Title: PACE UNIVERSITY POSTRETIREMENT AND BENEFIT PLAN PROPOSALS
1PACE UNIVERSITYPOST-RETIREMENT AND BENEFIT PLAN
PROPOSALS
- FACULTY STAFF DISCUSSION MEETINGS
- President David A. Caputo
- April 14 15, 2003
2PACE UNIVERSITYPOST-RETIREMENT ANDBENEFIT PLAN
PROPOSALS
- AGENDA
- Comparative Benchmark Analysis
- Current Post-retirement Benefits
- Alternate Proposal 1
- Alternate Proposal 2
- Recommended Proposal
3PACE UNIVERSITYPOST-RETIREMENT ANDBENEFIT PLAN
PROPOSALS
4PACE UNIVERSITYPOST-RETIREMENT ANDBENEFIT PLAN
PROPOSALS
5PACE UNIVERSITYPOST-RETIREMENT ANDBENEFIT PLAN
PROPOSALS
6PACE UNIVERSITYPOST-RETIREMENT ANDBENEFIT PLAN
PROPOSALS
7PACE UNIVERSITYPOST-RETIREMENT ANDBENEFIT PLAN
PROPOSALS
8PACE UNIVERSITYPOST-RETIREMENT ANDBENEFIT PLAN
PROPOSALS
9PACE UNIVERSITYPOST-RETIREMENT ANDBENEFIT PLAN
PROPOSALS
- STAFF SALARIES
- PROGRESS TOWARDS COMPETITIVENESS
- New compensation structure implemented 1/2001
covering over 500 staff positions for more than
1000 staff employees - 5-7 year commitment to provide additional funding
to improve staff salaries - Over 1.3 million additional/reallocated funding
to date - Staff Job levels B, and EE II at or above
competitive targets - Staff Job levels C I, and BB - DD still about
9 behind competitive targets and will be
priority for next 3-4 years
10PACE UNIVERSITYPOST-RETIREMENT ANDBENEFIT PLAN
PROPOSALS
- CURRENT POST RETIREMENT BENEFIT PLANS
- Plan 1 Pre-1996 FT Hires
- Qualifying Rule Age plus service equals 75 with
minimum of 10 years of service - Fully paid health insurance for retiree
- Reimbursement of Medicare Part B premium
- Life insurance- 100 of FT Salary grading down to
40 after 7 years - On-campus tuition benefits
11PACE UNIVERSITYPOST-RETIREMENT ANDBENEFIT PLAN
PROPOSALS
- CURRENT POST RETIREMENT BENEFIT PLANS
- Plan 2 FT Employees hired between 1/1/96
9/30/00 - Qualifying Rule Age plus service equals 75 with
minimum of 15 years of service - Health Insurance for retiree with contributions
according to years of service schedule - Life insurance- 10,000
- On-campus tuition benefits
12PACE UNIVERSITYPOST-RETIREMENT ANDBENEFIT PLAN
PROPOSALS
- CURRENT POST RETIREMENT BENEFIT PLANS
- Plan 3 FT Employees hired after 10/1/00
- No benefits in retirement
- Employees in this category may when they retire,
with at least 10 years of service, continue on
University health plan by paying 100 of premium
13PACE UNIVERSITYPOST-RETIREMENT ANDBENEFIT PLAN
PROPOSALS
- CURRENT POST RETIREMENT BENEFIT PLANS
- Issues (based on 7 FAS 106 medical trend)
- Current Post-retirement Benefit Obligation (PBO)
is 41 million - PBO will increase to 48 million in 2003 and to
50.8 million in 2004, due to continued increase
in retiree claims and expenses - PBO will grow to 75 million by 2021
- All health care costs are increasing faster than
normal inflation - Combined PB and health care costs will cause
University benefit budget to increase by over 10
in 2003-2004 - Pressure from external auditors may force us to
raise medical trend assumption to 10 which has
the effect of increasing our PBO to over 92
million by 2021
14PACE UNIVERSITYPOST-RETIREMENT ANDBENEFIT PLAN
PROPOSALS
- Alternative Proposal 1
- Proposed Action
- Make no change to benefits
- Fund the increased annual costs of
post-retirement benefits by reducing future
salary increase pools (reduces planned 2003-2004
increase pool from 4.15 to 3.27) OR - Fund the increased annual costs of
post-retirement benefits by reducing expenditures
in other areas OR - Fund the increased annual costs of
post-retirement benefits by combination of above.
15PACE UNIVERSITYPOST-RETIREMENT ANDBENEFIT PLAN
PROPOSALS
- Alternative Proposal 1
- Proposed Action - Issues
- This option will not impact the current and
projected PRB obligation - Will not result in cost-containment of future
health care costs - Will erode the Universitys ability to provide
competitive compensation for staff and faculty - Will erode rewards to recognize excellent staff
and faculty performance
16PACE UNIVERSITYPOST-RETIREMENT ANDBENEFIT PLAN
PROPOSALS
- Alternative Proposal 2
- Proposed Action Effective 1/1/2004
- Increase medical co-pays to 15 then increase by
5 every three years - Implement 3-tier prescription drug program
10/generic, 20/brand, 30/non-formulary, then
increase each tier by 5 every four years - University caps its medical plan contribution at
2003 cost future increase up to CPI and 50 of
increase over CPI. Applies to all current
employees and employees retiring after 8/31/2004.
Maximum contribution rate of 20 - New employees pay 20 of medical plan premium
immediately - These changes will have the impact of reducing
the PB obligation by 42.6, from 50.8 million to
29.2 million in 2004
17PACE UNIVERSITYPOST-RETIREMENT ANDBENEFIT PLAN
PROPOSALS
- Alternative Proposal 2
- Proposed Action Effective 1/1/2004
- Increase medical co-pays to 15 then increase by
5 every three years - Illustration (based on average utilization)
- 2003 170 (10 co-pay)
- 2004 255 (15 co-pay)
- 2007 340 (20 co-pay)
- 2010 425 (25 co-pay)
- 2013 510 (30 co-pay)
18PACE UNIVERSITYPOST-RETIREMENT ANDBENEFIT PLAN
PROPOSALS
- Alternative Proposal 2
- Proposed Action Effective 1/1/2004
- Implement 3-tier prescription drug program
- 10/generic, 20/brand, 30/non-formulary, then
increase each tier by 5 every four years - Illustration (based on average utilization)
- 2003 192 (10 co-pay)
- 2004 258 (10/20/30 co-pays)
- 2008 325 (15/25/35 co-pays)
- 2012 392 (20/30/40 co-pays)
19PACE UNIVERSITYPOST-RETIREMENT ANDBENEFIT PLAN
PROPOSALS
- Alternative Proposal 2
- Proposed Action Effective 1/1/2004
- University caps its medical plan contribution at
2003 cost future increase up to CPI and 50 of
increase over CPI. Applies to all current
employees and employees retiring after 8/31/2004.
Maximum contribution rate of 20 - New employees pay 20 of medical plan premium
immediately -
20PACE UNIVERSITYPOST-RETIREMENT ANDBENEFIT PLAN
PROPOSALS
Projected Annual Premiums for Alternative 2
Proposal
21PACE UNIVERSITYPOST-RETIREMENT ANDBENEFIT PLAN
PROPOSALS
- Recommended Proposal
- Proposed Action Effective 1/1/2004
- Increase medical co-pays to 15 then increase by
5 every four years - Implement 3-tier prescription drug program
10/generic, 20/brand, 30/non-formulary,
then increase each tier by 5 every five years - University caps its medical plan contribution at
2003 cost future increase up to CPI and 50 of
increase over CPI. Applies to all current
employees and employees retiring after 8/31/2005.
Maximum contribution rate of 15. Employees
retiring after 8/31/2005 will continue to pay the
same rate as prior to retirement and that rate
will be frozen. - New employees pay 15 of medical plan premium
immediately - These changes will have the impact of reducing
the PB obligation by 35.5, from 50.8 million to
32.8 million in 2004
22PACE UNIVERSITYPOST-RETIREMENT ANDBENEFIT PLAN
PROPOSALS
- Recommended Proposal
- Proposed Action Effective 1/1/2004
- Increase medical co-pays to 15 then increase by
5 every four years - Illustration (based on average utilization)
- 2003 170 (10 co-pay)
- 2004 255 (15 co-pay)
- 2008 340 (20 co-pay)
- 2012 425 (25 co-pay)
-
23PACE UNIVERSITYPOST-RETIREMENT ANDBENEFIT PLAN
PROPOSALS
- Recommended Proposal
- Proposed Action Effective 1/1/2004
- Implement 3-tier prescription drug program
- 10/generic, 20/brand, 30/non-formulary, then
increase each tier by 5 every five years - Illustration (based on average utilization)
- 2003 192 (10 co-pay)
- 2004 258 (10/20/30 co-pays)
- 2009 325 (15/25/35 co-pays)
- 2014 392 (20/30/40 co-pays)
24PACE UNIVERSITYPOST-RETIREMENT ANDBENEFIT PLAN
PROPOSALS
- Recommended Proposal
- Proposed Action Effective 1/1/2004
- University caps its medical plan contribution at
2003 cost future increase up to CPI and 50 of
increase over CPI. Applies to all current
employees and employees retiring after 8/31/2005.
Maximum contribution rate of 15 - New employees pay 15 of medical plan premium
immediately -
25PACE UNIVERSITYPOST-RETIREMENT ANDBENEFIT PLAN
PROPOSALS
Projected Annual Premiums for Recommended
Proposal
26PACE UNIVERSITYPOST-RETIREMENT ANDBENEFIT PLAN
PROPOSALS
- Questions?
- For more information about current employee
benefit - programs visit www.pace.edu/hr . This briefing
will be - posted to this site on or about April 21, 2003