UNIVERSITY OF PITTSBURGH POLICY 07-13-01

CATEGORY:             PERSONNEL

SECTION:                 Separation

SUBJECT:                Retirement

EFFECTIVE DATE:   July 1, 1994 (Published December 22, 1995)

PAGE(S):                   3

I.    SCOPE

      The information provided in this policy is a general discussion of pension plans.

      Additional information on retirement may be obtained from the Benefits Section of the

      Office of Human Resources, or the Office of the Provost.

      The University of Pittsburgh Retirement Program, established under the Internal

      Revenue Code, provides an opportunity for eligible employees to elect from two pension

      plans: a Contributory Tax-Deferred Annuity Plan (TIAA-CREF/Vanguard) and a

      Noncontributory Defined Benefit Pension Plan.  After the initial enrollment election, a

      participant may terminate participation in one plan and become a participant in the

      other plan if s/he is eligible for that plan.  Due to plan restrictions, as governed by IRS

      regulations, a participant may change plans only once during his/her career at the

      University of Pittsburgh.

      Faculty, faculty librarians, and research associates, according to their appointments,

      and all regular full- and part-time staff are eligible to participate.  The noncontributory

      defined benefit pension plan is available to part-time and temporary employees who

      fulfill hours and years of service vesting requirements.  Employees covered by separate

      collective bargaining agreements participate in the plans specified in their respective

      agreements.

II.   POLICY

      Contributory Tax-Deferred Annuity Plan

      To participate in the Contributory Tax-Deferred Annuity Plan, an employee must enroll and

      make an election within the first month of eligibility.  Participation will be effective the first

      of the month following one full month of employment.  According to how an employee

      enrolls, TIAA-CREF and The Vanguard Group send directly to each participant quarterly

      reports and other statements, which identify both the University and employee contributions.

      The retirement benefit to be received under the Contributory Tax- Deferred Annuity Plan

      depends on a number of factors, such as: the amount of funds contributed, the investment

      return on the funds contributed over time, and the distribution option selected at the time

      of retirement.  There are annuity and other options of cashability and transferability.

      Payments normally begin upon official retirement.  The amount of monthly or other

      payments depends on:

      -     The premiums that the individual and the University have placed into the retirement

            account during the employment period, including the past and projected earnings from

            the accumulated premiums.

      -     The amount of the lump sum payment elected by the retiree in accordance with the

            terms of the annuity contract.

      -     The particular payout option elected by the individual faculty member for the retirement

            period.

      The Contributory Tax-Deferred Annuity Plan permits an eligible employee to elect to

      contribute a percentage of his or her salary base.  The University then "matches" the

      employee's contribution according to a schedule specified in the Plan, but only up to a

      maximum contribution specified in the Plan.  The percentage of the University match

      varies depending on when the employee became a participant.  For employees who

      became participants after March 1, 1995, University contributions are subject to a

      three-year vesting schedule.  Employees may also make additional contributions which

      are not matched by the University.  Such additional contributions may be deposited in the

      Basic Plan or in an account designated as a Supplemental Retirement Account.  The

      amount of employee contributions and the tax deferral amount elected cannot be changed

      for the balance of the plan year, and only once in each subsequent plan year (unless the

      change would be prohibited by the contribution limits under the Internal Revenue Code

      and regulations).  See EXHIBITS A and B.

      There is also an Accelerated Plan available for eligible vested employees upon reaching

       52, 53, 54, or 55 years of age; these individuals make the maximum employee contribution

       and the University makes an increased matching contribution, which may continue for up

       to 120 months, after which all University contributions cease.

      The combined vested contributions of the University and the employee may be allocated

      among: the Teacher's Insurance and Annuity Association (TIAA), available funds within the

      College Retirement Equities Fund (CREF), and/or specified funds within The Vanguard

      Group.  Employees may adjust their allocation of University and employee contributions

      to either TIAA-CREF or The Vanguard Group through the University at any time. 

      Employees should communicate their allocation of funds between TIAA and CREF, and

      their allocation among the specific fund(s) with CREF or within The Vanguard Group, and

      subsequent changes in these allocations, directly to the carriers.

      Employees may defer Federal Income Taxes on the amount of their employee

      contributions until the time of receipt of retirement benefits by requesting that the amount

      of their contribution be converted to a salary reduction, subject to certain tax-deferral and

      contribution limits imposed by the Internal Revenue Code and regulations.  An agreement

      for contributing through salary reduction may not be made for salary already earned.

      When a tax deferral option is exercised, contributions to the Contributory Tax-Deferred

      Annuity Plan are withheld before Federal Income Tax but after Social Security Tax is

      withheld, so tax-deferred contributions to the Contributory Tax-Deferred Annuity Plan will

      not affect Social Security benefits.  In addition, the basis for Long-Term Disability benefits

      continues to be the stated regular salary, as if the tax deferral option had not been elected.

      The Internal Revenue Code and regulations impose limits on the amount that may be

      contributed on a tax-deferred basis to the Contributory Tax-Deferred Annuity Plan on

      behalf of an employee, on the compensation that the Contributory Tax-Deferred Annuity

      Plan may take into account, and on the total contributions that may be made to the

      Contributory Tax-Deferred Annuity Plan on behalf of an employee.

      In most circumstances where tax deferral is limited, an employee will be able to make

      after-tax contributions in order to obtain a particular University matching contribution.  If

      the contribution rate selected by an employee would result in an annual, combined

      University/employee contribution that exceeds the total contribution permitted by the

      Internal Revenue Code and regulations, the amount of the contribution will be reduced to

      an amount that complies with the applicable limits, while maintaining the same ratio of the

      University/employee contributions.  Any employee affected by these limitations will be

      notified and will have the opportunity to meet with a Benefits Section Analyst who can

      assist in reviewing the employee's options.

      Booklets and other documents issued by TIAA-CREF and The Vanguard Group explain in

      detail the investment, annuity, or benefits provisions of the Contributory Tax-Deferred

      Annuity Plan.  Information pertaining to participation by eligible employees of the University

      is available from the Benefits Section of the Office of Human Resources.

      Noncontributory Defined Benefit Pension Plan

      If an employee is eligible for the Contributory Tax-Deferred Annuity Plan and does not

      make an election to contribute, he or she is covered under the terms of the Noncontributory

      Defined Benefit Pension Plan.  Further, part-time and temporary employees who are not

      eligible for the Contributory Tax-Deferred Annuity Plan are covered by the Noncontributory

      Defined Benefit Pension Plan if they fulfill the hours of service requirement specified in the

      plan.

      The Noncontributory Defined Benefit Pension Plan does not require employee

       contributions and specifies the benefit a participant will receive upon retirement.  The plan

       is totally funded by University contributions to a trust fund.  The retirement benefit to be

       received is based on salary and years of service while a participant in the plan.

      Participants in the Noncontributory Defined Benefit Pension Plan also have the opportunity

      to make pre-Federal tax contributions, designated as a Supplemental Retirement Account,

      to TIAA-CREF and/or The Vanguard Group.  Such contributions are not part of the

      Contributory Tax-Deferred Annuity Plan and will not be matched by the University, but are

      subject to the same tax regulations and administrative policies and procedures as are

      applicable to the Contributory Tax-Deferred Annuity Plan.

III.  EXHIBITS

      Exhibit A, Retirement Program

      Exhibit B, Retirement Program (Delayed Vesting)

IV.  REFERENCES

      Policy 02-08-01, Preparation for Retirement (Faculty)

      Policy 02-08-02, Benefits and Privileges of Retired Faculty