MADISON — The University of Wisconsin System Regents will consider a set of principles to frame optional retirement system legislation at their April 8th meeting.
The development of these principles is the result of a legislatively-mandated timetable that requires the Regents to submit legislation by June 1, 1999 which would establish an optional retirement system (ORS). An ORS would allow newly hired UW faculty and academic staff to choose between the current Wisconsin Retirement System (WRS) and individually directed retirement accounts.
“The ability to offer an ORS may enhance recruiting of new faculty and academic staff,” said UW System Senior Vice President David W. Olien. “With recent studies indicating that nearly 40% of UW faculty and staff may retire over the next decade, offering competitive compensation and benefits will be a top priority as we seek to preserve the quality of our institutions. While offering competitive salaries is of primary importance, other benefits such as health insurance and a flexible retirement program will be critical as well.”
The UW System Administration recommends that the state Employe Trust Funds Board serve as the Plan Sponsor to establish the ORS. The Department of Employe Trust Funds (ETF) currently manages a large and sophisticated retirement plan for public employees as well as a major supplemental retirement plan, the Wisconsin Deferred Compensation Program.
“After examining the experience in other states, we feel that the fiduciary responsibility and administrative oversight should be located with the state entity best suited to provide legal expertise, plan design experience, employee education and counseling, appropriate information systems, and adequate auditing and accounting functions,” said Olien.
He added, “The Department of Employe Trust Funds maintains individual records for retirement and ancillary benefits. They do an outstanding job with the States Deferred Compensation Plan and have a national reputation for efficiency. For this reason the UW System Fringe Benefits Advisory Committee recommended that the expertise and resources currently available at ETF be used if an ORS is created.”
Other principles for an optional retirement system include:
Acknowledging the Universitys interest in preserving the excellence of the Wisconsin Retirement System by not passing the cost of an ORS on to other WRS participants, both employees and employers.
Authorizing ETF to determine retirement contribution rates to ensure equity among all employee groups.
Continuing full state funding of retirement plans.
New employees will be given a one-time choice to select a retirement plan.
Participants will be responsible for any of the consequences of their choice.
Olien said, “Following adoption of ORS principles the UW System Administration would prepare draft language creating an ORS that Regents would consider at the May Board meeting. This timetable gives all interested parties the opportunity to participate in an open, deliberative process on this important issue,” Olien said.
Any plan would have to be enacted into law by the legislature before it could be available to University participants.
David W. Olien