UW Supplemental Retirement Plan
The UW Supplemental Retirement Plan (UWSRP) provides extra retirement income to some members of the UW Retirement Plan (UWRP). It was designed to ensure that UWRP participants receive at least a minimum amount of retirement income. So though you may be eligible for the UWSRP, you may not receive any income from it.
The UWSRP applies to you only if you were an active participant in the UWRP before March 1, 2011. If you joined the UWRP after that date, the UWSRP doesn’t apply to you.
You can find specific information about the benefit amount in the UWSRP Plan Document. The UWSRP is defined under Washington state law in RCW 28B.10 Sections 400 – 480.
Benefit calculation and amount
Whether or not you receive retirement income from the UWSRP depends on the benefit calculation, which the UW performs on your behalf.
The calculation compares two amounts: goal income and assumed income. At retirement, you receive the UWSRP benefit only if your goal income is greater than your assumed income.
Your UWSRP benefit amount is calculated only once, at the time you retire. It generally takes three to four months to complete. Because of the complexity of the calculation, the UW does not provide projected benefit estimates (download a sample UWSRP calculation).
The benefit calculation, described below compares two hypothetical incomes: “Goal Income” and “Assumed Income.”
Goal income calculation
Goal income is determined by the formula:
(service factor) x (average monthly compensation) x (eligible years of participation)
Service factor: This is either 2 percent or 1.5 percent. It’s 2 percent if you increased your UWRP contribution amount to 10 percent at age 50 (this increased contribution is optional). It’s 1.5 percent for any month you worked, over the age of 50, when your UWRP contribution rate was below 10 percent.
Note: The service factor reduction of 1.5 percent does not apply effective January 2009.
Average monthly compensation: This is calculated using UWRP-eligible salary for the highest 24 consecutive months of service in a UWRP-eligible position.
Eligible years of participation: This is the number of consecutive years you participated in the UWRP, up to a maximum of 25 years.
If you participated in both the UWRP and a state Department of Retirement Systems (DRS) plan (for example, PERS 2 or 3), your DRS years are eligible if you meet two conditions: (1) You transferred directly from the DRS plan to the UWRP, with no break in service, while working at UW, and (2) you didn’t withdraw your DRS contributions prior to retiring with the UWRP.
If you were on an approved leave of absence without pay that decreases your number of eligible years, you can recover up to two years of service if you did two things: (1) You paid both your contributions and the UW’s contributions once you returned from the leave, and (2) you returned to work at UW immediately following your leave then continued to work for at least two more years.
Assumed income calculation
To calculate your assumed income amount, the UW contracts with an independent actuary who is not a University employee.
The assumed income is a theoretical amount of monthly income from an annuity that your actual employee and employer retirement contributions would have generated if the contributions had been allocated equally between a fixed dollar and variable dollar annuity. The resulting lump-sum figure is then annuitized by the actuary to provide a lifetime income based on the employee’s age at the time of retirement.
If you participated in a state DRS plan, you must authorize Benefits to access the calculation for your single life income option. This DRS plan income decreases your assumed income calculation. If you don’t provide Benefits with authorization, your calculation will be based solely on your UWRP service time.
To be eligible for the UWSRP benefit calculation, you must retire with at least 10 years of continuous participation in the UWRP. Normal retirement age is 65; early retirement age is 62.
Should the calculation qualify you for the UWSRP benefit, you’ll receive the full benefit if you retire at age 65 or older. You can retire earlier, starting at age 62, but you’ll receive a benefit that’s reduced by 0.5 percent multiplied by each full calendar month between when you retire and when you reach age 65.
If you retire before age 62, you’re not eligible for the UWSRP benefit calculation unless you qualify to retire due to a disability.
Income options at retirement
If you qualify to receive UWSRP income, you have four options for receiving the income.
The first option provides you with the highest monthly payment, but payments stop when you die. The three survivor options provide you with a lower initial payment amount, but when you die, your beneficiary receives ongoing income.
Benefit income is taxable for all options.
Option 1 – Single Life Supplemental Payment: You receive the full payment as a lifetime income with payments stopping when you die. This provides you with the highest monthly payment during your lifetime.
Option 2 – One-Half Supplemental Payment to Survivor: You receive a reduced monthly payment, upon your death, the beneficiary/survivor will receive one-half of the amount you were receiving. If the beneficiary/survivor dies before you, you will continue to receive the original amount with no reduction.
Option 3 – Two-Thirds Supplemental Payment to Survivor: You receive a reduced monthly payment relative to options one or two. When either you or your beneficiary/survivor dies, the payment drops to two-thirds of the original benefit amount for the life of the survivor.
Option 4 – Full Supplemental Payment to Survivor: You receive a reduced monthly payment relative to options one, two, or three. When either you or your beneficiary/survivor dies, the payments continue unchanged for the life of the beneficiary/survivor.
Separation before retirement
If you separate from UW employment or otherwise lose eligibility and cease active participation in UWRP prior to achieving eligibility to retire, no UWSRP benefit will be calculated.
Death before retirement
If you’re eligible for a UWSRP benefit calculation but die prior to retirement, the UW will perform the benefit calculation as if you retired on the day you died. If you qualify to receive supplemental income and you designated a beneficiary, the benefit will be calculated for that person. Otherwise, the UW will assume a two-thirds benefit for your surviving spouse or partner.