A new retirement incentive plan that could impact around 6,000 University of Minnesota employees could save the University around $24 million in the first year.
The Retirement Incentive Offer, which was confirmed at the July Board of Regents meeting, offers employees a health care savings plan equal to two years of University medical and dental coverage. The offer will become available on Aug. 17 and end on Oct. 19, 2020, and University faculty and staff who take the offer are expected to retire and leave the University by Jan. 15, 2021.
The offer strikes a balance between benefiting the University and individual employees, said Phil Buhlmann, the 2020-21 Faculty Consultative Committee chair.
Despite the benefits, the University has estimated only between 6-8% of those eligible will accept the offer.
“As a faculty member in the position of nearing retirement, it's not a huge incentive. It probably would be of interest to somebody who's already kind of deciding to fully retire within the next year or two,” said Wayne Gladfelter, a professor in the Department of Chemistry.
Gladfelter, who has worked at the University since 1979, said he is not considering the offer and has recently taken the option of a gradual, or phased, retirement plan.
Since the offer incentivizes older faculty to leave, it can create openings for younger faculty to join the University. Newer department members are critical to maintaining and growing the programs they enter by contributing to grant applications and new methods of teaching, Gladfelter said.
Newer faculty members are also generally paid less for their work.
“You [could] have a person teaching a course that may be a senior faculty member that is nearing retirement getting perhaps 50% more than somebody that is starting out as a new faculty member,” Gladfelter said.
Around 40% of the faculty who take the offer are expected to be replaced by new hires. The University could save up to $40 million if none of the empty positions are replaced, nearly double the amount of money saved if there are re-hires.
Emily Becher, who works in the Family Development Extension at the University said many staff members were excited about the retirement offer and wanted to see it become available. Of the 6,500 Professional and Administrator employees at the University, around 1,700 are eligible for the offer.
One concern among P&A employees is the possibility of layoffs due to budget cuts. The retirement incentive plan is one way to avoid that since it saves money for the University, Becher said.
“I think everyone's prepared for [the retirement offer] if that means that we don't have to lay off some of our colleagues ... or cut into our health insurance plan during a time when people need it,” Becher said.
“I think people really are aware that this is a better [option] out of many very bad options.”