Retirement Transition Options (S-6)

Standard: S-6
Responsible Executive: Vice President for Human Resources
Responsible Office: Office of the Vice President for Human Resources
Date Issued: September 1, 2017
Date Last Revised: N/A

TABLE OF CONTENTS

Contacts
Individuals and Entities Affected by this Standard
Statement of Standard
Responsibilities
Definitions (defined terms are capitalized throughout the document)
Related Documents, Forms and Tools
History and Updates
Appendix

CONTACTS

INDIVIDUALS AND ENTITIES AFFECTED BY THIS STANDARD

Faculty and staff enrolled in the Standard Retirement and Savings Plan.

STATEMENT OF STANDARD

The retirement transition options included as part of this standard are: (1) Advance Retirement Declaration and (2) Voluntary Partial Retirement. Only one option may be utilized by an eligible employee.

Eligibility 

These options may be available to faculty and staff members who are enrolled in the Standard Retirement and Savings Plan. The individual also must be eligible for Official Retiree status prior to commencing either retirement transition option.

Advance Retirement Declaration 

Faculty and staff nearing the end of their career may need additional resources to prepare financially for retirement years. An Advance Retirement Declaration allows an eligible employee to receive distributions from their Standard Retirement and Savings Plan while remaining actively employed in a benefits-eligible position. Participants may continue to work full time; an Advanced Retirement Declaration does not require a reduction in effort. This option may be in place for a maximum of two years, at the end of which the employee must retire from the University.

The individual must obtain written approval from their Responsible Executive Approver and coordinate with Human Resources regarding their start date and retirement date. Retirement distributions may begin once the arrangement is in effect.

Voluntary Partial Retirement

This arrangement allows an eligible employee to transition into retirement through a phased reduction in work over a specified period of time. Provisions of Voluntary Partial Retirement (VPR) include the following:

• The arrangement may be approved for up to a maximum of five (5) years. Duration of the arrangement is at the discretion of the Responsible Executive Approver and may be limited to a period less than five years. The arrangement must stipulate a level of part-time work between 50 and 80 percent effort. Once approved, the duration of the partial retirement arrangement cannot be lengthened nor the percentage of time employed increased; both may be decreased by mutual agreement, but the percentage of part-time work may not be lower than 50 percent. Participants may not supplement the terms of these agreements with employment elsewhere at the University.
• Participants must agree to retire fully from the University at the end of their approved period of transition.
• The proposed arrangement must align with the business needs of the department, and approval is at the discretion of the Responsible Executive Approver. Teaching, research and administrative assignments will be determined for the participant through negotiations with the cognizant department head, dean, director or other supervising unit head.
• Participants in the Standard Retirement and Savings Plan are typically exempt from the overtime requirements of the Fair Labor Standards Act (FLSA). The FLSA regulations specify exemption status for non-faculty employees and include a minimum salary test. A Voluntary Partial Retirement arrangement may only be approved if the resulting reduction in pay stays above the minimum salary threshold for exempt employees.
• During the period of partial retirement, the participant continues to qualify for staff privileges and benefits with group insurance coverage levels and rates based upon 100% Annual Base Pay; the University also continues contributions to these programs. Contributions to the employee’s Standard Retirement and Savings Plan will continue and are also based upon 100% Annual Base Pay. The participant is permitted to commence receipt of retirement distributions, including cash withdrawals, purchase of annuities or any other payout option available from the Standard Retirement and Savings Plan. 

RESPONSIBILITIES

Eligible Employees

• Confer with their supervisor and Responsible Executive Approver to find a mutually beneficial retirement transition plan.
• Work with their departmental business office or Regional Campus benefits administrator to complete required documentation in support of the request for an Advance Retirement Declaration or Voluntary Partial Retirement. Sign and submit the request for approval.
• Comply with the agreed upon conditions outlined in an approved retirement transition option.

Departmental Business Office and Regional Campus Benefits Administrators

• Assist faculty and staff in requesting and gaining approval to participate in a retirement transition option.
• Complete personnel actions, quota corrections and/or leave of absence transactions to support the approved retirement transition option and subsequent retirement.

Human Resources

• Administer this standard.
• Manage benefits associated with approved retirement transition arrangements.
• Maintain HRIS reporting elements related to retirement transition arrangements.

Supervisors and Unit Heads

• Confer with eligible employees interested in participating in a retirement transition option to determine whether an arrangement can be made.

Responsible Executive Approver

• Review requests for Advance Retirement Declarations and Voluntary Partial Retirements and approve or deny as appropriate for the business needs of the unit.

DEFINITIONS

All defined terms are capitalized throughout the document. Additional defined terms may be found in the central Policy Glossary.

Annual Base Pay
The amount budgeted for the faculty or staff member working their regular schedule. It does not include summer session, administrative supplements, awards, overloads/overtime or any additional forms of compensation beyond basic annual rate.

Official Retiree
A faculty or staff member who meets the following criteria:

• Age 55 or older and
• Employed by Purdue University in a benefits-eligible position for a total of 10 or more years over the course of the individual’s employment history. Approved leaves including sabbatical and faculty exchange leaves are counted as years of service. The required year of service following sabbatical must be completed.

Standard Retirement and Savings Plan
The 403b Base and 401a Mandatory defined contribution plans offered to benefits-eligible faculty and staff in management/administrative/professional positions. 

Responsible Executive Approver
The individual with the highest level budgetary responsibility in an organizational unit is considered the Responsible Executive Approver. Typically deans, directors, vice presidents, chancellors, and vice chancellors hold this role.

RELATED DOCUMENTS, FORMS AND TOOLS

This standard is issued in support of the following policies, as amended or superseded:

• Clinical/Professional Faculty Appointment and Promotion (VI.F.10)
• Research Faculty Appointment and Promotion (VI.F.8)
• Terms and Conditions of Administrative and Professional Staff Employment (VI.F.5)
• Terms and Conditions of Employment of Faculty Members (B-50)
• Terms and Conditions of Employment of Lecturers (VI.F.4)

Additional related information:

• Request form for Voluntary Partial Retirement
• Sample letter for approval of an Advance Retirement Declaration
• Retirement Transition Options website

HISTORY AND UPDATES

September 1, 2017: This standard supersedes the policy on Early Retirement Alternatives, Executive Memorandum C-32, dated March 27, 2000. Eligibility requirements were clarified, and the requirement for a combination of age and years of service equaling 70 was replaced with the current definition of an Official Retiree. Other provisions/language in the standard were updated to reflect current terminology.

February 28, 2000:  Early Retirement Alternatives, Executive Memorandum C-32, to comply with Internal Revenue Service code 403(b), the retirement contributions amounts in excess of IRS limits in effect for the 1999 tax year, would be made in the form of direct payments to the VEPR participant. These taxable payments are subject to federal, state, county, Social Security/Medicare and reported on the W-2.

August 1, 1994: Early Retirement Alternatives, Executive Memorandum C-32, update terms and broaden age and service requirements. Add “Advance Retirement Declaration” option.

December 1, 1983: Voluntary Early Partial Retirement Program, Addendum to B-59, initial five year period approved by BoT reviewed and program extended with periodic review.

December 19, 1978: Voluntary Early Partial Retirement, B-59, Board approved initial voluntary partial retirement program effective 1 July 1979.

APPENDIX

 There are no appendices to this standard.