## Step Plus Retirement Scenarios

**Summary:**

The Step Plus system has two offsetting tendencies when calculating retirement benefits: (i) for those who receive a greater-than-normal merit action (e.g. 1.5 steps), the quarter-step temporary off-scale increases a person's salary in those years and therefore increases the peak salary for retirement calculations; (ii) that temporary off-scale can only be given after a greater-than-normal action at a regularly timed merit review, and not earlier. Point (i) provides a benefit to those close to retirement by increasing the peak salary. But point (ii) is a potential drawback to those who are close to retirement, because it requires them to be employed long enough to receive the greater-than-normal merit and the subsequent temporary off-scale for the normative years at step. Depending on the balance between these two factors, the salary earned for retirement calculations can be either higher or lower under the current system. The examples below illustrate these principles in two scenarios. In both cases, a person who remains employed long enough to receive most years of the temporary off-scale will come out ahead.

Permanent off-scale salary and summer compensation are not considered in the scenarios below. The UCRP base shown here is the highest average calculated over a period of 36 consecutive months. The temporary off-scale supplement, like other off-scale salary, is eligible compensation for UCRP. For these examples, we are using the 07/01/2014 salary scale (professor, academic year), shown in the table available on page 4 of the Step Plus proposal available at:

**Scenario 1.**

Consider the case of a Professor Step 7 (P7), who will be in his second year at that step in 2014-15, and who intends to come up for a 1-year acceleration to Professor Step 8 (P8) under the current system. This person also considers retiring sometime in the next several years. We will work out the salary and retirement compensation in the current system (see a) and in the proposed Step Plus system (see b) for this person under a few reasonable assumptions. We will calculate the base on which UCRP benefits would be calculated if the person decided to retire at the end of academic year 2015-16, 2016-17, 2017-18, 2018-19, and 2019-20, under the assumption that no further advancement occurs before retirement. Since the Step Plus differs only from the current system if acceleration occurs we will focus on the case where a 1-year acceleration is approved in case a and a 1.5 acceleration in step is approved in case b.

a. Current system

Annual salary in 2013-14 and 2014-15: $130,900

Annual salary in 2015-16, after advancing to P8, and subsequent fiscal years: $141,700

UCRP base at retirement on June 30, 2016: $134,500 ((130,900+130,900+141,700)/3)

UCRP base at retirement on June 30, 2017: $138,100 ((130,900+141,700+141,700)/3)

UCRP base at retirement on June 30, 2018: $141,700

UCRP base at retirement on June 30, 2019: $141,700

UCRP base at retirement on June 30, 2020: $141,700

b. Step Plus system

Annual salary in 2013-14, 2014-15, and 2015-16 (normative period at step is 3 years): $130,900.

The acceleration in step of 1.5 steps to Professor 8.5 is approved and takes effect in 2016-17.

The 2016-17, 2017-18, and 2018-19 salary is therefore the step 8.5 salary plus a supplement in each of these three years of $2700 (this is 1/4 of the difference between the step 8 and step 7 salaries in the table: 141,700 - 130,900 = 11,800, 11,800/4 = 2700).

The annual salary for this person in 2016-17, 2017-18, and 2018-19 is therefore $147,700 + $2700 = $150400.

The salary for 2019-20 and subsequent years (assuming no further advancement) reverts to the base amount (no more supplement): $147,700.

UCRP base at retirement on June 30, 2016: $130,900

UCRP base at retirement on June 30, 2017: $137,400 ((130,900+130,900+150,400)/3)

UCRP base at retirement on June 30, 2018: $143,900 ((130,900+150,400+150,400)/3)

UCRP base at retirement on June 30, 2019: $150,400

UCRP base at retirement on June 30, 2020: $150,400

**Scenario 2.**

Consider the case of a Professor Step 9, who will be in her third year at that step in 2014-15, and who intends to come up for a 1-year acceleration to Professor Above Scale (AS1) under the current system. This person also considers retiring sometime in the next several years. We will work out the salary and retirement base in the current system (see a) and in the proposed Step Plus system (see b) for this person under some reasonable assumptions. We will calculate the base on which UCRP benefits would be calculated if the person decided to retire at the end of academic year 2015-16, 2016-17, 2017-18, 2018-19, and 2019-20, under the assumption that no further advancement occurs before retirement. Since the Step Plus differs only from the current system if acceleration occurs, we focus on the case where a 1-year acceleration is approved under the current system and a 1.5 acceleration in step is approved under Step Plus.

a. Current system

The annual salary in 2013-14 and 2014-15 is $153,700.

In 2015-16, after advancing to AS1, and subsequent fiscal years it is $166,546.

UCRP base at retirement on June 30, 2016: $157,982 ((153,700+153,700+166,546)/3)

UCRP base at retirement on June 30, 2017: $162,264 ((153,700+166,546+166,546)/3)

UCRP base at retirement on June 30, 2018: $166,546

UCRP base at retirement on June 30, 2019: $166,546

UCRP base at retirement on June 30, 2020: $166,546

b. Step Plus system

The annual salary in 2013-14, 2014-15, and 2015-16 is $153,700 (normative period at step is 4 years).

The acceleration in step of 1.5 steps is approved and takes effect in 2016-17.

We make the assumption that this person has no off-scale salary at that time. The most common scenario would then use the following Above Scale salaries:

AS 1: $166,546

AS 1.5: $170,710

AS 2.0: $174,873

The 2016-17, 2017-18, 2018-19, and 2019-20 salary is then the Above Scale 1.5 salary plus a supplement in each of these four years of $3211 (this is 1/4 of the difference between the AS1 and Professor Step 9 salaries in the table: 166,546 - 153,700 = 12,846, 12,846/4 = 3211, after rounding). The annual salary for this person in 2016-17, 2017-18, 2018-19, and 2019-20 is therefore $170,710 + $3211 = $173,921.

The salary for 2020-21 and subsequent years (assuming no further advancement occurs) reverts to the base amount (no more supplement): $170,710. The UCRP base continues to equal the highest average over a consecutive 36 month period.

UCRP base at retirement on June 30, 2016: $153,700

UCRP base at retirement on June 30, 2017: $160,440 ((153,700+153,700+173,921)/3)

UCRP base at retirement on June 30, 2018: $167,181 ((153,700+173,921+173,921)/3)

UCRP base at retirement on June 30, 2019: $173,921

UCRP base at retirement on June 30, 2020: $173,921