Retirement provision to help offset salary gap
CAP account will equal 3 percent of annual gross salary

29 November 2001 | All eligible UC employees will get a special retirement account, equal to 3 percent of their annual gross salary, under a deferred compensation provision recently approved by the UC Board of Regents.

The regents voted unanimously to institute the new retirement account, called a capital accumulation provision (CAP), at their Nov. 15 meeting in San Francisco.

The special account will be available to all eligible UC employees who are active members of the UC Retirement Plan on April 1, 2002. This will include UC Retirement Plan members on sabbatical or approved leave of absence. Employees who go on disability leave during the one-year period that begins April 1, 2002, those who are retired and inactive members will not be eligible.

“All of our employees work very hard to help keep UC a premier educational institution and they deserve to be recognized accordingly,” said Joseph Mullinix, UC senior vice president for business and finance. “Since we are only able to give modest raises on a systemwide basis this year, we wanted to try and find additional forms of rewarding people financially. And even though this won’t change employees’ incomes this year, it does give eligible employees throughout all of UC a financial boost later on.”

The amount of the capital accumulation provision is the equivalent of 3 percent of an employee’s annual gross salary, which will be put into a separate retirement account in the UC Retirement Plan to earn a fixed interest rate of 7.5 percent — today’s interest rates — until the employee begins to draw on his or her retirement funds.

For example, an employee who earns a gross salary of $50,000 annually will receive 3 percent of that salary — or $1,500 — in a capital accumulation provision accrual account. This fund will remain in the UC Retirement Plan and will earn interest at the current 7.5 percent interest rate.

This is not the first time that UC has offered employees a CAP provision to offset disappointing salary increases. In the 1990s, when the state budget was under similar constraints, eligible employees received CAPs. In the last 10 years, UC has offered five separate CAP programs.


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