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The Daily Wildcat

The Daily Wildcat

 

    UA faculty

    Older faculty and retirees from the UA still on an old retirement system face a big decision about how they will get their

    pension, said officials from the Arizona State Retirement System at a forum last night.

    The older system, known as the defined-contribution system, was the norm until about 1975, said Keith Meredith, chairman of the board of trustees that oversees the ASRS.

    At that time, Meredith said, about 80 percent of all employees began signing up for the new program, called the defined-benefits pension plan.

    After a certain number of years, the old

    You don’t invest the same way for an 80-year-old as you do for a 21-year-old

    – Paul Matson,
    chief executive
    officer of ASR

    system was phased out, and new employees only had the option to sign up for the new plan, Meredith said. Older employees could remain in the old system.

    Both retirement programs have continued to exist side-by-side ever since, during which time the size of the old system has shrunk to 2,000 members, 90 of whom are still working, Meredith said.

    The new pension plan has about 440,000 members statewide, Matson said. Many of these are young workers who still contribute to the fund.

    Money from both funds has been invested in the same way, said Paul Matson, chief executive officer of the ASRS. Earnings from those investments, along with contributions from still-working members, are what provide benefits to UA retirees.

    However, Matson said the current model won’t hold up because of the way the new plan is structured.

    Matson said the older demographics – and thus higher liability – of the older system, coupled with the fact that it is closed to new members, should give pause to some UA retirees.

    “”You don’t invest the same way for an 80-year-old as you do for a 21-year-old,”” Matson said.

    That’s why the ASRS is now going to hold a series of meetings to ask members of the old system to give their input on the possibility of switching to the newer plan.

    “”The question is, would you rather have monthly benefits of $1,000 that is not guaranteed, or $950 that is guaranteed,”” Matson said.

    Matson said no one would be forced to switch retirement programs, but the ASRS needs input if it is going to go to the state Legislature to ask for permission to allow the changes.

    Harold P. Larson, an active professor in the planetary sciences department and member of the old system, said he doesn’t know what he thinks yet.

    While Larson said he feels more informed after last night’s meeting, he doesn’t think the ASRS will be able to go to the state

    Legislature for about a year because so many people need time to puzzle out the specifics of what the proposals mean.

    “”I’m still confused,”” Larson said.

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