RICE UNIVERSITYReport of the Ad Hoc Faculty Advisory Committee on Retirement
August, 1998
RICE UNIVERSITY
The Provost, David Auston, appointed an ad hoc Faculty Committee on Retirement to study faculty retirement policies and practices and suggest improvements that are consistent with the objectives outlined in "Rice: The Next Century," the strategic plan of the University. The Committee was composed of a representative from each school. Auston set three objectives for the Committee:
Towers Perrin, a management consulting firm that specializes in human resources with expertise in this area, was engaged by the Administration to assist the Committee in studying retirement policies and practices. The findings of the study will guide decisions regarding University retirement practices in the future.
The Committee began meeting in February 1998. After discussing the Provost's charge (Appendix A) and various possible approaches, the Committee decided to interview a select group of faculty leaders; invite all tenured and tenure-track faculty to participate in focus groups and in a survey; collect basic demographic data on Rice tenured and tenure-track faculty, and retired faculty; and gather data from other universities on their retirement practices (Appendix B).
Towers Perrin was asked to draft an interview guide for review by the Committee. Once the interview guide was completed, a Towers Perrin consultant concluded 12 confidential individual interviews. The consultant analyzed the interview data and presented the prevailing themes to the Committee.
Based on what was learned through the interviews, a focus group protocol and survey were constructed. Forty-four active faculty and eleven retired faculty participated in the eight focus groups facilitated by a Towers Perrin consultant; most were attended by a member of the Committee. Active faculty attending the focus groups tended to be older and of higher male percentage than the overall faculty. Of 433 tenured and tenure-track faculty, 141 or 33% completed the survey by the deadline. Those faculty completing the survey were older than the faculty as a whole, but the gender and schools of the respondents reflect the faculty as a whole.
Over the past 10 academic years (1989-1998), approximately one percent of the Rice faculty has retired annually. The average age of faculty at retirement varies only slightly over the 10-year period and has not increased since Congress eliminated the mandatory age 70 retirement on January 1, 1994 (Appendix C).
The University's strategic plan calls for the faculty size to grow at a net rate of one percent (four to five faculty members) per year to assist in the growth and renewal of the faculty. If retirements were to continue at approximately one percent per year (the rate over the last 10 years), faculty renewal would be a very slow process. However, the Committee believes that improvements in retirement practices coupled with an investment in incentives would result in an increase in the retirement rate of senior faculty, thereby accelerating faculty turnover.
The remainder of this section of the Committee report focuses on recommendations, based largely on faculty input provided by the interviews, focus groups and survey. Detailed findings are presented in the Faculty Leadership Interviews Summary, the Faculty Focus Groups Summary and the Faculty Retirement Survey Summary (Part 1 and Part 2).
The data clearly indicate that faculty are not getting the assistance from University staff that is needed to make a smooth and effective transition to retirement. Communication about retirement benefits and options is viewed as inadequate and a deterrent to making faculty comfortable with the decision to retire.
Recommendation 1
It is recommended that the University provide the faculty with more knowledgeable, effective and user-friendly counsel on retirement issues.
Most faculty are not involved in long-term systematic financial planning. Retired faculty clearly regretted not doing more financial planing throughout their careers. Many faculty do not know what their financial needs will be when they retire and therefore are not confident about going forward with retirement.
Recommendation 2
It is recommended that the University incorporate financial and retirement planning and counseling into the benefit plans of tenure 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.
Faculty are very positive about their work and Rice and therefore want to continue their relationships with the University. Even apart from retirement and renewal issues, it is both appropriate and desirable for retired faculty to be closely integrated into the life of the University community. Faculty see the continuity issues as nearly as important as the economic ones. Retired faculty should be integrated more pro actively and equitably into the life of the University.
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 pro actively and effectively, and assistance should be provided to retired faculty in securing those benefits that interest them.
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.
In thinking ahead to retirement, the number-one concern of faculty is the lack of retiree medical insurance. Managing the cost of retiree medical insurance is a substantial worry. This worry is compounded by lack of knowledge. Most faculty are not well-informed about medical insurance for retirees. They don't understand the alternatives, the costs, the workings of Medicare, or options for coverage other than through Rice. In focus groups, faculty listed retiree medical insurance as the number-one change they would make to improve the retirement process. On the survey, 49% rated medical insurance with substantial University contribution as essential. Another 49% rated this as important.
In exploring Towers Perrin's employee database, a proprietary study and a survey of the Consortium on Financing Higher Education (COFHE) members, it is clear that most comparable schools offer retiree medical benefits with some University supplement for retirees prior to age 65 and a Medicare supplement post-age 65.
The available data suggest that offering retiree medical insurance would accelerate the rate of retirement.
Recommendation 4a
For faculty pre-age 65, it is recommended that the 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.
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.
In the current ad hoc faculty retirement process, both financial and non-financial considerations are negotiated into an agreement with faculty who approach the Administration. Faculty view this practice very negatively. The process is viewed as demeaning, requiring negotiating and bargaining. Faculty feel disadvantaged in these negotiations because there are no guidelines or parameters available to them. Most importantly, faculty conclude that the results are lacking in equity. Of course, this conclusion is based on inference and not on data. Nevertheless, it is the prevailing perception of the current approach. On the survey, 98% of the respondents said the retirement processes, practices and guidelines should be openly communicated.
Faculty want a process that is consistent with the values and principles of an academic institution. This means open rather than secretive procedures. It requires a detailed plan and set of guidelines rather than ad hoc practices. It establishes a set of equitable parameters and criteria to reduce bargaining and negotiating.
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.
Our data and the experiences of other universities suggest that establishing a successful program of financial incentives is difficult. Retirement financial incentives for faculty who meet eligibility criteria have several downsides. Incentives may motivate faculty to sit tight and wait for a better offer. They may establish a precedent for the future that could be difficult to change. Some outstanding performers may decide to retire and go to other schools. Some faculty might retire without incentives. Nevertheless, the only way to meet the faculty criteria for openness and equity is to offer a programmatic incentive.
In this study, many faculty expressed interest in having the option of phased retirement. Data from other universities suggest that coupling financial incentives and phased retirement provides highly valued flexibility, additional time to prepare a seamless transition, and increases in the number of faculty retirements.
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.
To Report Home Page
To Table of Contents
To Conclusions
and Recommendations
To Faculty
Leadership Interviews Summary
To Faculty
Focus Groups Summary
To Faculty Retirement Survey Summary (Part 1)
To Faculty Retirement Survey Summary (Part 2)
To Appendices
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