HR29 Voluntary Phased Retirement Program

POLICY'S INITIAL DATE: May 22, 1997 

THIS VERSION EFFECTIVE: June 14, 2016

Contents:

• Purpose
• Eligibility
• Policy
• Procedure

PURPOSE:

The Voluntary Phased Retirement program is intended to meet the needs of a faculty or staff member who would like to transition into full retirement and still provide service to the college/administrative unit in fulfilling its objectives. The program allows a faculty or staff participant to have a gradual work commitment reduction over a defined period of time at a reduced compensation level. A reduction may be in such activities as teaching, student counseling, administrative duties, research lab duties, or number of projects. Voluntary Phased Retirement should enhance succession planning and the mentoring of junior faculty and staff members as more senior faculty or staff members transition from strategic roles in the University.

ELIGIBILITY:

All faculty and staff on standing, fixed-term I, and fixed-term multi-year appointments have the option to voluntarily reduce both work commitment and compensation as they approach their designated retirement date.

POLICY:

Voluntary Phased Retirement Program Agreements are to be in accordance with the following:

1. In consideration of the reduced work commitment, the participant agrees to reduce compensation. Reduced compensation and responsibility normally occurs in increments of 15 to 25%. Staff participants will continue to accumulate sick, vacation, and holiday time according to their reduced work commitment.
2. The Penn State defined contribution retirement plan administered by TIAA has been amended to allow participants of the phased retirement program the option to begin accessing retirement accumulations prior to full retirement. A balance of 1% must be maintained in an individuals retirement account during phased retirement. It is important that a participant consider the tax implications (if any) of accessing retirement funds.
3. The provisions described in Item 2 above are only available to participants in the defined contribution retirement plan administered by TIAA. (Participants who are members of the State Employee Retirement System (SERS) cannot withdraw retirement funds from SERS until full retirement is commenced.)
4. Participants will continue to receive contributions to their retirement plan based on their reduced service and salary. Those who are members of the SERS will earn reduced service credit in proportion to the percent reduction in work commitment. TIAA members contributions will be based on their reduced salary.
5. The minimum amount of time a participant can be in the phased retirement program is 12 months with a maximum not to exceed 3 years. Normally, programs start on July 1 and end on June 30.
6. Participation in the program by a faculty or staff member must be reviewed and approved by the department head or manager and dean or administrative officer. Approval should take into consideration such issues as department capacity to support the request, both academically and financially, and department and college/administrative unit strategic planning.
7. The program is to be operated within the approved budget for each college or administrative unit.
8. Because the program must operate within each college or administrative unit's budget, it may not be possible for the dean or administrative officer to approve all phased retirement proposals for a given year. If a proposal is not approved for a given year, it may be re-submitted in a subsequent year.
9. Once approved for the program, agreement to participate is irrevocable and may not be rescinded at a future date. Full retirement will commence at the agreed upon date that designates the end of the phased retirement period. A participant may accelerate the retirement date during phased retirement; however, the final retirement date may not be delayed unless an extension is approved. If at the end of the phased retirement period, the participant is eligible to retire from the University with health benefits, the phased retirement may be extended with the Dean or Chancellors agreement and approval. Extensions must be reviewed and approved annually.
10. Healthcare, dental, vision, life insurance, and ADD benefits and long-term care are retained during the phased retirement at the regular, employee contribution rate. In addition, LTD coverage will be continued based on the reduced salary.
11. Suspension of the program will not affect participants already in the program.

PROCEDURE:

Individuals interested in exploring a phased-retirement program should begin by initiating discussions with their department head/manager and their Human Resources Representative.

The applicant must complete a Phased Retirement Application and Agreement and submit it with a written proposal for phased retirement to his/her department head or manager approximately 2 to 6 months prior to the intended start date of the program. The proposal should include, but not be limited to, such items as starting date; length of the phased retirement program; the percent of reduction in the work responsibilities in each year of the program (and the corresponding reduction in compensation); the type of work assignments in each year; and the perceived benefit of the program to the department and college or administrative area.

After the proposal is approved by the participant, the department head/manager, and the dean/administrative officer, the Phased Application and Agreement and a copy of the written proposal shall be forwarded to the Vice President for Human Resources or their designee for final processing. For academic appointments, the application and proposal must be submitted to the Vice Provost for Academic Affairs, who will then forward the information to the Vice President for Human Resources or their designee for final processing. The Office of Human Resources will forward a copy of the completed and processed application to the participants Human Resources Representative.

Updates:

June 14, 2016 - Added "or designee" to the Procedure section.

July 11, 2012 - Added extension provision.

April 28, 2011 - Extensive revisions.

January 26, 2011 - Added "or designee" throughout policy.