April 25, 2012

UIC HR Prepares for Retirees’ Institutional Impact

“Eligible employees are giving serious consideration to retiring prior to the July 1, 2012, deadline,”
said Robert Crouch, Assistant Vice President of Human Resources.
THE JULY 1 change in the State Universities Retirement System (SURS) Money Purchase Factor (MPF) is understandably causing potential retirees to deeply evaluate their options. “Eligible employees are giving serious consideration to retiring prior to the July 1, 2012, deadline,” said Robert Crouch, Assistant Vice President of Human Resources. The new factors will result in a lower monthly benefit payment for those retiring after the July 1, 2012 effective date. According to SURS “It is estimated that the monthly annuity benefit paid from the MPF will be reduced on average by 7% to 8%.”

SURS HAS undertaken surveying all retiree applicants as to their reasons for choosing to retire at this time. The key contributing factor was the change to the MPF and the resulting reduction in lifetime benefits after July 1. The majority of those surveyed also revealed that they plan to seek continued employment after their retirement.  The survey did not reveal where they planned to seek work, but their ability to return to UIC may be limited as the Illinois State Legislature is currently discussing potential constraints on rehiring retirees.
“THE POTENTIAL loss of institutional knowledge is critical for UIC, with nearly one in every five employees (17%) eligible to retire,” noted Crouch.  One department may lose up to 44% of its employees, while another may lose up to 466 people. Depending upon the normal rate of turnover in any given department, the potential impact for the institution could be even higher and longer-ranging. Those who choose not to retire by the July deadline will remain eligible to retire at any time and more will become eligible throughout the year. “Logic would suggest that every month we could potentially lose more mission-critical staff,” Crouch highlighted. “This is not a one-time situation, but a continuing concern.”
CROUCH STATED that “many departments will be losing knowledgeable and seasoned staff critical to operations. It is crucial to plan for budgetary requirements and create succession strategies. Departments should prepare themselves with succession plans and make sure their budgets will accommodate vacation benefit payouts.”
THE POTENTIAL surge in retirement notifications will lead to an increase in Central HR and departmental HR work. It is crucial that departmental HR staff are prepared and equipped to process the retirement notices, while balancing their regular job duties, to prevent any delays in the payment of retiree benefits. “I strongly encourage Deans and department heads to consider budgets, knowledge retention, and succession plans to ensure organizational readiness should UIC experience a significant surge in retirements,” Crouch said.
“IT IS imperative that retiring employees communicate at the earliest possible time to their department the intent to retire so that retirement notices can be processed in a timely manner,” Crouch said. The SURS website does not offer an absolute deadline for filing, but states that “SURS would like to receive your application 60-90 days prior to your effective date of retirement.” To begin the process:
  1. Employees should inform their department supervisor of the intent to retire.
  2. Employees should then contact Central HR.
  3. Contact SURS. They will provide clarification on entitlements and retirement income.
LOOKING AHEAD to potential changes, it is imperative that the University is prepared for the impending losses in human capital with succession plans or alternative human resource strategies in place.  “Departments need to also consider budgetary implications that may result from the need to make benefit payments on an employee’s retirement,” Crouch emphasized.

CENTRAL HUMAN Resources directly contacted employees who are eligible for retirement and informed them by e-mail or letter of retirement planning seminars held earlier in April.

THESE FOUR sessions emphasized the steps employees can take to facilitate smooth processing and administration of their benefits if they choose to retire at this time. This information was designed to be useful in helping employees plan for retirement.  .

FOR MORE information, call Susan Balmes at UIC Human Resources at (312) 355-5230. 

Monica Walk contributed to this article. See also “State employees rushing to retire” from the Springfield Journal-Register, April 14: http://www.sj-r.com/top-stories/x1157751000/State-employees-rushing-to-retire

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