RICE UNIVERSITY

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Report of the Ad Hoc Faculty Advisory Committee on Retirement
August, 1998

III. Faculty (Active and Retired) Focus Groups Summary

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Introduction

Objectives

• Determine factors in thinking ahead to retirement and the role, if any, faculty would like to have following retirement.
• Understand the financial and retirement planning needs faculty have.
• Solicit reactions to retirement incentives.
• Identify gaps in the retirement programs and assistance provided by the University.
• Understand Rice's long-term goals and implications for retirement.

Organization and Methodology

• All tenured and tenure-track faculty were invited to a two-hour focus group meeting at the University (see Appendix E).
• A total of eight focus groups were conducted, including one for retired faculty.
• Forty-five faculty and one spouse participated in the focus groups.
• Eleven local retired faculty attended a retiree focus group.
• Groups were facilitated by a Towers Perrin consultant; most were also attended by a member of the Committee.
• Discussions focused on:
  • financial and retirement planning
  • satisfaction with retirement plans and practices
  • priorities for change
  • long-term issues and retirement.
• The interviews focused on retirement practices and the interviewer put these practices into a broader context by asking about the long-term issues facing the University.
• Notes were taken for subsequent analysis and survey development purposes.
• Notes were analyzed by Towers Perrin to determine prevailing themes and identify verbatim comments supporting these themes.
• The Committee then reviewed and edited the summary report that follows but did not have access to confidential interview notes from individual sessions.

Demographics of Active Faculty Attending Focus Groups

The faculty attending the focus groups were older and a greater percentage were male than the overall faculty.

Financial and Retirement Planning

What kind of financial and retirement planning have you done? In planning for retirement, what financial and non-financial factors do you think will be important to you?

• Most faculty are comfortable waiting until close to retirement before they begin planning.
• Faculty are not involved in long-term systematic financial planning, although they recognize the importance of making effective TIAA-CREF asset allocations.
• Retired faculty regret not doing more financial planning throughout their careers.
• University-subsidized independent financial and retirement planning assistance is desired.
• In thinking ahead to retirement, faculty value most:
  • managing the cost of retiree medical insurance
  • continuing to work
  • remaining connected to the University.
• Most faculty are very positive about their work and Rice and therefore want to continue their relationships with the University.
• They want the relationship to be reciprocal where they are contributing and being recognized.
• Phased retirement is an attractive option.

Representative Comments

• "We get busy, then suddenly retirement is here and we haven't done any planning."
• "We need to begin retirement planning a couple of years before retirement."
• "Making appropriate long-range decisions about allocating TIAA-CREF investments is difficult for many younger faculty. Relevant illustrations based on the historical performance of different types of assets using some basic assumptions about the economy would be helpful."
• "A consultation with an independent, well-qualified planner who understands university teaching would be a valuable benefit. TIAA-CREF and Fidelity workshops and individual consultations are helpful in learning the basics."
• "The biggest disincentive to retirement is the tremendously high cost of medical insurance and the concern that these costs will increase at a rate significantly greater than inflation."
• "When I retire, I don't think of ending my career as a creative contributing scientist. I would like to continue what I'm doing at Rice."
• "In the best families, grandparents still have something to offer-and some of their needs are met by doing so."
• "I am ready to retire, but I want to phase out."

Satisfaction with Retirement Plans and Practices

How satisfied are you with the Rice retirement plans and practices? How do Rice's retirement plans compare with plans at other universities? How effectively does the University communicate with faculty about retirement benefits?

• Faculty are generally satisfied with the Rice University-paid TIAA-CREF defined contribution plan, although there is some interest in adjusting the formula of the plan for new faculty so there is a level contribution regardless of age and income.
• Faculty know very little about how Rice's plan compares to plans at similar universities.
• Some faculty would like to see more investment options for both plans, particularly ones that are more aggressive than TIAA-CREF.
• Retiree medical insurance is one area where faculty believe the University is not competitive.
• Faculty are not very knowledgeable about medical insurance for retirees. They don't understand the alternatives, the costs, the workings of Medicare, or the options for coverage other than through Rice.
• Faculty see the need to change the current process of ad hoc retirement incentive negotiations:

From	To
an ad hoc process	a process guided by a detailed plan and a set of guidelines
a secretive process	an openly communicated approach
bargaining and negotiating initiated by a faculty member	equitable parameters and criteria offered to all eligible faculty
an ad hoc process for retiring faculty who approach the administration	an ad hoc process only for faculty who are performing poorly and not eligible for the new retirement incentive plan.

• Benefits communication is inadequate and a source of considerable frustration:
  The complexity of regulations (government, TIAA-CREF, University) makes understanding retirement and retiree health care options, and taking appropriate actions, an arduous task.
  Faculty are seeking accessible, knowledgeable and professional assistance in untangling these complexities.
  A number of faculty recounted instances where they received incorrect information or where errors were made; retired faculty stressed this point even more than active faculty.
  Many faculty say there is more assistance and communication currently than there was in the past.
  Most faculty do not have a clear understanding of the standard benefits given to all retired faculty.
  Many faculty see this study as an important and positive communication, and they believe the Administration should continue the dialogue and involvement of faculty during the design phase.

Representative Comments

• "I'm reasonably satisfied with the retirement plan and TIAA-CREF. The Supplemental Retirement Annuities (SRA's) are super."
• "People with higher salaries also get a higher percentage contribution to the retirement plan and this isn't equitable."
• "It would be a real plus to periodically be provided data on how our retirement compares to comparable schools."
• "We're too tied to TIAA-CREF. I'd like to see more investment options for the University-paid plan and the SRA's."
• "We need to change the ad hoc approach. First, we need a plan that has internal and external equity. Second, we need to communicate the plan to all faculty. Third, we need an approach that has sufficient flexibility to allow faculty to continue doing what they do well, if they want to do so."
• "The biggest barrier to increasing the number of faculty retirements is having to initiate an adversarial negotiation process. No matter what the circumstances are for you in your department, it is more pleasant to stay on."
• "All the incentives and practices are geared to staying. The current approach takes away your motivation for the common good."
• "We're not looking for advice or someone to help us make decisions. We need to make these decisions about our retirement benefits. However, it's not sufficient to simply give faculty a pile of regulations and phone numbers."
• "It's critical that the faculty continue to have input into any changes that are considered."

Priorities for Change

If you could change only one thing about retirement at Rice that would improve the process, what would that be?

Participants list the following as most essential to improving the retirement process and practices (listed in order of frequency from most to least):

• Medical insurance: Offer retiree medical insurance with a substantial University contribution and educate faculty about the options available to them.
• Ad hoc negotiated incentives:
  • Replace this process with a set of equitable guidelines communicated to all faculty.
  • Implement the guidelines through a process that enhances the dignity and the role of retiring faculty.
  • Introduce policies that maximize the contribution and potential service of those faculty who want to be involved with the University following retirement.
• Financial and retirement planning and counseling: Incorporate this into the benefit plans of tenure-track and tenured faculty, underwrite the cost up to a cap and offer this periodically throughout a faculty member's career. Provide knowledgeable, professional, effective counsel on retirement issues by University staff.

Long-Term Issues and Retirement

What are the most critical long-range strategic issues facing the University?

• Virtually all faculty express concern about the difficult of maintaining the quality of undergraduate education while enhancing graduate education and research.
• Many see the size of the faculty and student body as the most significant limiting factor to substantively improving Rice's stature.
• Nearly all faculty see the Rice culture and work environment as very positive and want to maintain this.
• Some faculty see the need for tenured faculty to have systematic performance reviews that emphasize career development.

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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