UNIVERSITY OF WISCONSIN PLATTEVILLE VOLUNTARY SEPARATION INCENTIVE PROGRAM Presented by: Human Resources John Lohmann, J.D., M.B.A. - Interim Director of Human Resources Chris Buswell, M.P.A. – Assistant Director of Human Resources

Effective dates of separation will be determined by the Chancellor in the best interest of the University. After consultation with the Senior Review Team. If you have a preferred date, please put it on your application. Chancellor Shields said he will work with people on the date.

ELIGIBILITY  55 years or older as of June 30  Start date at University of Wisconsin Platteville June 30th 2010 or earlier.  Vested in WRS, entitle to receive annuity  All classes of employees except executive management, student employees and rehired annuitants

 Not eligible for rehire for two years if your application is approved and you elect to participate.

Dates to Remember! Employees must submit completed applications for consideration in the Voluntary Separation Incentive program no later than May 20 th. Chancellor Shields’ final decisions will be communicated to applicants no later than June 6 th.

 Applying for the program does not obligate you!  It only requests that you be considered.

IT IS ALL VOLUNTARY  The process goes like this:  1. Submit Application  2. Senior Review Team will consider the applications and give recommendations to the Chancellor.  3. Chancellor selects those who will be approved.  4. At this point you are still not obligated.  5. Those approved will receive a separation agreement. This is a contract.  6. You will have 45 days to consider the deal.  7. If you sign and turn in the contract, you still have 7 days to change your mind. You do not have to participate in the plan. There is no penalty to decide not to!

 The deal only becomes final after the 7 day period expires after you sign the separation agreement.  So if you are not sure I encourage you to consider applying to keep your options open. You can decide not to take the deal.

 Your benefit amount is arrived at by taking 50% of your base pay, prorated for your FTE.  LTE’s are a little different.  TENURED faculty receive an additional incentive How to Determine Your Benefit Amount

 Example: An employee at full-time rate of $80,000 who has a.75% FTE would be eligible for $30,000  Full-time base rate of $80,000 x.75% FTE = $60,000 x 50% = $30,000  Benefit amount does not include:  Overloads  Winterim, Summer Service / Summer Session amounts  Overtime  Standby pay  Weekend, night, shift differentials, etc.

Adjusted Base salary = $50,000 Standby Pay + $ 200 Overtime Pay + $ 650 Total Compensation = $50,850 Example Classified Staff: Total Separation Incentive Amount = $25,000

Contract Base Salary (adjusted for FTE) = $60,000 Overload + $ 1,500 Summer Session + $ 3,200 Total Compensation = $64,700 Example Unclassified Staff: Total Separation Incentive Amount = $30,000

There are 2 methods for distribution: 1.Cash lump sum payout 2.WRS Actuarial Reduction Plan The benefit amount to the employee is based on the 50% of salary prorated by FTE determination in both choices.

NOTE  If you elect the ARP: If the cost of the ARP is less than 50% of your salary (FTE adjusted), you will be paid the difference in a lump sum.  If the cost of the ARP is more than 50% of your salary (FTE adjusted) UW-Platteville will “eat” the extra cost.

Employee may choose a cash payout of the Separation Incentive in a lump sum payment at the end of their employment. Option 1: Points to consider: Consider changing your withholding exemptions. Complete a new W-4 and return the form to HR Work with HR on the date to use for your form. You are advised to speak to your tax advisor.

Option 2: Actuarial Reduction Payment (ARP) If you have not reached “normal retirement age” you may wish to consider selecting this option. Normal Retirement Age: General (Most workers):65 or 57 with 30 years of service Protective (e.g. Police):54 or 53 with 25 years of service

ARP  Anyone retiring early (not at normal retirement age but vested in WRS and over age 50) receives a reduction in their monthly benefit amount. The reduction is determined based on the number of months the retiree is below normal retirement age.  Current reduction for non-protective occupation participants:  0.4% per month between ages 55 and 57  % per month between age 57 and the normal retirement age.  The ARP pays ETF/WRS to eliminate this reduction.

Option 2 : Actuarial Reduction Benefit (WRS) Example: Rowen is Age 55 Estimate # 1 (Based on retirement date of 8/1/2015) Current salary: $68,000 per year Estimate of Retirement Benefit:$ per month Estimate of Retirement Benefit After ARP:$ per month

OPTION 2: “ROWEN” CONTINUED  Separation incentive payment: $34,000  Cost of ARP:29,391  Balance to be paid to Rowen: 4,609 Remember that these are estimates.

IS IT WORTH IT? (TALK TO YOUR FINANCIAL ADVISOR!)  If Rowen lives for thirty more years to age 85:  Total cumulative value of the increase to her payment:  $ x 12 months x 30 years: $67,928  What if I invested that money instead?  Currently inflation is negative (slight deflation)  But let’s assume an average annual rate of inflation of 2%.  If you were to invest the cost of the ARP ($29,391) and you got 2% per year, in 30 years your investment would be $53,338.

Option 2: ARP Example: Ted is Age 62 Based on retirement date of 8/1/15 $18.71/hour ($38,913,000/year) Separation incentive payment: $19, Estimate of Retirement Benefit:$1, per month Estimate of Retirement Benefit After ARP:$1, per month

 Cost of ARP: $ 9,  Balance payable to Ted: $ 10,  If Ted lives to 75:  Total cumulative value of increase to his payment:  x 12 x 13 = $10,  If you took the money that the ARP would cost you and invest it for 13 years and got 2% interest your investment would be: $12,170.07

Option 3 (continued): Points to consider: The closer you are to your normal retirement age, the lower the Actuarial Reduction Benefit will be and the lower the Actuarial Reduction Benefit will cost.

What you should do next: 1.Review your WRS estimates and the “Separation Incentive Payments” summary in your packet 2.If you are interested in discussing the Voluntary Separation Incentive Program, please call HR at to make an appointment with our staff. 3.There are additional presentations this week. Feel free to come to another one. 4.Complete and return your application if you want to be considered. -Please note if you have a desired separation date.

You are encouraged to contact ETF, your tax advisor and/or attorney if you have questions!

Dates to Remember! Employees must submit completed applications for consideration in the Voluntary Separation Incentive program no later than May 20th, 2015 Chancellor’s final decisions will be communicated to applicants no later than June 6 th. Separation Agreements must be returned no later than July 22 nd.

Additional Resources: Live Presentation: Watch your for announcements. We will be requesting ETF to present on campus if possible. Webinars: ETF has many webinars scheduled. You can find them on their website under the Webinar tab. Group Appointments: ETF also has many group appointments for members who have a retirement packet from ETF. It is listed under the Face to Face tab.

Questions?

QUESTIONS FROM PREVIOUS SESSION  If I am at or past regular retirement age do I have to sign up for Medicare or do I just wait until my sick leave conversion runs out?  When each of you reach age 65, each must enroll for Medicare (both Parts A and B) to continue state or local health insurance. We will automatically mail you a reminder before your 65th birthday. Your premiums decrease when either of you become enrolled in Medicare (both Parts A and B).   