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Alternative Retirement Plans rate change announced |
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Staff |
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Jul 31, 2007 |
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Beginning in August and due to a decision by the Ohio Public Employees Retirement System (OPERS), a portion of employer contributions to Alternative Retirement Plans (ARP) will go directly to OPERS instead of the accounts of individual employees.
The University of Toledo’s contribution to the ARP will remain at 13.77 percent, but starting in August, 13.23 percent will go to ARP accounts and 0.54 percent will be redirected to OPERS. ARP participants will see this contribution change in the August payroll period.
Ohio Revised Code Section 3305.6(d) allows OPERS to withhold a portion of the employer’s contribution to offset any negative financial impact the OPERS Traditional Plan may experience by the offering of alternative retirement plan options.
According to state law, OPERS may annually determine if the alternative retirement plans offered (OPERS Member-Directed Plan, OPERS Combined Plan and the Alternative Retirement Plan) have had a negative financial impact on the OPERS Traditional Plan. If a negative impact exists, then OPERS may require a percentage of the employer contributions be redirected to the OPERS Traditional Plan in order to compensate for the loss.
Staff members contributing to OPERS Member-Directed or Combined Plans began having .54 percent of the employer contribution directed to this offset effective January 2006. ARP participants will see this contribution change in the August payroll period.
Ohio Revised Code Section 3305.6(d) allows OPERS to appropriate up to 6 percent of the employer contribution. The mitigating contribution can range from 0 percent to 6 percent. The mitigating rate will be determined by the OPERS Board each year.
The amount the University contributes to retirement plans has not changed; it is still 13.77 percent.
Beginning in August, the University's contribution will be distributed as follows — 13.23 percent will go to ARP accounts and .54 percent will be redirected to OPERS.
The .54 percent is directed to the OPERS Traditional Plan to help fund the plan. It does not go to individual accounts.
No additional contribution will be added by the University to account for the mitigating rate. OPERS is able to prove a percentage of the employer contribution needed and, therefore, all universities must abide by that ruling.
Faculty contribute 10 percent of their salary to the retirement plan. The University contributes 10.5 percent of the faculty member's salary to his or her retirement plan, and is required to contribute 3.5 percent of salary to the State Teachers Retirement System of Ohio to finance unfunded liabilities.
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