Pension problem receives attention

A task force has been formed to fix an 11-year-old problem of creating a replacement retirement plan for 114 faculty members. These faculty members were hired in the summer of 1988 under the assumption that they would be eligible for the 18-20 pension plan. An IRS ruling in 1991 prevents them from receiving 18-20, however, and those 114 have been in limbo ever since, with no replacement plan created by the University. \nThe 18-20 program derives its name from its unique design. A professor who has worked at IU for 20 years and has invested his retirement money for at least 18 years can retire at age 64. For the following five years after retirement, he or she will continue to receive a full salary and also additional money for investment. \nIU is in the process of creating a new pension plan for these 114 -- one that will be equal to the 18-20 plan and that also meets the IRS code that eliminated it, said Vice President of Human Resources Dan Rives. \n"Indiana University is absolutely committed to ensuring that those employees that would have otherwise received 18-20 benefits will receive a comparable replacement retirement plan," Rives said. \nThe committee consists of nine faculty members working with the Nyhart benefit company to create a financially equivalent plan. Members of the committee said they don\'t expect the task to be too difficult to accomplish. \n"(These faculty members) fell in the cracks and something should have been done quite a while ago, at least 10 years ago," said Jim Sherman, committee member and professor of psychology. "It's not that hard of a problem to fix."\nSeveral viable retirement plan models will be considered, Rives said. \n"We do not think there will be any difficulty in finalizing a replacement plan that will comply with the IRS code and provide the comparable benefits that the university has committed to," he said.\nTwo of the proposed retirement plans that the committee is considering are called a deferred compensation plan and a defined benefit plan. \n"We want these people to enjoy the same benefits that 18-20 had," Sherman said. "If anything, they'll probably come out a little ahead of 18-20."\nThe 18-20 pension plan was eliminated in 1988, but the 114 faculty members hired that summer were promised its benefit structure. In 1991 the IRS ruled that a portion of the plan did not comply with its tax code. Anyone employed by the date July 14, 1988 would still be eligible for the 18-20 plan, but those employed afterwards would receive a slightly different retirement package. \nUnder the close-off date announced by the IRS ruling, those 114 faculty members could not receive the benefits of 18-20, despite the university\'s original promise. \n"Retirement plans for faculty are indeed important," said Elyce Rotella, a committee member and associate professor of economics. "I don't know why the University began to work seriously on this problem now rather than earlier. The important thing is that the problem is being addressed now and a plan will be in place before any of the members of the affected group retires."\nThe committee has already met once and will meet again this month. Once a plan is formed, the committee will present it to the Bloomington Faculty Council for consideration and feedback before the presenting it to the IU Board of Trustees for final approval. The development of a replacement plan should be complete by the end of the spring, Rives said.