Pension Choice and Savings Choice can help you build valuable retirement income, in addition to Social Security benefits and any other retirement income you may have.

 

Here’s a snapshot of your options

For complete details, see your Summary Plan Description.

Pension Choice Savings Choice
How it works

Pension Choice is a pension benefit under the UCRP, offering a fixed monthly income payable in retirement.

Along with the pension benefit, some faculty and staff are eligible to build retirement savings through a supplemental 401(k)-style account.

UC invests the money in the UCRP. If you are eligible for the supplemental benefit, you select the investments from available fund options.

The decision to participate in Pension Choice is irrevocable—you cannot change your participation to Savings Choice later.

Savings Choice works much like a 401(k) plan.

Your individual pretax contributions, plus contributions from UC (based on your eligible pay1), accumulate in a tax-deferred retirement account that you draw from in retirement.

Under Savings Choice, you select how you want to invest the contributions made to your account from a menu of available funds, and you assume the investment risk.

UC provides tools, resources and one-on-one guidance to help you understand how to plan and invest for retirement.

Under Savings Choice, subject to IRS approval, you may be offered an opportunity several years from now to change your participation to Pension Choice.2

Shared Contributions3

New to UC?

You contribute 7% of annual eligible pay1, before taxes, up to the annual IRS pay limit ($285,000 for the current plan year). Your contributions on pay up to the 2013 California Public Employees’ Pension Reform Act (PEPRA) limit ($126,291 in the current plan year) will go into the UCRP; your contributions on pay above the PEPRA limit will go into the supplemental account.

UC contributes:

  • For the pension, 8% up to the PEPRA limit.
  • For the supplemental account for eligible faculty4, 5% on all eligible pay up to the annual IRS pay limit.
  • For the supplemental account for eligible staff and other academic employees, 3% on eligible pay above the PEPRA limit, up to the annual IRS pay limit.

Previous UC employee in an eligible appointment for UCRP/CalPERS reciprocity?5

You contribute 7% of annual eligible pay, before taxes, up to the annual IRS pay maximum.

UC contributes:

  • For the pension, 8% up to the annual IRS pay limit.
  • No supplemental account contributions.

Note: Contributions are made only on pay you earn after you are enrolled, subject to payroll processing cycles.

You contribute 7% of your eligible pay1, before taxes, up to the annual IRS pay limit ($285,000 for the current plan year).

UC contributes 8% of your eligible pay, up to the annual IRS pay limit.

Your retirement income

You will vest (become eligible to receive pension benefits, subject to plan rules) once you have earned five years of UCRP service credit. You begin to earn service credit (based on your time worked) when you start making contributions.

New to UC?

  • Pension benefit is based on UCRP service credit, highest average 36 months of eligible pay (up to the PEPRA maximum) and age at retirement.
  • Balance of supplemental account, if applicable, depends on contributions from you and UC, plus investment performance.

Previous UC employee or eligible for UCRP/CalPERS reciprocity?5

  • Pension benefit is based on UCRP service credit, highest average 36 months of eligible pay (up to the IRS pay maximum) and age at retirement.

UCRP also includes benefits for your eligible survivors, as well as disability income if you become totally and permanently disabled before retirement.

Your contributions to your supplemental account, if any, will vest immediately. UC’s contributions will vest after you have earned five years of UCRP service credit or, if earlier, on the date of your death, provided you are actively employed on that date.

When you retire, you will be able to draw retirement income from your supplemental account. The balance of your account will depend on the amount contributed by you and UC and on the performance of the investments you select.

You can designate a beneficiary for your supplemental account balance.

Your contributions to your account will vest immediately. UC’s contributions will fully vest after one year if you are actively employed one year after your eligibility date or, if earlier, on the date of your death, provided you are actively employed on that date. Distributions are governed by plan rules.

When you retire, you will be able to draw money from your account or take the vested benefits with you if you leave UC. The balance in your account will depend on the amount contributed by you and UC and on the performance of the investments you select.

Savings Choice does not include disability or survivor benefits, but you can designate a beneficiary for your account balance. Employee-paid disability and employee-paid supplemental life insurance are also available through other UC benefit plans.

 

About retirement benefit limits

UC pension benefits are limited, consistent with the cap on pensionable earnings under the 2013 California Public Employees’ Pension Reform Act (PEPRA). This limit applies to other California public pension plans and is calculated and reviewed annually. For the current plan year, the limit is the first $126,291 of annual pay.

In addition, the IRS sets a dollar limit for annual earnings upon which retirement benefits and contributions may be based. The limit is reviewed and adjusted annually. For the current plan year, this limit is $285,000.