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Wednesday, December 29, 2010

Wednesday, December 29, 2010

Just Trying to Say that We Don't Care

UC"s latest image disaster came in the form of what I dearly hope is UC's final 2010 appearance in the California press.  Today's San Francisco Chronicle headline reads, "Highest-paid UC execs demand millions in benefits."   This refers to a demand by 36 senior executives that the Regents authorize UC to "calculate [their] retirement benefits as a percentage of their entire salaries, instead of the federally instituted limit of $245,000. The difference would be significant for the more than 200 UC employees who currently earn more than $245,000."

The salaries and the payouts are explained in this graphic. A $400,000 salary with the cap yields a pension of about $184,000 a year, but is bumped to $300,000 a year without.

I have never seen comments on any SF Chronicle story like the ones prompted here. There were 750 when I started this post. There will be over 800 before I finish.  I would guess that 740 of them are negative, except that I haven't found a supportive one yet.  Hundreds are furiously hostile. In the poll, only 5% think that the higher pensions should be granted if the university incurred a legal obligation to pay them.  Nearly two-thirds take option 3, which is that the letter writers be fired.

The symbolism of the pension spike is way beyond the actual money: UC's top officials, the ones who set the policies that affect the state, display selfish greed, total oblivion to the public mission, and a tight focus on lining their already bulging pockets. It confirms the majority suspicion that universities like UC care much more about the "bottom line" than about education (Question 6).  People don't see anything in this kind of effort that universities are supposed to be about.  There is in the background a sense of the university's abandonment of the state's suffering middle class, and of course nothing for the poor who still want to send their kids to college. Tuition has tripled over the decade, debt goes up incessantly, public pensions are under attack exactly because of $300,000 payouts,  thousands of students show up to UC every quarter with nothing but borrowed petty cash, and yet what they see senior executives spending their time on is maximizing their personal take.  As one commenter said, "oink oink oink. I know this is a dumb question but what happened to the UC system's mission of educating students?"  And these aren't even the commenters who are angry that UC has good pensions to begin with.



You can read the letter of the 36 to judge for yourself whether they have a legal case. My own reading is that their real argument is what they term the "ethical" one: in 1999 the Regents said they would remove the cap on salary eligible for pension accural if the IRS allowed it, people decided to stay at UC for that reason, the IRS granted the request, and now they are owed extra back pension. President Yudof, in contrast, defines UC's position as saying that the 1999 resolution was never implemented and the cap on the contribution level was not eliminated.  Both of these statements seem to be factually true.  The other argument of the 36 is that UC needs to pay market-level salaries and benefits, and this will only happen if UC removes the cap.


This latter argument is factually false.  UC has been proving for years that it doesn't has to pay market rates, and does so by paying sub-market wages to most of its faculty and staff.  More importantly, this argument displays an ignorance about the status of a public university that drives many people nuts. The 36 want market-level salaries, i.e., a top-end salary at a wealthy private-sector institution.   They at the same time want public-sector defined-benefit pensions, which historically developed to protect employees who made much less than their private-sector counterparts.   Public-sector pensions were never meant to support private-sector executive lifestyles.  The public has absolutely no obligation to pay for them. Hence the logic of the $245,000 cap.


There's a deeper stupidity in all this, which is the energy of this letter on behalf of a tiny group of executives that they have never directed at political and business leaders who've let the University go to hell.  They threaten to depose former Regents and UC Presidents.  When did they ever threaten the Schwarzenegger administration during their endless rounds of fee hikes and general fund cuts?   The 36 are brilliant, passionate advocates for themselves. With one known exception they have done no public advocacy for the university.  All 36 signers are non-instructional executives, and at least half are non-academic, but this is no excuse.  For much of the public, a University still stands for collective betterment, mutual development, enlightenment, progress for all, solidarity, and some kind of common life of knowledge. The wage and benefit inequalities deepened by this pension spike suggest an executive class that is comfortable with the inequalities that are damaging millions of individual lives and the future of the state as a whole. When they stand for the university, the university stands for nothing.


Ditto this sorry lecturing about public funding from the Dean of the UC Irvine Law School, which is actually a clarion call for no caps on executive salaries.  Somehow, the educational activities of UC come down paying senior professors the same that they get at Yale.
One proposal being discussed is freezing or decreasing executive and faculty salaries. But this is no answer. If the University of California is going to retain and attract high-level faculty, it must pay the same as comparable schools across the country. Over the last few weeks, I have negotiated salaries with superb professors we are attempting to recruit who are currently teaching at Harvard, Northwestern and Yale. The University of California must match their current salaries or they will not come. As much as I love living in Southern California, I could not have afforded to leave Duke University if it meant taking a substantial pay cut.
Count the comments on the SFC article calling for exactly that - substantial pay cuts for UC executives, and the rapid return of the discontented to whatever elite school they came from.  The Dean's final sally is this: "To limit tuition increases without increasing state funding, or to prevent the university from paying administrators and faculty at rates similar to comparable schools, would inevitably destroy a great university."  The university's greatness is here defined through its unfettered ability to raise both tuition and executive pay. 

These terrible appeals must come to an end, and here are two simple things that should be done instead. President Yudof should
  •  affirm the $245,000 pension calculation cap, giving as his reason the second-tier pensions recently allotted to all future generations and the financial sacrifices that regular UC employees have made for the university.  He should bring this to the Regents for endorsement at their March meeting.
  • announce a freeze on new non-instructional administrative hiring.  Even replacement non-instructional hiring should be centrally reviewed.   In addition, President Yudof should announce that given UC's 74% administrative proportion, all new hiring for two years will be instructional, and thus directly involved in the University's core mission of teaching and research.
There are 816 comments on the SFC article.

41 comments:

Bob Samuels said...

I believe there will be another SF Chronicle article on this topic before the year ends. Also, as I wrote in my blog, this letter was leaked to me during the last regents meeting, but the letter must have come the day before because Yudof had time to rewrite his pension proposal.

cloudminder said...

"I believe there will be another SF Chronicle article on this topic before the year ends."

but of course...

cloudminder said...

p.s
fyi fix your first link (it goes to LA Times rather than the SF Chron)

Michael Meranze said...

cloudminder--thanks. It is fixed.

R said...

Most excellent. Also thanks for calling attention to Chemerinsky's editorial, which presents a view of university "greatness" that has nothing to do with the population that its greatness would be for.

--Rei T.

cloudminder said...

i can't reconcile this :
"The difference would be significant for the more than 200 UC employees who currently earn more than $245,000."

according to the two salary databases here :

http://www.sacbee.com/statepay/?name=&agency=UC+LOS+ANGELES&salarylevel=200000

http://ucpay.globl.org/

there are many more- did you drop a zero or something?

Anonymous said...

Gross Pay (includes base pay + any additional pay)

Found on ucpay.globl.org 12/29/2010


Ananthaswamy
2009=292,279
2008=324,450

Marie Berggren
2009=637,823
2008=810,340

William Coaker Jr.
2009=287,277
2008=370,601

Lynda Chol
Not found in db

Linda Fried
2009=328,631
2008=370,601

Gloria Gil
2009=395,864
2008=391,311

Jesse Phillips
2009=366,960
2008=430,295

Tim Recker
2009=332,989
2008=330,402

Jack Stobo
Not found in db

Randolph Wedding
2009=380,688
2008=445,126

Sam Hawgood
2009=572,895
2008=537,021
Steven Currall
2009=293,843

William McGowan
Not found in db

Claire Pomeroy
2009=528,978
2008=628,180

Ann Madden Rice
2009=574,187
2008=665,591

Roger Farmer
2009=271,728
2008-246,700

Ken Jones
Unable to identify; multiple K. Jones in db

Mark Laret
2009=724,838
2008=703,156

Larry Lotenero
2009=300,796
2008=311,989

John Plotts
2009=229,797
2008=259,818

Christopher Edley Jr
2009= 336,510
20080=306,999

Richard Lyons
2009=360,760
2008=186,600

Terry Belmont
2009=514,717

David Feinberg
2009=725,738
2008=577,345

Franklin Gilliam Jr.
2009=244,084
2008=226,533

Gerald Levey
2009=729,186
2008=630,190

Virginia McFerran
2009=163,230

Judy Ollan
Not found in db

Amir Dan Rubin
2009=530,615
2008=559,071

Thomas Rosenthal
2009=418,229
2008=442,466

David Brenner
2009=755,897
2008=772,250

Tom Jackiewicz
2009=489,308
2008=563,599

Gary Matthews
2009=226,611
2008=225,000

Thomas McAfee
2009=433,059
2008=514,280

Robert Sullivan
2009=331,373
2008=342,800

Anonymous said...

This story has legs--it should quickly go national. (I'm surprised Drudge hasn't linked to it yet--but just wait). It just so happens that one of the high-priority items for the Republican party is destroying public pensions, and this letter is tailor-made for them.

What this means is that these 36 now have no chance at their golden pensions. It also probably doesn't bode well for the UC budget, not that its prospects were rosy to begin with.

Here's regent Blum in another Chronicle article on what UC would do with further cuts: "Try to run the place more efficiently." Way to go, Blum.

Catherine Liu said...

In the mean time, Inside Job, an extraordinary documentary on the 2008 financial crisis uses a graph to demonstrate the exponential increase in UC tuition as proof of the burden of higher ed costs on the middle class

http://www.sonyclassics.com/insidejob/

Anonymous said...

Over 1,000 comments on SFGate as of 9:30pm. So this story is not going to go away, not by a long shot.

I hope some of the 36 signers are feeling a bit of shame. Just a little bit?...

Anonymous said...

I don't think they are feeling any shame. The letter and the position paper reveals a very strong sense of entitlement and no concern for what others with much less income are losing in this pension reform.

aldo-antonelli said...

Odd to find ourselves on Yudof's side of the issue.

Anonymous said...

The $20 Billion unfunded pension obligation has legs, long and strong legs, with big feet at their bottom and steel toed boots that are going to sting when they kick us.

gasstationwithoutpumps said...

I think that Yudoff will cave to the demands of his friends. He puts executive compensation ahead of the good of the University every time.

More comments at
http://gasstationwithoutpumps.wordpress.com/2010/12/30/uc-execs-clearly-out-of-touch-with-reality/

cloudminder said...

Blum's comments seem to signal that they are willing to give a deal to them that comes up short of their expectations - but still meaning more money to them.

please don't expect shame from this group, just don't.

and my gut, intuition just tells me not to believe that any of this comes as a surprise to anyone- that they just wanted to wait til after the Dec votes happened in the special meeting

could someone please confirm the number of employees making over $245,000?

I don't think the 200 count is correct.

Anonymous said...

the coming Richard Blum "compromise" on the pension levels for high income folks (giving them more than they get now but less than if the 1999 agreement were enacted) is going to become the basis for cutting all other pensions by the same percent.

don't rule out the possibility that Yudoff and Edley talked about this in advance.

Bronwen Rowlands said...

Dear Anonymous 9:31,

Bingo.

(You write well. I like the steel-toed shoes bit.)

Anonymous said...

I'm sure this is all being orchestrated. Hence the lack of comments from the 36 signers. a little public humiliation is a small price to pay for their ultimate reward of getting exactly what they want.

Anonymous said...

I just ran a search on Berkeley pay at the uc pay db. in 2009 123 names pop up as being paid GROSS >240K Although I'm not sure if you count the Tedford, Boyle and the bball coach as doesn't the bulk of their money come from private funds. How about Sandy Barbour?

cloudminder said...

Anonymous December 30, 2010 1:32 PM

see, you ran a search for just ONE campus and your query gave you 123 for just ONE campus!

how can it be that there are only 200 in the entire UC system?

Michael Meranze said...

Cloudminder--
You are most likely correct. But you are referring to a statement made by the 36 complainants ("more than 200"). Chris was quoting their claim not making his own. Why they would understate the number is up for interpretation.

cloudminder said...

MM-thank you.
that is an important asterisk to pay attention to.

Anonymous said...

First UCB staff were furloughed, now we are being expected to participate in office reorganization exercises that will eliminate our jobs, with the result of many people being laid off in this terrible economy and those remaining taking on huge workloads. Yet we have to hear about these people at the top who are making sure that they get theirs, one way or another. It's insulting and depressing.

Michael Meranze said...

Cloudminder--
Just to make the way these things travel even clearer, it now seems to me that Chris' quotation is from the SF Chronicle putting their language on the claims of the complainants (which appear at the bottom of page 1 and top of page 2 of their letter. So their claim gets into the SFC and then we see it there since the SFC turns their claim into fact.

Anonymous said...

Matt Taibbi's Griftopia offers an excellent perspective on the mentality of the rich in American during the past 20 years. It isn't simple greed that protects and motivates them: they've got a sense of impunity that would be the envy of gangsters. Take as much as you can, as quickly as you can. Leave public goods and institutions devastated in your wake and call it unfortunate, but inevitable. Devastate large swathes of universities, factories and homes. Blame the poor, the helpless, the unemployed, and congratulate yourself on your expertise, your skill and your invaluable credentials.

cloudminder said...

MM at 2:31 pm,
yes, we saw that "telephone" trail- it is dangerous to let the phrase "more than 200" to persist unchallenged-- the SFC story has been picked up widely and other news outlets are copying the term "more than 200" in their coverage.

if the number is actually e.g. 2000 and not 200 everyone should know about it sooner rather than later.

btw, Happy New Year to all - Remaking the University is making an important global contribution to this fight to save public higher ed- most importantly the UC mission- and have to say the posts here have taught so much to us- the complicated issues and complex information is highly accessible, easy to read and does not talk down to any others. really appreciated.

Anonymous said...

Regarding the salary amounts. I am somewhat confused as to how to parse the difference between "base pay" and "gross pay." What is the source of the "extra pay?" Perhaps the 200 number comes from only counting "base pay." Is that extra pay included in pension calculations?

Anonymous said...

The key phrase is `covered compensation'. Med School profs may have a gross pay of $800K/year but only $300K in `covered compensation'... the covered compensation comes from UC funds, while their fees for clinical work may make up the $500K/year difference.

So what is needed is the list of UC employees with covered compensation >$185K or so.

But in any case this is a debacle. California Pension Reform is arguing for a State initiative to limit defined benefits to <(State median income), currently about $56,344/year. For anyone to argue that they are entitled to >$185K/year on the public (or public school) dime is to argue that the sound of clay feet breaking heard by tin ears is more beautiful than Beethoven.

Here is the California reform initiative proposal:

http://www.calwatchdog.com/2010/12/01/group-touts-new-pension-initiative/

BTW, the detailed 1999 discussion of the `restoration' is at:

http://www.universityofcalifornia.edu/regents/minutes/1999/fin299.pdf

While the Regents approval is at:

http://www.universityofcalifornia.edu/regents/minutes/1999/board299.pdf

Seems to me that implementation of the restoration was left to the President, the Regents Chair, and the Committee on Finance Chair. Further, the UCRP amendment was not finalized back in 1999... until the UCRP documents are finalized, I would think that the benefits could not be counted upon. But surely lawyers will litigate the details.

Meanwhile, all of us drones who work hard at UC are reminded by the top-earners arguments that it is their money and their arguments that matter the most; the hard work of educated the youth of California, for which all public portions of UC's funding and pensions emanate, is mentioned not once in the top-earners arguments. Sproul and Kerr would be hanging their heads in shame.

Anonymous said...

A search at the salary db for Berkeley for >$240K in base pay only = 33 people.

xicano said...

Anonymous is on to something w/regard to the media spin and timing being orchestrated. A 'threat' of a lawsuit is made by some fat cats. First Yudof says no and looks like he cares about the little people. When The Gang of 36 eventually get their way it lets the Prez off the hook because he can blame contractual obligations beyond his control. Let's be real--Chris doesn't participate in a mutiny against Mark.

cloudminder said...

did this earlier and passing it along fwiw:
__________________
according to the salary database
here are the rough numbers for those making more than $400,000
merced 0
riverside 0
ucsc 0
ucsb 1
berkeley 7
ucop 12
davis 48
irvine 55
ucsd 65
ucsf 86
la 108
Total for this group: 382
________________________
here are the rough numbers for those making more than $300,000
merced 1
sc 1
riverside 2
sb 11
ucop 28
berkeley 47
irvine 132
davis 155
sd 179
sf 296
LA 378
Total for this group: 1230
________________________

here are the rough numbers for those making more than $245,000 (the figure referenced in the news on this topic)

merced 7
sc 30
riverside 66
ucop 74
sb 110
berkeley 379
irvine 397
davis 552
sd 629
sf 931
LA 1172
Total number for this group: 4347

The search did not separate out "base pay", "extra pay",`covered compensation'- its just rough numbers --(you could probably do it between the Sac Bee tool and the ucpay global tool on an individual employee search but I am on holiday damn it! and it would not be a formal confirmation anyway!) but the total for each group in this simple search above is significantly higher than "200" - we'll see- if/when we get detailed answers. Perhaps there is some rare hybrid that makes the group only slightly more than 200 as referenced in the letter. we'll see.

fyi
http://www.sacbee.com/statepay/?name=&agency=UC+UCOP&salarylevel=400000

and this is the other one

http://ucpay.globl.org/

Bronwen Rowlands said...

"Regent Dick Blum said Wednesday that he hopes a compromise can be reached with the executives to avoid a lawsuit."*

There it is: the "compromise" that was the plan all along.

And this from Chris Edley:
"All UC employees have made sacrifices - pay freezes, furloughs, reorganizations and layoffs. We "craven scum" (who signed the letter) are prepared to make further sacrifices, but disagree with UC staff about what's fair, necessary and wise."

Oh this is rich! Edley is prepared to make further sacrifices! How was your Christmas, Dean Edley? A little more posh than mine, I'll bet. As one of those UC staff who are wrong about what is "fair, necessary and wise" I scrambled--as I have for years now--to keep food on the table. There was no money for gifts.


(*From today's SF Chron: http://tinyurl.com/23vbe4e)

Chris Newfield said...

Thank you Cloudminder for the comment about the blog and for the work on the compensation tables (along with an Anon). The size of the group ranges by a factor of 20 (with 200 at the bottom), and I hope someone like Jeffrey Bergamini who knows the data could separate the covered compensation from the high salaries that are only partially covered. These comments also get at the bigger issues of the purpose of the university, equity, fairness, governance, and whether we have anyone in place at the top that will do more than sacrifice various parts of a declining institution in order to protect their own. Pulling people together is the only way to save it, and that is the opposite of what they are doing. But Happy New Year anyway!

Bob Samuels said...

I have a new blog entry on the UC pension scandal: http://changinguniversities.blogspot.com/2010/12/uc-execs-reveal-true-values.html

Anonymous said...

So, what to do? Yudof has invited comments by deferring the issue. A practical question is... in the computations of the adequacy of the Pension fund, was it assumed (between 1999 and 2007) that the IRS caps were eliminated, or, not? If not, it tends to argue against the high-pay argument.

Additionally, 4% of their salary was going into their on DCPs during that time. No IRS limits on payouts from that, or, are there limits on DCP payouts?

There is also the issue of the pension deficit... none of the recent changes address the deficit, just future accrual by new employees. High up brass have emphasized that the 20% of payroll contributions projected in 2016 or so will cause huge impacts on campuses. The $50 million or so in new costs these guys want falls right in this category...

Finally, there is the threat, always present, that *future* pension credit for existing employees was never formally agreed to by the regents.... that is, they could change the pension credit formula for future accrual at any time, they say. Seems like the 36 are going way beyond that, and saying a Regents motion without UCRP rules finalization trumps all...

cloudminder said...

let us also remember possible legislative action in all of this:

http://www.bizjournals.com/losangeles/news/2010/12/30/pension-cap-to-target-uc-officials.html

Anonymous said...

Looked at the Final Report of the President's Task Force on Post-Employment Benefits... starting page 43...

http://universityofcalifornia.edu/sites/ucrpfuture/files/2010/08/peb_finalreport_082710.pdf

There are at least two IRS limits... one on the actual pension highly compensated retirees can get... that is $195,000, the 415(b) limit. UC already evades this with a so-called `restoration plan' under IRS 415(m), and tops up pensions from $195K/year to whatever the benefit calc indicates. The plan document indicates that this is *not* a vested benefit, and is subject to Regental change at any time (like Retiree Health Benefits).

http://atyourservice.ucop.edu/forms_pubs/checklists_factsheets/415factsheet.pdf


The other limit is the maximum working salary that can be used for the pension calc, known as the IRS 401(a)(17) limit. For those employed prior to 1994, this limit is $360,000, for those after, the limit is $245,000. The Final Task Force Report says 250 employees have covered compensation that exceeds these limits... mainly Health Sciences, SMG, and other executives. The task force recommended adjusting the cap to be $360,000 for everybody, although Academic Senate members objected. This seems like a vested benefit, however, subject
to the 415(b) limitations and 415(m) restoration if the actual pension gets high enough.

The main point... the 401(a)(17) limit can lead to a much higher pension for short-timers who retire early... they can get a much higher HAPC (Highest Average Plan Compenstion). Edley, if he retires today, can't have a HAPC higher than $245,000, but if the 401(a)(17) limit is raised to $360,000, his HAPC would be roughly $330,000. He has maybe 6 years of service credit, he is near 60, so assume he could get 6*0.025*245000 = $36,750 a year if he retired soon, with the limit. Without the 401(a)(17) limit he'd get about $49,500/year if he retired soon.

If he works until he is 70, he still won't be near the 415(b) limit... his pension would be something like $144,000/year at 70.

So... this limit in discussion 401(a)(17)... is mostly about highly paid execs and health science folks who are eyeing bailing out early from their UC position... they want $10K or $20K/year from UC if they bail.

There are other perks for senior management... a special `Senior Management Supplemental Benefit Program', which is not part of UCRP.

Anonymous said...

Looked at the Final Report of the President's Task Force on Post-Employment Benefits... starting page 43...

http://universityofcalifornia.edu/sites/ucrpfuture/files/2010/08/peb_finalreport_082710.pdf

There are at least two IRS limits... one on the actual pension highly compensated retirees can get... that is $195,000, the 415(b) limit. UC already evades this with a so-called `restoration plan' under IRS 415(m), and tops up pensions from $195K/year to whatever the benefit calc indicates. The plan document indicates that this is *not* a vested benefit, and is subject to Regental change at any time (like Retiree Health Benefits).

http://atyourservice.ucop.edu/forms_pubs/checklists_factsheets/415factsheet.pdf


The other limit is the maximum working salary that can be used for the pension calc, known as the IRS 401(a)(17) limit. For those employed prior to 1994, this limit is $360,000, for those after, the limit is $245,000. The Final Task Force Report says 250 employees have covered compensation that exceeds these limits... mainly Health Sciences, SMG, and other executives. The task force recommended adjusting the cap to be $360,000 for everybody, although Academic Senate members objected. This seems like a vested benefit, however, subject
to the 415(b) limitations and 415(m) restoration if the actual pension gets high enough.

The main point... the 401(a)(17) limit can lead to a much higher pension for short-timers who retire early... they can get a much higher HAPC (Highest Average Plan Compenstion). Edley, if he retires today, can't have a HAPC higher than $245,000, but if the 401(a)(17) limit is raised to $360,000, his HAPC would be roughly $330,000. He has maybe 6 years of service credit, he is near 60, so assume he could get 6*0.025*245000 = $36,750 a year if he retired soon, with the limit. Without the 401(a)(17) limit he'd get about $49,500/year if he retired soon.

If he works until he is 70, he still won't be near the 415(b) limit... his pension would be something like $144,000/year at 70.

So... this limit in discussion 401(a)(17)... is mostly about highly paid execs and health science folks who are eyeing bailing out early from their UC position... they want $10K or $20K/year from UC if they bail.

There are other perks for senior management... a special `Senior Management Supplemental Benefit Program', which is not part of UCRP.

Anonymous said...

Looked at the Final Report of the President's Task Force on Post-Employment Benefits... starting page 43...

http://universityofcalifornia.edu/sites/ucrpfuture/files/2010/08/peb_finalreport_082710.pdf

There are at least two IRS limits... one on the actual pension highly compensated retirees can get... that is $195,000, the 415(b) limit. UC already evades this with a so-called `restoration plan' under IRS 415(m), and tops up pensions from $195K/year to whatever the benefit calc indicates. The plan document indicates that this is *not* a vested benefit, and is subject to Regental change at any time (like Retiree Health Benefits).

http://atyourservice.ucop.edu/forms_pubs/checklists_factsheets/415factsheet.pdf


The other limit is the maximum working salary that can be used for the pension calc, known as the IRS 401(a)(17) limit. For those employed prior to 1994, this limit is $360,000, for those after, the limit is $245,000. The Final Task Force Report says 250 employees have covered compensation that exceeds these limits... mainly Health Sciences, SMG, and other executives. The task force recommended adjusting the cap to be $360,000 for everybody, although Academic Senate members objected. This seems like a vested benefit, however, subject
to the 415(b) limitations and 415(m) restoration if the actual pension gets high enough.

Anonymous said...

The main point... the 401(a)(17) limit can lead to a higher pension for short-timers who retire early... they can get a much higher HAPC (Highest Average Plan Compenstion). Edley, if he retires today, can't have a HAPC higher than $245,000, but if the 401(a)(17) limit is raised to $360,000, his HAPC would be roughly $330,000. He has maybe 6 years of service credit, he is near 60, so assume he could get 6*0.025*245000 = $36,750 a year if he retired soon, with the limit. Without the 401(a)(17) limit he'd get about $49,500/year if he retired soon.

If he works until he is 70, he still won't be near the 415(b) limit... his pension would be something like $144,000/year at 70.

So... this limit in discussion 401(a)(17)... is mostly about highly paid execs and health science folks who are eyeing bailing out early from their UC position... they want $10K or $20K/year from UC if they bail.

There are other perks for senior management... a special `Senior Management Supplemental Benefit Program', which is not part of UCRP.

Keith Danner said...

A golden opportunity for organizing. This greedy bunch should have their homes picketed by all of us. Wouldn't take much research to find out where they live. Terry Belmont, CEO of the medical center at Irvine, would be the logical choice to picket here at Irvine.

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