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Office of Human Resources 200 Donhowe Building 319 15th Avenue SE Minneapolis, MN 55455 612-625-2000 612-624-6037 (fax) OHR@hr-mail.ohr.umn.edu Search OHR Home > Policies > Departure Print friendly page 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. top <#top> 2006 Regents of the University of Minnesota. All rights reserved. Contact Webmaster | Privacy Statement The University of Minnesota is an equal opportunity educator and employer. Last modified February 15, 2007