Paul L. Caron
Dean


Tuesday, June 2, 2020

Colleges Lower The Boom On Faculty/Staff Retirement Plans

Inside Higher Ed, Colleges Lower the Boom on Retirement Plans:

CoronavirusFacing devastating financial losses related to the coronavirus pandemic, colleges and universities are cutting costs just about everywhere they can. Increasingly, that includes faculty and staff retirement benefits.

Duke, Georgetown, Northwestern and Texas Christian Universities are some of the institutions to announce cuts to retirement contributions in recent days. Some of these decisions have been more severe and more controversial than others. ...

Of course, retirement contributions are offered mostly to full-time professors. The majority of instructors who are part-time or create full-time work for themselves with part-time teaching gigs are excluded more often than not.

Glenn Colby, senior research officer at the American Association of University Professors, said about 97 percent of full-time faculty members earn additional compensation in the form of contributions by their institutions or state or local governments toward retirement plans, based on the group's annual faculty compensation survey. The average combined expenditure on retirement is 10.7 percent of the average salary of faculty members who are covered.

Some 38 percent of U.S. institutions surveyed contribute toward retirement plans for some or all part-time faculty members, and 37 percent of institutions contribute to premiums for medical insurance plans. Among doctoral institutions, part-time faculty are more likely to receive benefits, with 52 percent of institutions contributing to retirement plans and 60 percent contributing to medical insurance plans.

In any case, it appears that cutting retirement benefits is something of a last resort for many institutions. Announcements about faculty hiring freezes and even furloughs and layoffs preceded those about cutting retirement benefits. As recently as mid-April, a minority of U.S. institutions said they were planning to suspend retirement benefits as part of their COVID-19 response strategy, according to a survey by EAB, an education best practices firm. It was an unpopular option, followed only by delaying payments to vendors and "other."

https://taxprof.typepad.com/taxprof_blog/2020/06/colleges-lower-the-boom-on-facultystaff-retirement-plans.html

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Comments

These people are truly screwed, at least state of Illinois employees. The state workers don't pay into social security; the state makes them pay into the retirement system. So if that goes away, there's no social security to fall back on, because with social security, you get paid based on what you put in. Didn't put anything in? Guess what, no social security.

Posted by: Girn Blanston | Jun 2, 2020 4:45:40 PM

Not explicitly stated in the post, but these are likely pension plans that are being discontinued. No organization, university, government, or private enterprise can afford to pay people who are not working. All pensions need to be converted to a 401K. Our working society can't survive with pensions.

Posted by: Chris Cha | Jun 2, 2020 8:21:58 PM

The colleges and universities making these cuts at least have good reason. Not quite so for the university employing a good friend of mine.

Said university was heavily invested with one Bernie Madoff. When his fraud came undone, the school immediately halted its contributions to the university's 401(k) plans. The contributions haven't been resumed, and now will likely never be.

Posted by: Gerald Scorse | Jun 3, 2020 11:48:07 AM