To: Tenured and Tenure-track Faculty

From: David Auston

Date: February 10, 1999

Subject: Retirement planning and benefits

Last spring, Malcolm Gillis and I appointed an ad hoc Faculty Advisory Committee on Retirement and charged it with the task of making a thorough study of the factors affecting faculty retirement. In their report, which was completed last fall, the Committee recommends a number of important changes in our current policies and practices regarding faculty retirement.

One of the primary recommendations of the report is that the University develop a retirement incentive plan open to all eligible faculty. We have already implemented this recommendation and communicated it to eligible faculty on December 1, 1998.

In this memo, I address the other recommendations of the ad-hoc committee.

Recommendation 1:

"It is recommended that the University provide the faculty with more knowledgeable, effective and user-friendly professional counsel on retirement issues."

Response: We accept this recommendation and have taken steps to implement it. Kyle Cavanaugh, the new Associate Vice President for Human Resources has identified additional resources necessary to provide enhanced services to faculty and staff to meet this need. His organization will provide better and more timely information about Rice retirement benefits, Social Security, Medicare, continuing health insurance, financial planning, and retirement planning to faculty and staff at all stages of their employment.

Representatives from TIAA-CREF and Fidelity will continue to provide seminars about financial planning and retirement for faculty and staff. They will also arrange individual planning sessions.

Recommendation 2:

"It is recommended that the University incorporate financial and retirement planning and counseling into the benefit plans of tenured and tenure-track faculty. This benefit should be offered with a dollar limit several times during a faculty member's career. Although the program must be voluntary, a strong effort should be made to communicate the benefits of financial and retirement planning. In addition, faculty would like to see the University offer workshops independent of those offered by TIAA-CREF and Fidelity."

Response: The University will provide a one-time reimbursement to tenured faculty of up to $600 for financial planning. This reimbursement will be made upon presentation of a receipt from an independent certified financial planner. We encourage participation in this voluntary program.

Tenured faculty are eligible to receive this benefit now. All non-tenured faculty will be eligible for the same benefit when they become tenured.

Note: Federal law requires that the University treat this reimbursement as taxable income to the faculty member. Consequently tax with-holding will apply.

Recommendation 3a:

"It is recommended that the existence of basic institutional access benefits (e.g., Internet access, free parking, etc.) currently available to all retired faculty, be communicated more proactively and effectively, and assistance should be provided to retired faculty in securing those benefits that interest them."

Response: We agree. One of the services under review for improvement in the Human Resources area is the dissemination of information related to benefits. While these are at present posted on the University web page, the Rice Benefits Office will make certain that information is widely distributed. Consideration will be given to initiating a separate publication for faculty and staff regarding University benefits and how they are affected by retirement.

Recommendation 3b:

"It is recommended that general policies and guidelines be established regarding teaching, research, space (office/laboratory), advising/directing graduate students and administrative support for retired faculty who remain actively involved in furthering the goals of the University. In particular, it is recommended that active retired faculty be provided at least shared office space, and for up to 5 years small (approximately $2,000) annual research/professional travel stipends."

Response: Retirees who continue to teach are a valuable resource to the University and its students. We currently provide this opportunity on a contractual basis whereby the departments hire retired faculty on an as-needed basis. Given the variability of the specific needs of the departments, we believe this is the best way to continue to provide this opportunity to retired faculty--a guaranteed opportunity to teach would be very difficult to implement and potentially at odds with the needs of the departments.

We acknowledge that access to offices and in some cases to laboratories, is an important issue for retirees. The limited availability of such facilities and the need to provide space for new faculty make this a challenging issue. Nevertheless, we have taken the following steps to address this need: First, I have instructed the deans to give full consideration to requests from retirees for continued access to offices. Second, we have included in our planning for the renovation of Fondren Library a suite of offices for retirees along with a provision for administrative support services. With regard to laboratory space, we have and will continue to make specific agreements with faculty to continue research activities while retired. These opportunities are of necessity limited and must be arranged on a case-by-case basis. They depend on continued substantial external support for research, and require that the retiree be appointed by the University as a Research Professor.

Recommendation 4a:

"For faculty pre-age 65, it is recommended that the (medical insurance) benefit parallel the coverage and contribution levels of the program for active faculty with eligibility criteria for participation to be determined when the plan is designed. For faculty post-age 65, it is recommended that a defined dollar benefit be provided on a tax-free basis to any eligible retiree to assist with funding a Medicare supplement."

Response: We must defer a decision about this recommendation in order to secure more information. We acknowledge that this is a very important consideration for retirees. Currently, Rice faculty and staff and their spouses are eligible to continue to participate in the University medical insurance plan but must pay the entire premium. We recognize that it would be desirable to provide some assistance to cover these costs. However, this is a more complex matter than one might assume. It is very difficult to estimate the costs due to both the uncertainty of the number of individuals who would participate and their medical needs which invariably increase with age. Also, Federal accounting rules require us to show a liability for projected future retirements, not just the cost of claims and premiums for a single year. Consequently, we have asked a consultant to conduct a detailed actuarial analysis of our potential retired population of both faculty and staff. When completed, we will be in a position to make a decision on this important issue.

Recommendation 4b:

"For post-age 65 faculty and retirees, it is also recommended that the University provide more accessible, knowledgeable and professional assistance regarding the Medicare and Medicare supplement options. Learning about the options available will help faculty feel more comfortable about making the transition to retirement."

Response: We agree. Our expectation is that Kyle Cavanaugh will designate an individual who will effectively fulfill this role (see recommendation #1).

Recommendation 5:

"It is recommended that the process of negotiating faculty retirement incentives on an ad hoc basis be discontinued and replaced with a more open and systematic approach."

Response: We have developed and implemented an incentive plan based on this recommendation. It was communicated to all eligible faculty on December 1, 1998. It provides a one-time payment to eligible faculty who elect to retire between June 30, 1999 and June 30, 2000.

Recommendation 6:

"It is recommended that the Administration develop and communicate to all faculty a financial retirement incentive program that is designed to accomplish the goal of the strategic plan for faculty renewal. Caution should be exercised in fashioning eligibility criteria so that unintended consequences are minimized. It is also recommended that the plan include options and incentives for phased retirement."

Response: The incentive plan mentioned in regard to recommendation #5 is our response. It was decided not to implement a plan of phased retirements. Part-time teaching is best done as we currently do it--by individual contractual arrangements between retired faculty and their departments.

If you have any questions about the report of the ad hoc Faculty Advisory Committee on Retirement and our responses to it, please contact me, or Carl MacDowell, Assistant to the President and the Provost.

copies to:
Malcolm Gillis
Deans
Dean Currie
Kyle Cavanaugh

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