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Implementing the Phased Retirement Program
About This Policy
Procedure 4.10.4
Related Policy: Board of Regents Policy Faculty and Staff Retirement
Responsible University Officer: President
Responsible Office: Office of Human Resources
Table of Contents
* Section I. Purpose <#purpose>
* Section II. Scope <#scope>
* Section III. Provisions <#provisions>
* Section IV. Definitions <#definitions>
* Section V. Relation to Other Benefits Programs <#relation>
* Section VI. Forms/Information <#forms>
* Section VII. Contacts <#contacts>
* Section VIII. Responsibilities <#responsibilities>
* Section IX. Departmental Procedures <#procedures>
* Section X. Frequently Asked Questions <#FAQ>
Section I. Purpose
The University of Minnesota Phased Retirement Program is a voluntary
internal University retirement program provided to tenured faculty
members and academic professionals with continuous appointment. The
Phased Retirement Program is designed to facilitate change within units
by providing compensation in return for tenure resignation. Permission
to offer this option must be obtained from the Unit Administrator, dean
or Senior Administrator and the Office of Human Resources.
Section II. Scope
Subd. 1. Eligibility
Only tenured faculty members and academic professionals with continuous
appointments of at least 75 percent on a nine-month or greater basis are
eligible for the program. Employees must be at least 52 years of age on
their Last Day of Employment. Employees on federal appointment are not
eligible for this program.
Subd. 2. Caveats
It must be demonstrated in a cover letter that the use of the phased
retirement option, which is not available to the faculty and academic
professional staff in general, is in the best interest of the
University, that is, in keeping with specific programmatic goals or
other special circumstances.Any arrangement must be in writing and
signed by the faculty member or academic professional, the Unit
Administrator, dean, or Senior Administrator; and the Office of Human
Resources before the terms become binding. An agreement may be changed
only by mutual consent of all parties.Any amendment to the original
agreement must comply with the policy, must be in writing, must be
signed by the parties, and is not effective until signed by the Senior
Administrator (or designee) and the Office of Human Resources.
Section III. Provisions
Subd.1. Termination of Employment.
The individual must terminate employment and surrender tenure or rights
to continuous appointment no earlier than 1 year and no later than five
years after the commencement of the phased retirement. The Last Day of
Employment must be specified in writing and must be mutually agreed upon
by the faculty member or academic professional, the Unit Administrator,
dean or Senior Administrator, and the Office of Human Resources.
Subd. 2. Leave Without Salary.
Based on an annual 100 percent appointment term, the leave without
salary during the phased retirement must be for at least 25 percent and
not more than 75 percent time.
Subd. 3. Release Statements.
The individual must sign two releases in the Phased Retirement Program:
a special release statement on the Last Day of Regular Appointment and a
second release on the Last Day of Employment. Both releases must be
forwarded to Employee Benefits. Release statements signed prior to these
dates will not be accepted. The individual will receive no benefit under
this agreement until both releases are signed and received by Employee
Benefits.
Subd. 4. Benefit Cessation.
All benefits not listed in this Section III, Subdivision 5, or continued
at the individual's expense under the Consolidated Omnibus Budget
Reconciliation Act (COBRA), will cease on the individual's Last Day of
Employment.
Subd. 5. Benefits.
The Phased Retirement Program offers the following benefits:
Medical and Dental Benefits
The University's contributions to the University-sponsored medical and
dental insurance plans continue during the phased retirement period,
provided that these plans continue to be offered to regular
benefits-eligible employees of the University. The University's
contribution will be based on the employee's work location and permanent
residence on the Last Day of Employment. In addition, at the end of the
phased retirement period, the University contribution for medical and
dental coverage will continue for the level of coverage (employee-only
or family) currently in effect until the later of:
* A minimum of 24 months, regardless of Medicare eligibility; or
* The last day of the month in which the employee becomes eligible
for Medicare.
In no event will coverage extend past 48 months or the 31 st day
following the date on which the employee becomes eligible for other
group medical and/or dental coverage subsidized by another employer,
whichever is earlier. In all cases, coverage will not continue unless
the required employee contributions have been paid. In the even that an
employee dies while covered under this Agreement, dependent medical and
dental coverage in effect on that date will be continued with the
University contribution under the same terms as if the employee had lived.
If the employee is a federal employee with federal health benefits, this
program is not available through the University. If an employee,
employee's spouse or registered same-sex domestic partner is age 65 or
older on or after the Last Day of Employment, immediate application must
be made for Medicare Part B. Medicare then becomes primary with the
UPlan secondary for these individuals.Dependent coverage may be added at
the expense of the employee while covered by this program during open
enrollment time or if there is a change in the employee's family status.
If medical and/or dental coverage are canceled or dropped for any reason
during the time that the University is contributing towards the
coverage, including but not limited to cases where an employee does not
make payments towards required contributions for coverage, then the
University will not be responsible for any further compensation to or on
behalf of the employee in connection with these coverages.
Faculty Retirement Plan Contributions
Under the program, the University's contributions to the Faculty
Retirement Plan continue during phased retirement, regardless of the
percentage of leave without salary in effect at any time during the
phased retirement. Contributions to the individual's Faculty Retirement
Plan account will be based on the individual's unreduced salary, subject
to contribution limits imposed by law.
Faculty Retirement Plan Withdrawals
In addition to any other withdrawals provided under the Faculty
Retirement Plan document, participants under age 55 in the Phased
Retirement Program may make one withdrawal from the pre-1989 403(b)
portion of the Faculty Retirement Plan account each calendar year during
the phased retirement period. The maximum amount available each year is
10 percent of the pre-1989 403(b) account determined as of the value of
the account on the day before the withdrawal occurs. Such payments will
be taxable to the employee as required by law.
Other Retirement Plan Benefits
All contributions to University-sponsored retirement plans will cease as
of the Last Day of Employment. After the Last Day of Employment, the
individual will have such access to retirement plan accounts as provided
by the various plan documents and investment contracts.
Life Insurance
Under the program, the University's contribution to life insurance
coverage continues during phased retirement, regardless of the
percentage of leave without salary in effect at any time during the
phased retirement. Life insurance coverage will continue during the
phased retirement period, based on unreduced salary.
Academic Disability Program
Under the program, the University's contributions to the Academic
Disability Program continue during phased retirement period, regardless
of the percentage of leave without salary in effect at any time during
the phased retirement. In the event of certification of disability,
payments may not exceed the level of the phased retirement actual
salary. Coordination of benefits between the Academic Disability Program
and the Phased Retirement Program is detailed in Section V, Subdivision
3 below.
Vacation
Vacation will accrue for individuals on a 12-month appointment of 67
percent or greater. Individuals are encouraged to use vacation prior to
reducing their appointment below 67 percent. Payment for unused vacation
days accrued with the 12 months immediately preceding the Last Day of
Employment will be made shortly after that date, provided that proper
documentation is provided. Accumulated vacation is lost if not used
within 12 months of the date on which it was accrued.
Section IV. Definitions
Subd. 1. Last Day of Employment
The last day of work as a tenured faculty member or continuous
appointment academic professional and the last day of the Phased
Retirement period.
Subd. 2. Last Day of Regular Appointment
The last day in unreduced appointment prior to the beginning of the
phased retirement.
Subd. 3. Senior Administrator
The president, chancellor, senior vice president, or vice president, as
appropriate.
Subd. 4. Unit Administrator
The department, unit or division head, as appropriate.
Section V. Relation to Other Benefits Programs
Subd. 1. COBRA
The continuance benefits coverage available under COBRA runs
concurrently with the benefits extended after the Last Day of Employment
under the Phased Retirement Program. In addition to medical and dental
coverage, COBRA coverage is available following the Last Day of
Employment for life insurance benefits.
Subd. 2 Other Programs
The Phased Retirement Program is not available to any individual who
participates in another University of Minnesota exit program, voluntary
or involuntary, to which the University contributes or has contributed
monies (including the Academic Disability Program, the Terminal
Agreement Program and the Federal Terminal Agreement Program).
Subd. 3 Integration of Academic Disability Program Benefits and
Phased Retirement Benefits
If a faculty member becomes totally disabled on or before his or her
Last Day of Regular Appointment prior to the beginning of his or her
phased retirement, the phased retirement agreement is void. In this
situation, only disability benefits apply, under the terms and
conditions of the faculty member's regular appointment.
If a faculty member becomes totally disabled at any time during the term
of the phased agreement, the agreement will end on the original ending
date. After the Last Day of Employment, the faculty member will have no
further employment claims on the University and will surrender all
tenure rights.
If the faculty member continues to be totally disabled past the end date
of the phased retirement agreement, the continuing disability benefit
will be based upon his last actual salary amount until the end of the
normal disability benefit period.
During the term of the phased agreement, the faculty member will receive
Faculty Retirement Plan contributions based on his full, unreduced base
salary. For the period of time during which such faculty member is
totally disabled, the retirement plan waiver in the disability plan will
fund those contributions. If the faculty member remains totally disabled
past the end date of the phased retirement agreement, the disability
plan provisions will continue to apply, as they would with any other
disabled faculty member, and retirement plan contributions will
continue, again based on his full, unreduced base salary at the time of
onset.
A faculty member's health insurance subsidy will follow the provisions
of the phased agreement, regardless of disability status. Health
insurance subsidy is limited to a maximum of 9 years (a maximum of 5
years of phased retirement plus a maximum of 4 years following the end
of the phased agreement).
Section VI. Forms/Information
* Phased Retirement Agreement
(pdf)
* Benefits Election Form (pdf)
* Benefits Information Supplement
(pdf)
* Initial Release (pdf)
* Subsequent Release (pdf)
Section VII. Contacts
Information
Supervisor or campus, collegiate or administrative unit human resources
administrator initially, central human resources specialist or
consultant as appropriate.
Document Process
Human Resources Management System (HRMS) Call Center at 612.625.2016.
Employee Benefits
Employee Benefits Service Center at 612.624.9090 or 800.756.2363, option 2.
Section VIII. Responsibilities
Subd.1. Tenured faculty member or continuous appointment academic
professional
* Review all program documentation, forms, policy and procedure.
* Consult counsel as appropriate.
* Schedule the Leave without Pay percentages and the Last Day of
Employment with the unit administrator, dean or senior
administrator, and the Office of Human Resources.
* Execute the Phased Retirement Agreement and the Initial Release.
* At the end of the Phased Retirement, execute the Subsequent
Release and the Benefits Election form and forward them to
Employee Benefits.
Subd. 2. Responsible administrators/supervisors
* Review all program documentation, forms, policy and procedure.
* Schedule the Leave without Pay percentages and the Last Day of
Employment with the Unit Administrator, dean or Senior
Administrator, and the Office of Human Resources.
* Follow procedures listed in Section IX below.
Subd. 3. Office of Human Resources
* Advise administrators/supervisors on documentation, forms, policy
or procedure interpretation.
* Schedule Last Day of Employment with the tenured faculty member or
continuous appointment academic professional, and the Unit
Administrator, dean or Senior Administrator.
* Approve and sign all Phased Retirement Agreements.
* Ensure payment of all benefits under the Phased Retirement
Program, according to policy.
Section IX. Departmental Procedures
1. Notify the tenured faculty member or continuous appointment
academic professional of the right to consult counsel. The tenured
faculty member or continuous appointment academic professional
turns in the Phased Retirement Agreementand the signed Initial
Release form to the department.
2. Certify the employee's eligibility for the program.
3. Complete the department's section of the Phased Retirement
Agreement. Ensure that the CUFS number is provided on the
agreement and that the Unit Administrator signs both sides of the
agreement.
4. Photocopy the agreement and forward the original for the
appropriate signatures: dean, provost, chancellor and/or vice
president.
5. Send the signed original agreement and the Initial Release to the
Office of Human Resources for approval by the Vice President for
Human Resources.
6. After the college receives a fully-executed copy of the agreement,
complete initial payroll data entry in PeopleSoft according to the
instructions included in the business process for Ending an
Appointment for Employee Receiving a Severance Package
.
7. At the end of the Phased Retirement, complete the final steps as
instructed in the business process for Ending an Appointment for
Employee Receiving a Severance Package
.
* Have the employee sign the Subsequent Release and Benefit
Election forms as of the Last Day of Employment and forward
them to Employee Benefits.
* If vacation needs to be paid out, send vacation balance
verification to Employee Benefits
8. Employee Benefits will enter the Action/Reason on the Job Data
panel in PeopleSoft and take the full charge for the cost of the
24-48 month subsidy as of the Last Day of Employment against the
CUFS account provided on the Phased Retirement Agreement. The
department is responsible for picking up the cost of the medical
and dental subsidy after retirement for a minimum of 24 months but
no longer than 48 months.
Section X. Frequently Asked Questions
Q1. Can federal employees participate in the Phased Retirement
Program? A1. No, the Phased Retirement Program is not available to
federal employees.
Q2. Do I surrender my tenure or right to my continuous appointment as
part of my participation in the program? A2. In consideration for the
benefits received through the program, the release signed on the Last
Day of Employment releases the University from all future claims,
including tenure rights and rights to a continuous appointment.
Q3. After my Last Day of Employment, may I take another position at the
University? A3. Once retired, you may return to work in a
non-benefits-eligible appointment, or as an independent contractor, if
eligible, pending approval by the academic unit in which the work is
carried out.
Q4. May I combine participation in this program with any of the other
exit programs sponsored by the University? A4. No. Refer to Section V,
Subd. 2 above.
Q5. Who determines my Last Day of Employment and my leave without salary
during the Phased Retirement? A5. You, your Unit Administrator, dean or
Senior Administrator and the Office of Human Resources mutually agree
upon the Last Day of Employment and your leave without salary.
Q6. If I am participating in the Phased Retirement Program, am I
permitted to pick up additional grant work during my leave without
salary? A6. No, your work effort and leave without salary percentages
are specified in your Phased Retirement Agreement and may be modified
only by mutual consent of all parties.Any amendment to the original
agreement must comply with the policy, must be in writing, must be
signed by the parties, and is not effective until signed by the Senior
Administrator (or designee) and the Office of Human Resources.
Q7. If I am participating in the Phased Retirement Program, may I still
take advantage of my ability to perform outside consulting? A7. Yes,
subject to the Board of Regent Policy on Conflict of Interest. Your
maximum number of consulting days permissible under the program will be
prorated based on your actual work effort and appointment term. For
example, if you have a 12-month, 'A' appointment, you would normally be
entitled to a maximum of 49 consulting days annually. If, on phased
retirement, your work effort were lowered to 50%, you would be entitled
to a maximum of 24.5 days of consulting, subject to the other program
provisions.
Q8. Is it possible to alter or defer the phased retirement period? A8.
If approved by the faculty member, the unit and central administration,
the phased retirement agreement may be modified to increase or decrease
the percentage of leave within the agreement period or change the phased
retirement end date. The phased retirement end date, however, may not be
extended past the 5 th year anniversary of the initial date of the
agreement.
Reversing a phased retirement agreement to full time status is not
permitted.
Q9. What is the proper procedure for submitting a modification to a
phased retirement agreement? A9. To modify an existing phased
retirement agreement, the unit should obtain a copy of the original
agreement, write in the changes (e.g., date changes, percentage changes)
and have each person who originally signed the agreement place their
initials by the changes. The unit should then forward the revised
agreement to the Vice President for Human Resources, 120 Morrill Hall
for final approval.
Q10. Would it be possible to alter the agreement to a half time, no
benefits arrangement for an extended period (meaning that I would not
have to retire but would lose the benefits offered by the phased
retirement package?)? A10. No, the phased retirement agreement
specifies a maximum period of 5 years and must be for continuous years.
The suggested arrangement would, in effect, cancel the phased
retirement, which may only be done with mutual agreement between the
faculty member, the unit and central administration.
Q11. May I take a leave without pay for a year in the midst of the
agreement and thus extend the arrangement for another year? A11. No,
the leave must be for continuous years.
Q12. May I apply for a sabbatical (single semester leave?) while on a
phased retirement agreement? A12. No, a faculty member is not eligible
for a sabbatical or single semester leave after the Last Day of Regular
Appointment.
Q13. May I have as many as three (or more) different
percentage-leave-of-absences on a phased retirement agreement? A13.
Yes, subject to the mutual agreement requirement between the faculty
member, the unit and central administration.
Q14. Are there any circumstances under which central would consider a
phased retirement period of longer than five years? A14. No. Current
policy limits the term of the phased retirement agreement to a maximum
of 5 years.
Q15. Under what circumstances may the phased retirement be cancelled?
A15. Once the phased retirement agreement is agreed upon and signed by
all parties, it may only be modified by mutual agreement between the
faculty member, the unit and central administration.
Q16. Is it possible for a faculty member who is on a phased retirement
agreement to accept another position outside the University for the
percentage of time they are on leave? A16. Yes, this is permissible.
The outside position could be in addition to any consulting permitted by
University policy. It should be remembered, however, that the intent of
the policy is to permit a faculty member to ease into retirement, rather
than accepting an additional outside position.
Q17. If the additional 'outside' position provides benefits, does it
negate benefits provide by the University? A17. No, benefits continue
to be provided according to the terms of this policy.
Q18. During a phased retirement, is vacation accrual pro-rated based on
the percentage of appointment? A18. Yes. For example, if a faculty
member holds a 12-month, 'A' appointment and would otherwise accrue 22
days of vacation annually, a faculty member with a 75% work effort would
then accrue 16.5 days of vacation annually.
Q19. Must the phased retirement agreement specifically state the work
effort percentage, or can it be completed using a range (for example,
50% - 60%)? A19. The work effort, as with the end date of the phased
retirement agreement, must be specifically stated in the agreement. This
provision permits the department to better plan succession needs.
Q20. If a faculty member ends his phased retirement agreement on his 61
st birthday, how many months of health and dental subsidy with he or she
receive after retirement? A20. The faculty member will receive 48
months of subsidy, which will bring him to his Medicare eligibility age
of 65. If, however, the faculty member had ended his phased retirement
on his 60 th birthday, he would still only receive a maximum of 48
months of subsidy. Alternatively, if the faculty member ends his phased
retirement on his 62nd birthday, he will receive 36 months of subsidy,
again, bringing him to his Medicare eligibility age of 65.
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