Trustees approve new life insurance premiums and down payment for defined contribution plan liability

WEST LAFAYETTE, Ind. — Purdue's Board of Trustees on Friday (June 17) approved a five-year renewal proposal for employee life insurance through Securian Financial Group (formerly Minnesota Life) and a down payment toward the defined contribution plan for non-exempt employees currently part of the Public Employees’ Retirement Fund (PERF).

Purdue offers term life insurance at a benefit level equal to 1.5 times employees’ salary and basic accidental death and dismemberment (AD&D) insurance in the amount of $15,000 to all benefits-eligible employees.

In addition, Securian offers voluntary life insurance, including spouse and child life insurance, and additional AD&D options, which are available for purchase by Purdue employees. Finally, Securian offers the opportunity for Purdue retirees to maintain their life insurance policies, at the retiree’s expense.

While premium rates associated with Securian’s life insurance offerings have not increased since fiscal year 2009, there will be an overall increase of 8.8 percent across the three categories (benefits-eligible employees, voluntary coverage and retirees) under the renewal.

The premium increase was driven primarily by an aging workforce and other health factors, said Bill Sullivan, Purdue treasurer and chief financial officer.

Sullivan said the five-year plan would allow Purdue to prevent premiums from additional increases over the term and allow for a greater opportunity to fully realize health improvement initiatives through the university’s on-campus clinic and health-care plans.

The board also approved a $2.2 million earnest payment as Purdue officials work with the Indiana Public Retirement System (INPRS) to calculate the university’s total pension liability under new Indiana legislation.

In the 2015 session, the Indiana General Assembly passed legislation that imposed new funding obligations for employers who had previously made the decision to freeze their Public Employee Retirement Fund (PERF) participation. The legislation requires employers to make a supplemental contribution to fund an amount necessary to pay their share of the unfunded pension liability.

In the 2016 legislative session, the Indiana General Assembly passed additional legislation that imposed a deadline of June 30, 2016, for payment of the liability.

The university’s payment is approximately 10 percent of Purdue's estimated total supplemental contribution. In exchange for this payment, INPRS has agreed that the final calculated payment will be due on Aug. 31, 2016.

In May 2013, trustees passed a resolution authorizing that all non-exempt employees hired on or after September 9, 2013, would enroll in a defined contribution plan instead of the PERF-administered plan. That decision was based on an analysis that the university’s contribution to the non-exempt retirement plan would be reduced from PERF’s 14.2 percent to 8 percent while still delivering a comparable benefit to Purdue employees. 

Source: Bill Sullivan, 765-494-9705, sully1976@purdue.edu