UC Benefits Teach-In

April 1, 2006 - South

April 8, 2006 - North

WelcomeIntroductions

Overview

Agenda

1. Welcome, Introductions & Overview2. Benefits Basics3. State & National Perspective

-Break -4. UC’s Pension & Plan of Attack5. Panel - Framework for Fighting Back

& Brainstorm6. Break-Outs for each Union

Si, se puede!

We can protect our UC pension and retiree health!

Benefits Basics

Benefits Basics

Pension

• Different kinds

• Benefits, Contributions,

Funding Level

Retiree Health Insurance

What is a Retirement Plan?

• Monthly income after you retire

• Earn it during your working life

Got Retirement?

Union Non-Union

Source: BLS 2004 Data.

88%

56%

How do Retirement Plans Work?

Contributions Retirement

Investment Earnings

2 Types of Retirement Plans

1. Defined Benefit – benefit is defined in advance--“Pension”

2. Defined Contribution (DC) – contributions are defined, but benefit is not defined.

Defined Benefit (DB)

• Guaranteed benefit

• Contributions are employer paid or shared

• Amount required to fund the plan fluctuates

Defined Contribution (DC)

• Contribution amount is known, but benefit is unknown

• You get whatever there is when you retire

• Employee makes investment decisions, and often decides how much to contribute, if anything

88%

56%

Got Pension?

Union Non-Union

73% DB

16% DB

Source: BLS 2004 Data.

How Much Do You Get When You Retire?

Defined Benefit formula:

• How old when you retire?

• How long did you work?

• What was your salary?

How Much Do You Get When You Retire?

Defined Benefit formula:

Age Factor X

Years on the Job X

Average or Highest Salary =

Benefit

Age factor: %, based on age at retirement, used to calculate retirement income.

UCRP Benefit Formula

Basic Retirement Formula - ExampleRetire @ 60 = 2.5% age factor30 years at UC$12.50 / hour ($2000 / month)$1,500 Monthly Benefit

• COLA – at UC, formula based on inflation

• Reduced if you receive Social Security checks

What is Retiree Health Insurance?

• Health Insurance after retirement (or payment of medical bills after retirement)

• 2 Types:– Pre-65 (pre-Medicare)– Post-65

• May include prescriptions

• May include survivor health insurance

Retiree Health Insurance

National Context• History of “Pay-as-you-go” – not setting aside

money every year (like for pensions)

• New Regulation requires governments to report how much it costs… a lot…$60B for State of CA, $10B for UC

• Some government employers will start to pre-fund

• Retiree health is not vested like pensions are

Retiree Health Insurance

At UC• You are eligible for some benefit after 10

years, full benefit after 20 years employment.

• CNA, CUE & UPTE won retiree health protection in their 2005 contract

• Where not protected by contract, UC can change or stop their contribution to retiree health.

Health Insurance

National Context-Costs are increasing, due in part to large profits in

healthcare industry-Increasing numbers of uninsured-National Crisis, which ultimately will require a single

payer solution

At UC-UC currently pays on average 89% of the cost-UC each year is shifting more costs onto the

employees, especially for family coverage

State & NationalPolitical Context

UC’s Pension & UC’s Plan of Attack

Outline

1. Pension & Benefits at UC

2. Comparisons

3. UC’s Plan of Attack

1. Pension & Benefits at UC

UC Pension

• Benefit Formula

• Contributions

• Funding Levels

UC Pension Benefit

Senior Custodian

Wage (max) $32,028

Retire at age 65 after 15 years at UC

Pension $11,412

UC Contributions History

1980s

Employer: 4% - 16%

Employee: 2-3%

UC Contributions History

1991 – Present: fully funded from investment earnings

Employer: “Contribution Holiday”

Employee: 2% redirected to DC Plan

UC Pension Funding Level

148% - 2001110% - 2005100% - 2009 85% - 2014

* Assumes no new contributions.

2. Comparisons

Pension – Sr. Custodian Retires at Age 65, 15 Years of Service

UCSF CSUSF City College

CPMC* (Sutter)

Cintas (USA)

Wage $ 32,028 $ 38,148 $ 43,056 $ 39,395 $ 21,840

Pension $ 11,412 $ 13,707 $ 12,438 $ 12,673 DC plan

EE ($) $ - $ 1,907 $3,229 ($0 in

04/05 & 05/06)' 0 ?

EE (%) 0.0% 5.0%7.5% (0% in

04/05 & 05/06) 0 ?

ER (%) 0.0% 15.9% ? ? Match

Wage (maximum)

Benefit

Contribution

Comparisons: Funding Levels

• UC Pension: 110%

• CalPERS Public Agency: 87%

• US Public Pensions, Avg.: 85%

3. UC’s Plan of Attack

UC’s Plan of Attack

Overall Package

• Wages

• Pension

• Retiree Health

• Healthcare

UC’s Plan of Attack – Part I

March 2006 Regents Voted• Restart contributions July 2007 (nonrep)• “Shared” – phase in up to 8% each?• Total contribution phased in to 16%

May 2006 Regents Plan to Vote• Specify employee & employer contributions (%)

thru 2010

UC’s Pension Attack – Part I

Senior Custodian

Wage $32,028Pension contribution $2,562

... Like an 8% pay cut!

UC’s Pension Attack – Part II

2-Tier

“Exploring” new plans w/ lesser benefits

Health Insurance Attack

UC may want to cut it’s share of health care costs, from 89% (2005) to 68% (2010).

Retiree Health Insurance Attack

• Reduce / Cost Shift

• 2-Tier – may reduce benefit for new employees

Why now?

• Pension 100% funded until 2009

• Most unions bargain in 2007/08

• Arnold

Let’s slow UC down!

Fight Back!

• CNA, CUE & UPTE won protections for pension & retiree health, with right to bargain & strike

• AFSCME also has protection, because our contract ties us to everyone else

• Reach out to other workers at UC, our Allies and Politicians to stop UC

• Fight together and win!

We can do it! ¡SÍ se puede!

Questions & Answers

Framework to Defend our Benefits

• Educate & Mobilize members

• Make UC slow down so we can fight changes

• Share information and work together

• Reach out to unrepresented Workers, Faculty & Allies

• Politics key to this fight - help defeat Arnold for Governor

Brainstorm

Brainstorm How to Defend our

Benefits

Discuss at UC Union Coalition