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OF RECORD

Source—Office of the Provost, 1995, as amended 2003

(Almanac May 9, 1995; Almanac November 25, 2003)

Source—Office of the Provost, 2004

The Faculty Early Retirement Income Allowance Program (FIAP) was first announced “OF RECORD” in the May 9, 1995 issue of Almanac. Changes in the income algorithms and in the service requirements were announced “OF RECORD” in the November 25, 2003 issue of Almanac. In addition to these changes, the practice that has evolved since 1995 has differed in some ways from the original statement of the program. Moreover, the original statement describes a transition mechanism that is now irrelevant. The statement that follows replaces all previous FIAP statements, and should be used in their stead.  However, this statement, like all previous statements, is subordinate to the Summary Plan Description and the official plan document for FIAP, which can be inspected at the Division of Human Resources.

Faculty Income Allowance Program

I.  Introduction

The Faculty Early Retirement Income Allowance Program (FIAP) provides income for two years to senior faculty members who agree to retire from active service at the University at a time when they meet the service and age eligibility requirements of the program. This program has been available for senior faculty members since June 30, 1996. This description applies to faculty members electing FIAP on or after January 1, 2004.

II.  Eligibility for Participation in the Program

Tenured members of the Standing Faculty and senior members (Associate Professor or Professor) of the Standing Faculty—Clinician-Educator are eligible for enrollment in the program provided they meet all of the conditions of either A or B:

A.  The sum of the faculty member’s age and number of years of service on the faculty at the University of Pennsylvania is *equal to or greater than 75 years, the faculty member's age is equal to or greater than 60 years but less than 69 years of age, and the faculty member has been on the faculty at least ten years.

B.  The faculty member’s years of service at the University of Pennsylvania equals ten years, the faculty member’s age is greater than 68 years, and the faculty member retires no later than the last day of the academic year (June 30) in which the faculty member’s service with the University reached ten years.1

Please note that only full-time, continuous service is considered for purposes of FIAP. Thus, if a faculty member leaves the University and then is rehired at a later date, only the faculty member’s most recent period of full-time service is taken into account in determining FIAP eligibility. Part-time service generally is not counted under FIAP, but service accrued while participating in the University’s phased retirement program is counted as full-time service for FIAP eligibility. The table below shows the combinations of ages and service that meet the eligibility requirements.

III.  Benefits of the Program

A. The Retirement Income Allowance

A faculty member who chooses to retire under the provisions of this program will receive an income allowance equal to 165% of either the average academic base salary for professors in his or her school or the faculty member’s own academic base salary, whichever is higher, during the year immediately preceding retirement.2 This retirement income allowance will be paid in 24 equal monthly installments beginning in the first month after retirement. In the event of a faculty member’s death during the 24 month period, the total of any residual payments will be made in a lump sum to his or her beneficiaries.  The retirement income allowance is considered a severance payment.  As such, it is currently subject to federal, state, and local income taxes and to taxes for Social Security and Medicare.

B. Continuation of University Benefits3

Basic Group Term Life Insurance:  Basic insurance equal to the faculty member’s benefits base salary in the year immediately before retirement begins (up to a maximum of $300,000) will be continued at University expense during the two years that the faculty member receives the retirement income allowance. The faculty member may reduce insurance coverage to $50,000 to avoid imputed income taxes.  Supplemental insurance may be purchased by the faculty member (up to a maximum total coverage of $1,000,000).  At the end of the two years the coverage provided by the University will be reduced to $2,000, the level afforded to all current retirees. Conversion privileges will be the same as for the active faculty who retire over the age of 65.

Dental insurance: Dental insurance will be continued during the two years that faculty members receive the retirement income allowance. No dental insurance will be provided by the University thereafter, but faculty members can continue coverage for 18 months under COBRA at the prevailing costs at that time or purchase alternative coverage from the Penn Faculty Practice Plan on an individual contract basis.

Tax-Deferred Retirement Plan: The University will not make contributions to the Tax-Deferred Retirement Plan based on FIAP income, nor can faculty members make contributions to the Tax Deferred Retirement Plan (TDR) or Supplemental Retirement Annuity (SRA) Plan based on FIAP income. Faculty members who are otherwise employed and receiving compensation from the University may be able to participate in the TDR or SRA Plans based on that income.

Medical insurance: Medical insurance will be made available to faculty members who are under 65 through the same coverage options that are available to active employees. When the retired faculty member reaches Medicare eligibility age, the faculty member can elect medical insurance under one of the coverage options that supplements Medicare (but the faculty member must enroll in Part B of Medicare).  For Faculty members age 65 or over, the faculty member must then enroll in Part B of Medicare and elect medical insurance under one of the coverage options that supplements Medicare. The cost of these programs is shared by the University and the retired faculty member.  The cost sharing amounts change periodically and will be communicated to you when you elect FIAP and/or at actual retirement.

Tuition: Tuition benefits as in effect at a faculty member’s retirement are continued for the faculty member and his dependents during the faculty member’s lifetime.

C. Social Security Benefits

A faculty member contemplating retirement should contact his or her local office of the Social Security Administration for a calculation of the Social Security benefit that he or she can expect to receive. These offices are listed in local telephone directories.  More information about Social Security benefits can be found on the Social Security website: www.ssa.gov/.

D. Other Benefits

The faculty members who retire under the terms of this program will be granted emeritus status and be given those privileges outlined for retired faculty in the Handbook for Faculty and Academic Administrators.

IV.  Enrollment in the Program

Faculty members who wish to retire from the University under the terms of this program should provide their school with notice one year prior to the date of their intended retirements to permit their school to make appropriate arrangements to meet the faculty members’ responsibilities. Normally such retirements will occur at the end of a fiscal year or at the end of an academic semester. Retirements under this program will be permitted at other times of the year only when approved by the department chair and dean.  Faculty members who have enrolled in the program will be asked to sign a formal retirement agreement, including a release of all claims against the University, prior to their intended retirement date. Faculty members may rescind their notice of retirement at any time prior to signing the formal agreement by notifying their department chair or dean. Faculty members who do rescind their retirements may enroll in the program in subsequent years provided that they still meet the requirements of the program.

Age at First Faculty Appointment*

    Age Window for Retirement Under FIAP

Age

Years of Service*


30

60-68

30

31

60-68

29

32

60-68

28

33

60-68

27

34

60-68

26

35

60-68

25

36

60-68

24

37

60-68

23

38

60-68

22

39

60-68

21

40

60-68

20

41

60-68

19

42

60-68

18

43

60-68

17

44

60-68

16

45

60-68

15

46

61-68

15

47

61-68

14

48

62-68

14

49

62-68

13

50

63-68

13

51

63-68

12

52

64-68

12

53

64-68

11

54

65-68

11

55

65-68

10

56

66-68

10

57

67-68

10

58

68

10

59

69

10

60

70

10

61

71

10

62

72

10

63

73

10

64

74

10

65

75

10

*  At the University of Pennsylvania as a member of the standing faculty.

1Faculty members who joined the University faculty before January 1, 2004 and whose age was 54 years or greater at the time they joined may retire either under the provisions of this program or the provisions of the original FIAP program, which permitted their retirement with the benefits of the program at the end of the academic year (June 30) in which their service at the University reached 15 years.

2For retirements effective July 1, this salary would be the average (or the faculty member’s own salary) for the fiscal year immediately past. For retirements effective January 1, the salary would be halfway between the salary for the current fiscal year and the salary for the past fiscal year.  For retirements at other dates, the salary would be determined from an appropriate combination of the salaries from the current fiscal year and the previous fiscal year. For these purposes, academic base salary only includes a faculty member’s base salary for academic services and does not include salary that a faculty member may receive for other reasons (including, without limitation, an administrative stipend or through the Clinical Practices of the University of Pennsylvania).

3While the University currently intends to keep these benefits in place indefinitely, the University reserves the right to change these non-cash benefits and/or the cost charged for such benefits at any time and for any reason.

*equal to or greater than 75 years, the faculty member’s age is equal to or greater than 60 years but less than 69 years of age, and the faculty member has been on the faculty at least ten years.”



 
  Almanac, Vol. 51, No. 33, May 24, 2005

ISSUE HIGHLIGHTS:

Tuesday,
May 24, 2005
Volume 51 Number 33
www.upenn.edu/almanac

 

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