In May of 2021, the University of Redlands revealed a new retirement plan disguised as a way to give faculty more money in the long run. In a town hall meeting set to establish what the university would be doing with regards to the pandemic, Kevin Dyerly, the Vice President of Finance, announced this new retirement plan. He stated that the new plan will “allow for a larger university contribution if and as the employee makes some contribution of their own.”
The major issue with this statement made by Dyerly is the word “if,” as it implies that some faculty will not be able to afford to contribute to their retirement funds, and thus, the university will not match their contribution. This may not seem like an issue until you start to break down the numbers.
In speaking with Johnston professor Julie Townsend about this new retirement plan, she provided a document she sent to the College of Arts and Sciences faculty in October 2021 in which she detailed the potential harm low-income faculty would face with this new retirement plan. In the now-public document, Townsend outlines these numbers in detail and what exactly they mean for faculty. The breakdown of the new retirement plans is as follows:
To clarify some of this information, a nonexempt employee is defined by the Cornell Law institute as an employee who makes an hourly wage and has the ability to make overtime. On the other hand, an exempt employee receives a set salary and is not eligible for overtime pay. This means that both nonexempt and exempt employees can make as much as 15 percent in retirement if they can afford to put up 5 percent of their salary to their university retirement plan in year one.
What the new retirement plan fails to consider is whether the faculty member in question can afford to allocate 5 percent of their wage towards retirement, exempt or non-exempt. If the faculty member comes from a low-income household, is a single parent, or for any other reason faces financial troubles, they are left with only 5 percent in their retirement fund, as opposed to 15 percent
Employees with more household wealth receive a substantially larger amount of retirement benefits–a 10% difference in year one compared to their lower-income counterparts–assuming they choose to contribute. This plan, in its current setup, is designed to benefit higher-income employees, as they can afford to contribute part of their income in order to receive the benefit of the university matching them.
This raises the question: What is the university’s intention behind this plan? One could argue this is a setup to save them money in the long run as they will not have to contribute anything if their faculty cannot afford to contribute their own income into their retirement.
In a later meeting in November, Townsend said that the university made this plan because employees were not contributing to their retirement at a sufficient rate. Therefore, this model was developed to incentivize faculty contributions to their own retirement plans.
Townsend discussed other concerns regarding this plan, citing other expenses the university has been prioritizing over faculty retirement funds: “There is a fundamental concern that we are not, broadly, prioritizing the right things, and unless we can really see detailed budget priorities, we aren’t convinced that the university’s budget priorities are right. For example, the inauguration, faculty dinner, hiring a search firm for the dean, hiring a firm for strategic planning, the President’s house, travel costs, a new assistant provost position, etc. We have not seen the limits on others’ expenditures. Are these things more important than retirement contributions (or other priorities)?”
Determining what is more important to spend university money on is difficult, but for many faculty who have lower household wealth, this plan could be detrimental for their future. If a faculty member cannot afford to contribute to their retirement, they should not be punished for it. This proposed model depends far too much on the ability of faculty to be able to contribute to their own retirement fund.
This new plan is said to begin this month, January of 2022.
Photo provided by the University of Redlands Image Archive.
