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This survey, conducted at the request of a NASRA member, was
distributed to 22 statewide retirement systems identified
as possibly administering an optional retirement plan (ORP)
for members of their state’s higher education faculty.
Findings
In response to the question, “Does your system administer a defined contribution Optional Retirement
Plan (ORP) for college and university faculty?” eight
responded affirmatively.
Of these eight respondents, only
one indicated that their ORP allows faculty who have elected
to participate to later rescind their ORP election and switch
to the traditional defined benefit plan.
Following
are responses to the question, “What
are the employer and employee contribution rates to your ORP?”
- The ORP allows for the administration of the plan
at the reporting unit level and is dependent on the optional
plan administrator. The
rates vary.
- The employer contributes 10% of salary up to the
social security wage base; 11% of salary above the social
security wage base. Employees
do not contribute.
- Employer rate is 7.25%. Employee rate is 0.00%.
The ORP consists of employer contributions only. Employees
can also elect to participate in a supplemental plan that
allows for employee contributions.
- Employer Contribution Rate is 10.43%. The State
University System ORP is mandated for all state universities
and administered by the Division of Retirement. There is
a 0.01% administrative fee with 10.42% forwarded to one
of the 5 bundled provider companies offered under this ORP.
The State Community College ORP may be offered by
an individual college or in consortium with other colleges but this ORP is not mandated. The administrative cost is set by the state
community college. There is no required employee contribution
in either the state university or the state community college
ORP but the employee may contribute up to the
employer contribution rate (less any administrative fee)
by salary reduction or salary reduction.
- Employer = 5% (plus an additional 2.55% goes to
the DB for the UAAL); employee = 6%
- Employer--Same as for the regular plan but only the normal cost portion is actually
sent to the ORP account.
The normal cost portion varies annually but is usually
around 7%; employee—8% less 0.1% kept by the retirement
system to administer the ORP.
- Employer-8.65% minus 3% until the unfunded liability
in the DB plans is amortized; employee-7.6%
- Employer 6.84%; employee 6%
Following
are responses to the questions: “How
are contribution rates determined--by statute, board of trustees,
legislature, other? and How frequently are contribution rates adjusted?”
- The ORP allows for the administration of the plan
at the reporting unit level and is dependent on the optional
plan administrator. The
rates vary.
- By statute
- Statute
- Legislature sets rate. Rate is adjusted through
amendment to the law with no regular schedule for review
or increase.
- By statute
- Employee rate is set by statute. Employer rate is
set by statute to cover normal cost and amortize the UAL. See [response number 6] above for further
explanation. Employer rate is adjusted annually.
- By Statute.
- By the Legislature. The employer rate used to be
the same as the employee contribution rate (which is the
as if the member had joined the Teachers' and State Employees'
Retirement System). In the last decade the employer contribution
has occasionally gone up when there was an increase in the
accrual rate for employees in the DB plan.
Following
are responses to the question, “What is the
vesting schedule for employer contributions to the ORP?“
- The ORP allows for the administration of the plan
at the reporting unit level and is dependent on the optional
plan administrator. The
rates vary.
- Immediate vesting
- Immediate 100% vesting.
- Immediate vesting.
- a member is immediately vested
- Immediate vesting.
- Immediate.
- The state makes contributions from initial enrollment.
Vesting immediately if individual leaves before five
years and continues participation in a core retirement plan
at another institution of higher education with a like retirement
plan; otherwise vesting after five years.
Following
are responses to the question, “Are
the ORP investment options joined with another defined contribution
plan, such as a 403(b) or 457 plan, or are the ORP investment
options independent of other plans?”
- The ORP allows for the administration of the plan
at the reporting unit level and is dependent on the optional
plan administrator. Setup
and structure is determined at the reporting unit level.
- Independent
- no response
- ORP investments are independent of other plans.
- independent
- They are independent.
- Independent.
- Independent
Following
are responses to the question, “How
many third-party administrators service the ORP?”
- Since it is administered at the reporting unit level,
we do not maintain that information.
- We have three bundled investment providers but no
TPA.
- no response
- For the State University ORP, none since it is administered
by the Division of Retirement with five separate bundled
provider companies available under this program. Each college
has the ability—but no mandate—to provide an ORP individually
or in consortia with other community colleges.
There are 28 state community colleges total but there
is no record of how many, if any, that offer an ORP use
third-party administrators.
- Four vendors participate
- Three
- Two
- Four
Additional comments:
·
There is legislation pending
that would allow community college ORP participants a one-time
opportunity to elect participation in the FRS Pension Plan
(DB plan) or the FRS Investment Plan (primary DC plan). The
State University System ORP does not currently have any provision
to allow participants into the defined benefit plan as long
as the participant is in ORP-eligible employment. Under both
the university and college ORPs,
the continued participation is limited to remaining in eligible
employment with a community college or university.
Once an employee leaves ORP-eligible employment, the
employee defaults back into the defined benefit plan on a
prospective basis.
·
The Idaho State Board of Education
administers the plans and is using TIAA-CREF and Valic as their selected vendors.
·
The Montana ORP for the University
System is administrated by the Office of Commissioner of Higher
Education. The Montana
University System also contributes to the Montana TRS 4.04%
of the salaries paid to ORP participants to pay the University
System’s share of the unfunded liabilities that existed when
the ORP was created in 1998. This supplemental contribution
will continue until July 1, 2033
·
University of Alaska
faculty and certain university staff may opt to participate
in an ORP. The choice is irrevocable and must be made within
90 days of employment. The ORP plan is administered by the
university.
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