Retirement Plan Age Factor Changes

Effective Jan. 1, 1997, some of the age factors used to calculate monthly retirement income will increase.

This change, approved by the UC Regents at their May 17 meeting, affects age factors for ages 55 and four months through age 59 and 11 months and is not retroactive for those who have already retired.

Age factors for members under age 55 and four months and for members age 60 and over will not change.

Department benefits counselors have been sent the UCRP Retirement Income Estimate Worksheet containing current age factors and an attachment which includes the Jan. 1, 1997, age factors.

Employees interested in comparing benefits under both sets of factors should ask their department benefits counselors for the UCRP Retirement Income Estimate Worksheet and corresponding attachment.

This change is not an "early retirement incentive" (as described in several misleading articles in major Bay Area newspapers).

While it will increase retirement benefits to some degree for certain members as shown in the example below, the change was primarily designed to smooth the age factor compression that resulted from lowering the maximum age factor from age 63 to 60 without a uniform smoothing throughout the age factor matrix.

Example:When an employee is eligible to retire (age 50 or over with five years service credit), the monthly retirement income is based on a percentage of the employee's "Highest Average Plan Compensation" (a monthly average using 36 consecutive months at the full-time rate). The percentage is derived by multiplying the employee'ss service credit by the applicable age factor. For example, using an HAPC of $3,000 per month and the current age factor, an employee age 58 has an age factor of .018. If the employee has 20 years of service credit, the benefits percentage is 36 percent, resulting in monthly retirement income of $1,080. However, using the Jan. 1, 1997, age factor of .0195, the benefits percentage is 39 percent, and the monthly retirement income is $1,170.


Copyright 1996, The Regents of the University of California.
Produced and maintained by the Office of Public Affairs at UC Berkeley.
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