A University news release said the plan as approved by university trustees to reduce the university contribution to 10%, would not hurt employees’ salary levels, but would keep Purdue competitive in offering employee benefits. The new system is set to take effect January 1, 2011.
The plan applies only to faculty and exempt-status staff who are part of the TIAA-CREF retirement plan.Under the current retirement plan, no employee contribution is required, and Purdue pays in 11% percent of the first $9,000 in salary and 15% for additional salary above $9,000.
“Our goal, based on input from members of the university community, was to create a plan that would continue to allow employees to contribute to a retirement plan without negative compensation or tax consequences,” said Al Diaz, Purdue executive vice president for business and finance, treasurer. “In the end, we will have a retirement system that is more consistent with our peer institutions, is sustainable and makes our job offers to new employees more compatible with our peers.”
An additional retirement account element would be established for the mandatory employee contribution, said Luis Lewin, Purdue’s vice president for human resources.
According to the University, the idea for the revised retirement system was based on information contained in a Hewitt Associates compensation market study. The report found that at Purdue’s West Lafayette, Indiana, campus salaries for faculty, exempt and non-exempt employees were competitive with the market across the board, but Purdue’s retirement income benefits for faculty and exempt staff were 140% to 210% of that provided by peers.
“The findings in the Hewitt report confirm that this plan will move us in the right direction, both in terms of mitigating the impact on current employees and in terms of being competitive in the marketplace moving forward,” Diaz said.