Phased Retirement Guidelines
Officers of administration who are age 55 or over, have completed 10 years of service with the University, and are now contemplating retirement can now explore the possibility of a "phased retirement," in which they gradually decrease their workload instead of going immediately into full retirement. During this period, the officer retains his or her full-time status. Salary and any salary-dependent benefits are prorated to reflect the decreased work load. The officer can supplement any decrease in pay with pension or annuity money, which can be withdrawn without incurring a tax penalty. This period ends with the officer's full-retirement date, which is established at the outset in the officer's Phased Retirement Agreement.
Phased retirements can benefit departments as well as officers. It may give a department time to hire and train a replacement—or to restructure positions within the department—with the benefit of the retiring officer's continuing input. On the other hand, a department is under no obligation to grant a phased retirement that's unworkable from its standpoint.
For the arrangement to work, detailed decisions must be made in advance. Will the department still be able to meet its needs given the officer's reduced schedule? If the department plans to hire a part-time employee to supplement the work done by the retiring officer, can this be worked out both in terms of budget and work space? If a phased retirement proves to be unworkable from the department's standpoint, it is no longer an option. Accommodating the needs of both the officer and the department requires adequate planning.
A phased retirement goes into effect according to the terms of written Phased Retirement Agreement, agreed to by the Officer and the department and approved by the Vice President for Human Resources. The Agreement must address the following issues:
- The effective date of the agreement must be included.
- The decrease in workload and salary. Agreements typically specify work commitments of one-half, two-thirds, or three-fifths of a full-time schedule (or the equivalent of days per week), although other arrangements may be negotiated.
- The Officer's eligibility for future merit increases must be addressed in the agreement.
- The Officer's full retirement date, generally no more than two years after the start of the agreement must also be included.
- A confidentiality agreement.
- The Officer's continued participation in full-time fringe benefits. Note that the Officer's medical salary tier, group life and long-term disability will follow the Officer's pre-phased retirement income. The Officer's University Retirement Plan and Voluntary Retirement Savings Plan benefits will reflect the Officer's actual salary during the phased period.
- Vacation time is pro-rated to reflect the Officer's decreased work commitment.
- The date at which the Officer can begin drawing on his or her retirement plan benefits must be included in the agreement.
Departments should contact a Retirement Benefits Specialist by calling 212-851-7000.
Any final agreement must be approved by the department's dean, chair, or vice president, as well as by the Vice President for Human Resources.
Once approved, a copy of the agreement should be submitted to Human Resources with the PAF to implement changes in salary and benefits. The department should place the Officer on a partial leave of absence in accordance with the terms of the agreement.
As with full-time Officers, a standard retirement letter should be submitted to Human Resources three months before the Officer's full retirement date so that the appropriate benefits can be activated.
[Officer Name] [Date]
I write to confirm the terms of the retirement agreement that we have discussed.
We have agreed that you will work [number] of days per week. Your salary will be prorated to reflect the decreased work load. Your responsibilities during this period will be [responsibilities].
The following defines our understanding with respect to your pay and benefits over the next two year:
- Effective [effective date], and continuing until your retirement, you will be placed on a partial leave of absence at [number]-fifths your normal salary, which will be paid out in monthly installments over the full year on the normal payroll cycle.
- Until your retirement, you will continue to participate in the University's fringe benefit programs for officers, [and you will be eligible for merit increases]. Your vacation accrual will be prorated to reflect [number]-fifths time.
- The University will instruct TIAA-CREF to permit you to start to draw upon a portion of your pension, if you choose to do so on or after [effective date].
- You will retire on or before [retirement date].
- Following your retirement, you will have the privileges of a retired officer and will be entitled to participate in the University's fringe benefits plan then in effect.
- You agree that you will keep the nature and terms of this agreement completely confidential and that you will not hereafter disclose any information concerning this agreement or the discussions, communications, correspondence, or negotiations in connection therewith to anyone except your spouse, children, attorneys and/or accountants on condition that your require them to honor this covenant of confidentiality, or except as compelled by law.
If you find these terms satisfactory, please countersign both copies of this agreement and return one to me.
[Department Dean, Chair, or VP]
[Department Dean, Chair, or Vice President]
[Vice President of Human Resources]
[Vice President of Human Resources]
[Officer Name] Dated: [Date]