1114 Retirement Benefit Plans

Document purpose

(A) The University of Pennsylvania Basic Plan and the University of Pennsylvania Matching Plan provide eligible employees with retirement benefits and an opportunity to contribute to their retirement savings. (B) The Supplemental Retirement Annuity Plan of the University of Pennsylvania provides eligible employees with the opportunity to make pre-tax and/ or Roth contributions to their retirement savings account. (C) The Retirement Allowance Plan of the University of Pennsylvania provides eligible employees with a retirement benefit based on their average compensation and years of service with the University. (D) The Retiree Health Plan provides retirees (and their dependents) with certain medical benefits. (E) The University of Pennsylvania, Penn Police Association, Defined Benefit Pension Plan provides eligible police officers with a retirement benefit based on their average compensation and years of service with the University.

effective

December, 1986

revised

April, 2024

Reviewed

April, 2024

Responsible Office

Human Resources

Approval

Comptroller

Policies

The University has several plans that provide faculty and staff with a vehicle for retirement savings based on University contributions as well as contributions by the participants.

Accounting for the retirement plans and the retiree medical plan are in accordance with the pronouncements given by the Financial Accounting Standards Board (“FASB”) in accordance with Accounting Standards Codification (“ASC”) 715, Compensation-Retirement Benefits.

The Internal Revenue Service (IRS) specifies annual retirement limits that determine the maximum amounts both the individual and the University may contribute to the retirement plans in any calendar year. These limits are indexed by the IRS each year. This link directs you to the current IRS guidelines on contributions and compensation limits.

  • The Basic and Matching Plans are administered by the Division of Human Resources with the Vice President of Human Resources as the named Plan Administrator. The investment provider is Teachers Insurance and Annuity Association (TIAA). The plan is made up of the following components:
    • The Matching Plan – individuals can make pre-tax or Roth contributions of up to 5% of their standard pay per period, which the University matches dollar for
      • Individuals can begin participating in the Matching Plan immediately upon employment with the University, provided they are at least 21 years of age.
      • University contributions will begin on the second month of employment at the University (for rehires, University contributions begin as of the rehire date). University contributions vest after three Years of Service.
      • This plan is a 403(b) Defined Contribution Plan.
    • The Basic Plan – individuals receive a basic contribution from the University equal to a set percentage of their pay.
      • Basic Plan contribution begin on the second month of employment at the University (for rehires, Basic Plan contributions begin as of the rehire date).
      • This plan is a 401(a) Defined Contribution Plan
    • Effective January 1, 2010, university contributions vest after three Years of Service. The percentage is determined by the following age table:
        • Under Age 30           2.5% of Compensation
        • Age 30 to 39             4.0% of Compensation
        • Age 40 and above    5.0% of Compensation
  1. The Supplemental Retirement Annuity Plan (SRA) is administered by the Division of Human Resources with the Vice President of Human Resources as the named Plan Administrator. The investment provider is Teachers Insurance and Annuity Association (TIAA). The SRA is a voluntary tax-deferred retirement plan, which an individual may utilize to supplement their retirement savings.
    • Individuals can begin participating in the SRA plan immediately upon employment with the University, provided they are at least 21 years of age.
    • There are no matching contributions from the University under the SRA plan.
    • This plan is a 403(b) Defined Contribution Plan.
  2. The Retirement Allowance Plan (RAP) provides eligible employees with a retirement benefit based on their average compensation and years of service with the University. The plan is administered by the Division of Human Resources with the Vice President of Human Resources as the named Plan Administrator. The plan trustee is State Street Global Advisors.
    • This plan was initially set up for non-exempt individuals who were not eligible to participate in the Basic and Matching Plans
    • As of 7/1/2000, the Plan was frozen to all new full-time employees. Any part time employee who works more than 1,000 hours becomes a participant in the RAP, including any temporary employee who meets the hours requirement. This Plan was frozen to all new participants as of 7/1/2018.
    • The individual’s benefit is determined by: (1) their years of eligible service at the University and (2) their average compensation multiplied by 1.25%.
    • Eligible employees are not required or permitted to make contributions to the Plan.
    • The University makes periodic contributions to the Plan in accordance with actuarially and legally required contribution amounts.
    • Prior to 7/1/2000, full-time employees were eligible on the first day of the month coincident with or following the date they complete a year of service and attain age 21.
    • Before 7/1/2018, any part-time or temporary employees hired are eligible on the first day of the month coincident with or following the date they complete 1000 Hours of Service either during the 12 consecutive months following their hire date, or any subsequent Plan Year, and attain age 21.
    • As of 07/01/2019 the Plan is closed to new participants.
    • This plan is a Defined Benefit Pension Plan
  3. The University has a Retiree Medical Plan that provides retirees (and their dependents) medical and prescription drug benefits. In addition, retirees have a University paid $5,000 life insurance benefit. The plan is administered by the Division of Human Resources with the Vice President of Human Resources as named Plan Administrator. The plan trustee is State Street Bank and Trust Company.
    • Eligible individuals must meet the Rule of 75 to participate in the plan i.e., – an individual’s age plus service must total at least 75 with a minimum of age 55 and 15 years of full-time continuous service, or age 62 and 10 years of full-time continuous service. Employees active as of January 1,2006 (the effective date of the Rule of 75) are “grandfathered” under the old eligibility rules as stated previously (without the Rule of 75) until December 31, 2008.
  4. The Penn Police Association (PPA), Defined Benefit Pension Plan provides a retirement benefit to employees of the University who are police officers or other employees whose terms and conditions of employment are subject to the collective bargaining agreement with the Penn Police Association. The named Plan Administrator for this plan is the Vice President of the Division of Public Safety. The plan trustee is The Newport Trust Company.
    • The individual’s benefit is determined by; (1) their years of service and (2) their average compensation multiplied by 2.10%.
    • The University makes periodic contributions to the trust fund in accordance with actuarially and legally required contribution amounts.
    • Eligible employees are required to make contributions of 3% of their compensation to the trust fund.
    • Each employee employed by the University as a police officer or other job classification whose terms and conditions of employment are subject to a collective bargaining agreement with the Penn Police Association are eligible to participate and become an Active Participant on their employment commencement date.
    • This plan is a Defined Benefit Pension Plan

References

University of Pennsylvania Retiree Health Plan and Retirement Plan Summary Plan Descriptions (SPDs) – http://www.hr.upenn.edu/myhr/benefits/forms/spd

University of Pennsylvania Retiree Health Plan and Retirement Plan Summary Annual Reports (SARs) – http://www.hr.upenn.edu/myhr/benefits/notices/sar