Retirement Options for Tenured Faculty

I. Introduction

Carnegie Mellon University has adopted this policy to facilitate the voluntary retirement of tenured faculty. While faculty are not constrained to retire at any particular age, arrangements for retirement are naturally a part of a faculty member's personal and professional planning. The policy provides information, resources and, in some cases, incentives to faculty members that should make financial and retirement planning easier. This policy is aimed as well at promoting the well-being of emeriti faculty and encouraging their continued participation in the Carnegie Mellon academic community.

A clear, uniform and fiscally responsible policy is to the overall advantage of both the faculty and the university. It helps faculty and their respective departments plan for retirement in an orderly way. While retaining the presence and contributions of those who want to be actively engaged, it potentially opens positions for new faculty.

The decision to retire is left to the discretion of the individual faculty members, and remains entirely voluntary. However, if a faculty member decides to retire, this policy provides several retirement options so as to make available possibilities that fit individual circumstances: a monetary incentive retirement option and a phased retirement option. Financial planning and retirement information will be made available by the university to all faculty and their spouses, see Section IV below.

Although this policy refers to employee benefits, such as health insurance and life insurance, it is intended that all employee benefits continue to be provided through, and governed by, the terms of the employee benefit plans maintained by Carnegie Mellon University, as those plans may be amended from time to time, including such amendments as may be necessary to implement this policy. This policy in itself does not constitute an employee benefit plan or an amendment to any such plan. The university retains the right to alter, eliminate or revise this policy at any time in the future.

ll. Monetary Incentive Retirement Option

A monetary incentive is available to tenured faculty members with ten or more years of service on the tenure track who make a decision to retire during the "window" period below within the requirements of this section, provided that at the end of the window period, the faculty member has completed ten or more years of service on the tenure track.

The "window period" begins on the July 1 coinciding with or immediately preceding the date on which the tenured faculty member reaches the age of 64 and ends on the June 30 after the faculty member reaches the age of 67. To express interest in the monetary incentive under this option of the policy, the faculty member must, during the window period, notify the provost in writing that the faculty member irrevocably elects to retire during the forthcoming year, but no later than the June 30 after the election is made. The written notice should specify the intended effective retirement date. In exchange for making the irrevocable election during this window period and signing and not revoking the required release (see Section VI below), the faculty member will receive an incentive payment equal to his or her base nine-month academic year salary for the academic year during which retirement occurs (hereinafter “base pay”). The incentive payment will be made within 30 days following the effective date of retirement, or the date upon which the required release becomes effective, whichever date is later.

(Extended Window for Faculty Who Meet the Service Requirement After Age 67)

Tenured faculty (current or future) who will not have satisfied the requirement for a minimum of ten years of service until after the age of 67 are nevertheless eligible to participate in the monetary incentive retirement option based on the following provision. At the time the 10-year requirement is satisfied, such faculty shall have a 180-day "window" in which to make a written election to retire. If a faculty member so elects to retire, that retirement must occur at the end of a semester (either June 30 or December 31) and not later than the conclusion of the first semester that ends on a date that is at least 180 days after the date of the faculty member's election. A faculty member who elects to retire under the terms of this paragraph must provide the provost with written notice of his or her election to retire at least 90 days before that retirement will take effect. In exchange for making the irrevocable election and signing and not revoking the required release (see Section VI below), the faculty member will receive an incentive payment equal to his or her base nine-month academic year salary for the academic year during which retirement occurs (hereinafter “base pay”). The incentive payment will be made within 30 days following the effective date of retirement, or the date upon which the required release becomes effective, whichever date is later.

lll. Phased Retirement Option

A tenured faculty member who has attained age 61 or older and completed ten or more years of service on the tenure track may voluntarily enter phased retirement under this part of the policy. A faculty member interested in considering entering phased retirement must notify the provost in writing at least one full semester prior to the beginning of phased retirement. If a faculty member chooses the option of phased retirement, that faculty member may not thereafter participate in the monetary option described in Section II above. Similarly, a faculty member who elects the monetary option described in Section II above may not participate in the Phased Retirement Option described in this Section III.

Upon entering phased retirement, the faculty member will be permitted to work half-time for up to four academic years and, in return, voluntarily agrees to retire by the end of that period. (The faculty member may retire after fewer than four academic years.) Half-time work can be achieved either by working full-time during one semester and not working the other semester, or by working half-time both semesters in any given academic year. The choice of how to achieve half-time work will be made by mutual agreement of the faculty member and the respective department or unit head, subject to approval of the dean. Compensation will correspond to the option chosen: 50% of academic year base pay paid over the pay periods of either the Fall or Spring semester when the faculty member chooses to work full-time (under the first option), or 50% of academic year base pay paid over the nine months of the academic year where the faculty member elects to work half-time over the full year (under the second option).

In either case, the faculty member will receive benefits in accordance with the Carnegie Mellon University Benefit Plans as they may be amended from time to time. The faculty member will be eligible throughout the academic year for health care, dental and vision insurance on the same terms and conditions as if working full time. The faculty member will be eligible throughout the academic year for the same life insurance to which the faculty member would be entitled if working full time throughout the academic year, with the understanding that, if the provision of such life insurance would cause the life insurance feature of the Carnegie Mellon University Benefit Plan to be discriminatory under the Internal Revenue Code, a separate plan may be established for such faculty members and the cost of such coverage might not be exempt from federal income tax. The amount of life insurance coverage will be based on the faculty member’s “annualized base salary” (the salary that he or she would have been receiving if he or she had not elected phased retirement), without regard to the reduced salary that the faculty member is receiving during the phased retirement period. Similarly, the faculty member will remain eligible for short-term disability coverage on the same terms and conditions as if working full time, and benefits will be calculated based on the faculty member’s “annualized base salary.” Disability benefits will only be payable during the academic year when the faculty member would otherwise have been receiving pay. Retirement benefits will be unaffected; that is, the Carnegie Mellon University Faculty and Staff Retirement Plan will be applied in accordance with its terms to the pattern of employment and compensation resulting from phased retirement, such that retirement benefits will be based on the reduced salary earned during the phased retirement period.

A faculty member who retires through this phased retirement plan will be freed, if desired, from department/unit, committee, administrative and other duties as far as possible during the period of phased retirement.

As a condition to entering phased retirement, the faculty member will be required to sign and not revoke a release (see Section VI below). The phased retirement period will not commence until the release becomes effective.

IV. Financial and Retirement Planning

The university will make available to faculty and their spouses programs and materials relevant to financial and retirement planning. The university will designate a person within Human Resources who will be a readily accessible contact for assistance to prospective retiring faculty members in getting information on health care (including Medicare), Social Security, pension elections and other matters related to retirement. Materials available should include a compendium of the provisions of the various benefit plans that pertain to retirement, booklets issued by various government agencies on topics such as Medicare and Social Security, and informational materials prepared by organizations such as the AARP.

In addition, programs and materials will be provided by outside organizations and professionals rather than by the university itself, but at no cost to the faculty members. These programs will include the opportunity to meet individually or in groups to discuss aspects of financial and retirement planning.

It is understood that assistance with financial planning under this policy will not encompass such arrangements or advice as would cast the university in the role of a fiduciary under the Employee Retirement Income Security Act of 1974, as amended, with respect to investment advice.

V. Notice of Intent to Retire and (Optional) Request for Emerit Status

All faculty seeking to retire under the terms of this policy should complete a Notice of Intent to Retire and, if they wish to request emerit status following retirement, should complete the Request for Emerit Status portion of the form. A request for emerit status must be supported by recommendations from the faculty member’s unit head, dean and the provost. In the case of faculty holding joint appointments, the unit head and dean of one of the relevant units must support and recommend the request for emerit status. The president has final authority on the conferral or denial of emerit status, and the status takes effect on retirement or approval by the president, whichever occurs later. Emeriti faculty are encouraged to continue playing an active role in their academic discipline, in their department and in the intellectual life of the university generally. Emeriti faculty will have the rights set forth in the university’s Policy on Emeriti Faculty, subject to the terms of the policy.

VI. Miscellaneous

This policy will be administered by the provost.

This policy to provide retirement options for tenured faculty is expected to continue indefinitely. However, the university reserves the right to amend or terminate this policy at any time.

Since the benefits of Sections II and III of this policy are over and above the benefits otherwise available to tenured faculty upon retirement, and further since retirement under the terms of Sections II or III of this policy is entirely voluntary on the part of the faculty member, in order to make a valid election under Sections II or III of this policy, the faculty member will be required to sign (and not revoke) an Agreement and Release, releasing certain legal claims against the university.