Repository: UIHistories Project: Board of Trustees Minutes - 1964 [PAGE 904]

EXTRACTED TEXT FROM PAGE:

1963]

U N I V E R S I T Y OF I L L I N O I S

859

SUPPLEMENTAL ANNUITIES FOR RETIRED UNIVERSITY PERSONNEL (15) The University Retirement System of Illinois was created by an Act of the General Assembly of Illinois approved June 21, 1941, and began operating on September 1, 1941. Since then, it has provided the retirement, disability, death, and survivor benefits for all members of the faculty and other employees of the six state-supported institutions of higher education, the state scientific surveys, and certain auxiliary state agencies such as the System itself. All benefits accruing to the personnel covered by the System are defined by state law; and any changes in benefits are pursuant to legislative action. Prior to the establishment of the University Retirement System, the Board of Trustees of the University of Illinois established a program and policies, which became operative September 1, 1925, providing for payment of retirement and death benefits from University funds. All personnel who retired prior to September 1, 1941, have received their benefits from this University of Illinois System, and those still living continue to receive their retirement benefits from University funds. Retirement benefits, then as now, were based upon salaries paid during the last several years of active service and the period of such service. It is apparent that the retirement annuities determined by salaries which were being paid in 1941 are wholly inadequate when measured by present costs of living. The same is true, although perhaps in most cases to a somewhat lesser extent, of annuities being paid to those who retired after September 1, 1941, under the University Retirement System of Illinois prior to the increases in benefits established by the amendments to the Act made by the General Assembly in 1959. While the University may supplement the annuities of those who retired under the University of Illinois System established in 1925, and which is under the sole jurisdiction of the Board of Trustees of the University of Illinois, action to improve the benefits of those who retired under the University Retirement System of Illinois requires specific authorization of the General Assembly. The Seventy-second General Assembly of Illinois established a precedent for supplemental annuities of employees after retirement by an Act providing for additional annuities for teachers in the State Teachers and the Chicago Teachers Retirement Systems, the constitutionality of which law has been upheld by the Supreme Court of Illinois. Under that law, retired teachers are permitted to purchase additional annuities to bring their total retirement benefits to a maximum of $50 a year for each year of service but in no event in excess of $2,250 per year. For such supplemental benefits the individual is required to make a payment of $5 for each year of credited service at the time of retirement into a separate fund to which fund the state also contributes. The supplemental benefits are payable only out of that fund. Since University of Illinois personnel who retired prior to September 1, 1941, are under a retirement system which was established and has been operated solely by the University, the Board of Trustees may act to supplement the benefits of such retired personnel without state legislation; and the precedent cited above justifies such action as a matter of policy. Seven members of the University faculty and other employees who retired prior to September 1, 1941, and who are still living, are eligible to purchase supplemental annuities if the formula used for those who retired under the State and Chicago Teachers Systems is applied. The totals of the annuities of these seven retired staff members would thus be supplemented by $4,510 per year. Initial payments required of them would total $1,021.26, resulting in a net cost of $3,48874 during the first year. Based on the life expectancy of these individuals, the total program would cost approximately $17,116 to be paid over a period of years. The Vice-President and Comptroller recommends that the Board approve the establishment of such a program of supplementary retirement benefits on a basis comparable to that provided by the Seventy-second General Assembly for retired personnel under the State Teachers and the Chicago Teachers Retirement Systems, and authorize the payment into such separate fund such amounts as may be necessary to pay the net cost of said supplemental annuities from funds received for reimbursement for the indirect costs of operation of research and service contracts. This proposal has been considered by the Committee on General Policy which recommends approval. I concur.