New retirement plan introduced for non-exempt staff
Purdue’s non-exempt employees have been part of the Indiana Public Retirement System (INPRS) for many years, and Purdue’s association with Public Employees’ Retirement Fund (PERF) will continue for many more. But there is a new plan on the horizon for newly hired clerical, service, and operations/technical assistants.
The 2013 change to the Purdue plans was prompted by a number of goals:
- Minimize impact of escalating PERF pension costs and volatility in the future
- Design a plan reflecting best practices; engage staff in planning for retirement
- Leverage existing retirement plan infrastructure in place with Fidelity
- Offer a solid and competitive plan for future non-exempt staff
Employees currently in PERF will continue in that plan; non-exempt employees hired September 9, 2013 or after will be enrolled in the Non-Exempt Defined Contribution 403(b) plan. Newly hired police officers and firefighters will be enrolled in PERF.
As you manage your staff through transitions like transfers, promotions, or reclassifications, new questions may arise due to the different features associated with the three retirement programs now in place. Vesting, waiting periods and employee participation levels vary across plans.
There are a couple new resources to help. One is a high-level “snapshot” of the three plans, which captures key elements of each plan in a chart. Additionally, there is an Interactive Retirement Guide available to help with questions about eligibility linked to various employment actions and positions.
New retirement plan design
Like the Defined Contribution plan that faculty, administrative/professional and management staff participate in, actual account balance at retirement depends upon total contributions, as well as market and investment elections throughout the employee’s career.
Here is a very brief overview of the plan:
- Immediate participation in a Defined Contribution Plan 403(b) (no waiting period)
- University “base” 4% calculated on total earnings and are sent to Fidelity
- University matches employee contribution up to 4%
- Auto enroll newly hired non-exempt staff in the voluntary savings plan 403(b) at 5%
- Provides a portable benefit after 3 year cliff vesting
More details will be available shortly on the Benefits website.
Two provisions unique to the NE DC 403(b) plan
Since there are a couple new elements built into the non-exempt plan, here are some highlights to help familiarize you with them.
- Auto-enrollment in Voluntary Retirement Savings has been incorporated into the new hire process to help staff get a good start to retirement savings. This means that the employee will be “defaulted” into a 5% retirement savings unless they take action to change the participation level. The University worked with Fidelity to create process that includes these steps:
- Notification letter mailed to employee’s home after hire action is established in SAP
- There is a 30-day “consideration period” before the 5% voluntary deduction is setup in SAP
- Highlight auto enrollment in New Employee Orientation; Purdue’s local Fidelity team will encourage a follow-up appointment with each new staff member
- SAP will not retroactively match a voluntary reduction, so waiting to be defaulted may result in missing out on a University match. Employees who actively get into the Fidelity system to enroll in voluntary program are most likely to get University matching dollars earlier.
- If an employee wants to reduce their contribution, it’s possible to reduce the amounts coming out of future paychecks, but no refunds of past contributions to Fidelity retirement savings are possible.
- Vesting – 3 years of Purdue benefits-eligible service
Retirement programs use the word “vesting” to describe the period of time served before employee has the right to the accumulation set aside for his/her retirement. All funds an employee contributes to the voluntary retirement program are vested and may be retained by the employee if they move to another employer.
For more information, contact Benefits at 49-42222 or email@example.com.
- Susan Morgan Davis, benefit programs manager
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