UNIVERSITY OF WISCONSIN PLATTEVILLEVOLUNTARY SEPARATION INCENTIVE PROGRAM

Presented by: Human Resources

John Lohmann, J.D., M.B.A. - Interim Director of Human Resources

Chris Buswell, M.P.A. – Assistant Director of Human Resources

Effective dates of separation will be determined by the Chancellor in the best interest of the University.

After consultation with the Senior Review Team.

If you have a preferred date, please put it on your application. Chancellor Shields said he will work

with people on the date.

ELIGIBILITY

55 years or older as of June 30

Start date at University of Wisconsin Platteville June 30th 2010 or earlier.

Vested in WRS, entitle to receive annuity

All classes of employees except executive management, student employees and rehired annuitants

Not eligible for rehire for two years if your application is approved and you elect to participate.

Dates to Remember!

• Employees must submit completed applications for consideration in the Voluntary Separation Incentive program no later than May 20th.

• Chancellor Shields’ final decisions will be communicated to applicants no later than June 6th.

Applying for the program does not obligate you!

It only requests that you be considered.

IT IS ALL VOLUNTARY

The process goes like this:

1. Submit Application

2. Senior Review Team will consider the applications and give recommendations to the Chancellor.

3. Chancellor selects those who will be approved.

4. At this point you are still not obligated.

5. Those approved will receive a separation agreement. This is a contract.

6. You will have 45 days to consider the deal.

7. If you sign and turn in the contract, you still have 7 days to change your mind.

You do not have to participate in the plan. There is no penalty to decide not to!

The deal only becomes final after the 7 day period expires after you sign the separation agreement.

So if you are not sure I encourage you to consider applying to keep your options open. You can decide not to take the deal.

Your benefit amount is arrived at by taking 50% of your base pay, prorated for your FTE.

LTE’s are a little different. TENURED faculty receive an additional incentive

How to Determine Your Benefit Amount

Example: An employee at full-time rate of $80,000 who has a .75% FTE would be eligible for $30,000

Full-time base rate of $80,000 x .75% FTE = $60,000 x 50% = $30,000

Benefit amount does not include: Overloads

Winterim, Summer Service / Summer Session amounts

Overtime

Standby pay

Weekend, night, shift differentials, etc.

Adjusted Base salary = $50,000

Standby Pay + $ 200

Overtime Pay + $ 650

Total Compensation = $50,850

Example Classified Staff:

Total Separation Incentive Amount = $25,000

Contract Base Salary (adjusted for FTE) = $60,000

Overload + $ 1,500

Summer Session + $ 3,200

Total Compensation = $64,700

Example Unclassified Staff:

Total Separation Incentive Amount = $30,000

There are 2 methods for distribution:

1.Cash lump sum payout

2.WRS Actuarial Reduction Plan

The benefit amount to the employee is based on the 50% of salary prorated by FTE determination in both choices.

NOTE

If you elect the ARP: If the cost of the ARP is less than 50% of your salary (FTE adjusted), you will be paid the difference in a lump sum.

If the cost of the ARP is more than 50% of your salary (FTE adjusted) UW-Platteville will “eat” the extra cost.

Employee may choose a cash payout of the Separation Incentive in a lump sum payment at the end of their employment.

Option 1:

Points to consider:• Consider changing your withholding exemptions. • Complete a new W-4 and return the form to HR• Work with HR on the date to use for your form.• You are advised to speak to your tax advisor.

Option 2: Actuarial Reduction Payment (ARP)

If you have not reached “normal retirement age” you may wish to consider selecting this option.

Normal Retirement Age:General (Most workers): 65 or 57 with 30 years of

serviceProtective (e.g. Police): 54 or 53 with 25 years of service

ARP

Anyone retiring early (not at normal retirement age but vested in WRS and over age 50) receives a reduction in their monthly benefit amount. The reduction is determined based on the number of months the retiree is below normal retirement age .

Current reduction for non-protective occupation participants:

0.4% per month between ages 55 and 57

0.001111% per month between age 57 and the normal retirement age.

The ARP pays ETF/WRS to eliminate this reduction.

Option 2 : Actuarial Reduction Benefit (WRS)

Example: Rowen is Age 55Estimate #1 (Based on retirement date of 8/1/2015)

Current salary: $68,000 per year

Estimate of Retirement Benefit: $ 338.36 per month

Estimate of Retirement BenefitAfter ARP : $527.05 per month

OPTION 2: “ROWEN” CONTINUED

Separation incentive payment: $ 34,000 Cost of ARP:

29,391 Balance to be paid to Rowen: 4,609

Remember that these are estimates.

IS IT WORTH IT?(TALK TO YOUR FINANCIAL ADVISOR!)

If Rowen lives for thirty more years to age 85:

Total cumulative value of the increase to her payment:

$188.69 x 12 months x 30 years: $67,928 What if I invested that money instead?

Currently inflation is negative (slight deflation)

But let’s assume an average annual rate of inflation of 2%.

If you were to invest the cost of the ARP ($29,391) and you got

2% per year, in 30 years your investment would be $53,338.

Option 2: ARPExample: Ted is Age 62

Based on retirement date of 8/1/15$18.71/hour ($38,913,000/year)Separation incentive payment: $19,456.50

Estimate of Retirement Benefit: $ 1,274.69 per month

Estimate of Retirement BenefitAfter ARP : $1,340.16 per month

Cost of ARP: $ 9,407.86

Balance payable to Ted: $ 10,048.64

If Ted lives to 75: Total cumulative value of increase to his payment:

65.47 x 12 x 13 = $10,213.32 If you took the money that the ARP would cost

you and invest it for 13 years and got 2% interest your investment would be: $12,170.07

Option 3 (continued):

Points to consider:

The closer you are to your normal retirement age, the lower the Actuarial Reduction Benefit will be and the lower the Actuarial Reduction Benefit will cost .

What you should do next:

1. Review your WRS estimates and the “Separation Incentive Payments” summary in your packet

2. If you are interested in discussing the Voluntary Separation Incentive Program, please call HR at 608-342-1176 to make an appointment with our staff.

3. There are additional presentations this week. Feel free to come to another one.

4. Complete and return your application if you want to be considered.-Please note if you have a desired separation date.

You are encouraged to contact ETF, your tax advisor and/or

attorney if you have questions!

Dates to Remember!

• Employees must submit completed applications for consideration in the Voluntary Separation Incentive program no later than May 20th, 2015

• Chancellor’s final decisions will be communicated to applicants no later than June 6th.

• Separation Agreements must be returned no later than July 22nd.

Additional Resources:Live Presentation:  Watch your email for announcements. We will be requesting ETF to present on campus if possible. Webinars:  ETF has many webinars scheduled.  You can find them on their website under the Webinar tab. http://etf.wi.gov/member_education.htm#tab2   Group Appointments:  ETF also has many group appointments for members who have a retirement packet from ETF.  It is listed under the Face to Face tab. 

Questions?

QUESTIONS FROM PREVIOUS SESSION

If I am at or past regular retirement age do I have to sign up for Medicare or do I just wait until my sick leave conversion runs out?

When each of you reach age 65, each must enroll for Medicare (both Parts A and B) to continue state or local health insurance. We will automatically mail you a reminder before your 65th birthday. Your premiums decrease when either of you become enrolled in Medicare (both Parts A and B).

http://etf.wi.gov/faq/retirees.htm#3