As Jerry Brown prepares to take office as Governor, some of the highest paid officers and professors at the University of California are threatening to sue the State to allow them to spike their defined benefit pensions by adding bonus and other forms of “compensation” to the formula beyond the Federal IRS cap for doing so set at $245,000 in 2007. The IRS granted the UC system a waiver from the cap for these employees, but the university did not implement it because of its cost promising to do so at some unspecified future.
Now the professors, deans and other affected UC administrators sensing correctly that this gravy train was at serious risk want UC to make good on ‘the promise to allow them to accrue retirement benefits based on their full salaries, rather than at a federal cap set at $245,000.’
They complain that the current pension system sets benefits for retired employees who made $500,000 per year the same benefits as those who made $245,000 or $184,000. But the University says honoring the alleged promise would cost the university about $5.5 million a year, plus $51 million as a one-time catch-up to make the change retroactive to 2007.
Thirty-six employees of the 200 affected sent a letter to the UC Regents demanding action to ‘follow through on this promise’ according to a story by Matt Krupnick in the Contra Costa Times. Meanwhile, the University is under growing pressure to overhaul its under-funded pension plan which now has a $20 billion liability because the 20 years of underfunding.
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When asked his comment on the letter sent to the regents Governor-elect Jerry Brown replied:
“These executives seem very out of touch at a time when the state is contemplating billions of dollars in reductions that will affect people who are far less advantaged.”