Retirement Agreement for a Tenured Faculty Member
A retirement agreement is a formal agreement by a tenured faculty member to retire by a particular date. The agreement is signed by the faculty member and the Vice President for Finance and Administration after the faculty member has consulted with the Vice President for Academic Affairs and they are in accord about the terms of the agreement.
Under DePauw’s employee policies, certain retirement benefits accrue to employees who meet the “Rule of 80” (age of at least 55, currently continuous years of service at DePauw of at least 15, and sum of age and currently continuous years of service at DePauw of at least 80) as long as they were hired before January 1, 2013. There are no continuing health care benefits for employees hired on or after January 1, 2013.
For those employed at DePauw whose years of continuous service began before July 1, 1996, the eligibility requirements are: as stated above, or they must be at least age 62 and have at least 15 years of continuous service, without any threshold on the total. These benefits are:
Eligibility to participate in the DePauw Voluntary Employee Benefit Association (VEBA) which acts as a post retirement medical spending account and allows for use of the DePauw contributions and investment earnings designated for the employee for qualifying medical expenses.
Continuation after retirement for eligible dependents to obtain tuition remission benefits (free tuition at DePauw, and substantially reduced tuition for enrollment at a college participating in the GLCA tuition remission exchange program).
Certain eligibility for employee and eligible dependents to participate in healthcare insurance options.
Employees who retire before their 65th birthday
After retirement and until the month before turning 65, the retiree and eligible dependents will be able to purchase group health insurance through DePauw’s group health insurance plan at the pre-65 retiree rate. (In 2007-2008 this rate is similar to the active employee premium rate; check with Human Resources for the current rates.)
Beginning in the month in which the retiree turns 65, Medicare becomes the primary health insurance coverage and the retiree may purchase secondary health insurance coverage through DePauw's group health insurance plan at the post-65 retiree rate which includes a defined contribution amount by DePauw for the retiree and eligible dependents. This benefit will continue until June 30, 2030, plus one additional full year for each year or fraction thereof in which the employee retires before the 65th birthday. The retiree and/or eligible dependents will be responsible for the balance of all insurance premiums for secondary health insurance coverage. After that time, the retiree and/or eligible dependent will be responsible for all costs related to their health insurance coverage. However, the retiree and/or eligible dependents will be able to remain on the DePauw group plan at the group rates.
If an eligible dependent is older than the pre-65 retiree, the dependent remains on the pre-65 retiree plan until the first day of the month in which the retiree turns age 65. At that time, both the retiree and the dependent will transition to the post-65 plan.
Employees who retire after their 65th birthday
Medicare will become the primary health insurance coverage and the retiree and eligible dependents may purchase secondary health insurance coverage through DePauw's post retirement group health insurance plan at the post-65 retiree rates until June 30, 2030. After that time, the retiree and/or eligible dependents will be responsible for the balance of all insurance premiums for secondary health insurance coverage, however, the retiree and/or eligible dependents will be able to remain on the DePauw group plan at the group rates.
If an eligible dependent is under age 65 (and the retiree is over age 65), the dependent will remain on the pre-65 retiree plan until the first day of the month in which the dependent turns age 65. At that time they will join the retiree on the post-65 plan.
DePauw is willing to enter into a pre-retirement arrangement with a tenured faculty member if it benefits the University and if the faculty member finds it of benefit as well. Agreements are individualized since the needs and desires of each individual and University in particular cases may differ.
Pre-retirement arrangements may include the following as part of an agreement that sets a definite retirement date:
Eligibility to take instead of the last scheduled sabbatical leave a “pre-retirement leave” (full year at half pay or half year at full pay). A pre-retirement leave may be for a pre-retirement project, perhaps preparing for post-retirement activities) that would not normally be approved for a regular professional sabbatical. Note that the compensation for a pre-retirement leave differs from that of a regular professional sabbatical (full year at 2/3 pay or a four-course reduction from the normal teaching duties at full pay).
Removal of the normal obligation to return to teach for a full year following the final sabbatical or pre-retirement leave.
Up to one half year of reduced teaching without reduction in compensation which may be spread over the last three years prior to retirement.
The University may choose to make a contribution to a Grantor Trust as part of reaching a mutually acceptable agreement meeting the needs of the retiring employee and the University.
With the approval of the VPAA, other reductions of teaching for reduction of salary in the amount of one or two courses per year (for salary reductions of 12.3% of base salary per course; and 5% of base salary for each semester of no teaching for which no service would be expected). (These percentages have been determined by allocating the salary of a normal full-time job as follows: 80% for teaching spread on average over 6.5 courses per year including Winter Term; 10% for service; 10% for professional growth.) These arrangements can only be made for the last five years prior to retirement. Otherwise in each of these years prior to retirement except for a semester in which there are no teaching obligations the faculty member is expected to complete the normal obligations of service and professional growth.
A retired faculty member may be appointed to teach as a Senior Professor (part-time faculty status) under the usual arrangements for senior professors, which require both departmental need and mutual approval by the individual, the department chair and the Vice President for Academic Affairs. The pay will be no less than the current arrangement which is that a senior professor is paid per course at the rate of 10% of what would have been the base salary in the year of teaching had the person continued as a full-time faculty member. The selection and scheduling of the courses are to be completed in the usual way of consultation with and ultimate decision by the chair of the department. (Other details regarding the faculty status of Senior Professors are described in the Academic Handbook.)
A retired faculty member receives the benefits of emeriti professors as stated in the Academic Handbook, such as, on-campus Internet connection, email account, attendance privileges at faculty meetings including the right to vote in semesters in which the person is teaching, library use and borrowing privileges and access to and use of the recreational facilities.
After retirement a faculty member will be assigned an office according to the current University policies for emeriti faculty members. In the years of service as a Senior Professor (teaching) the retiree will be assigned a single office. After retirement the retiree may retain use of the current University-supplied computer or a designated replacement provided by the University. For at least three years after a retiree ceases teaching, if the retiree plans to remain professionally active and to work regularly on campus, and on request, the retiree will be assigned office space, which may be shared, including a desk, computer with Internet connection, and phone. Toward the end of the second year of this three-year period the VPAA will review the retiree’s recent use of the office and the level of professional activity and the retiree’s projected future needs to determine whether the arrangement should be renewed. The University will endeavor to minimize the number of office moves that are required of a retiree but cannot assure that the office assignment after retirement will be the same from year to year.
Other employee benefit changes resulting from retirement:
- Retired employees are no longer eligible for such employee benefits as employee contributions to a flexible spending benefit plan or long-term disability insurance; however, they may continue to make after-tax contributions to their Voluntary Employee Benefit Association Accounts (VEBA).
- After the retirement date, DePauw-funded life insurance coverage will be $3,500.
- Retired employees are no longer eligible to receive employer contributions into the tax deferred annuity 403(b) plan, or the VEBA account for active employees.
- A retired employee may not make personal contributions to a 403(b) account through the University’s programs except when the retiree is working part-time for the University.
Benefits for those who meet the Rule of 80
Employees who satisfy the rule of 80 (age at least 55, years of service in continuous benefit-eligible employment at least 15, and the total of age and years of service at least 80; both age and years of service are counted in full years completed) will be eligible for the following benefits:
- Tuition benefit: For qualified dependent children even after your retirement.
- Health benefits:
For an employee who retires before his or her 65th birthday, after retirement and until the month before the retiree turn 65, the retiree will be eligible to purchase health insurance through DePauw at the pre-65 retiree rate;
Beginning in the month in which the retiree turns 65 Medicare becomes the retiree’s primary health coverage and the retiree may purchase secondary medical coverage through DePauw at the post-65 retiree rates until June 30, 2030 plus one full year for each year or fraction thereof the retiree retires before his or her 65th birthday; and
The retiree is vested (able to use) the funds invested by DePauw in the EMERITI medical expense investment account (VEBA) for qualifying medical expenses.
NOTE: The retiree will be responsible for the balance of all medical costs including the full premium for secondary coverage after the expiration of eligibility for the post-65 retiree rates, though the retiree may choose to reserve the funds of the EMERITI medical expense investment account (VEBA) to draw upon tax free to address these expenses.
DePauw may make tax-free contributions to a tax-free investment account designated for the benefit of an eligible retiring tenured faculty member or an eligible retired faculty member who held appointment with tenure and that faculty member’s eligible dependents. The current eligibility for using Grantor Trust contributions is that the employee retired at an age of at least 55 and after having been continuously employed in a benefit-eligible position for at least 5 years. Such a Grantor Trust may be used only for the cost of premiums of the DePauw fully insured, post retirement health insurnace plan. Investment options are chosen by the retiree. Insurance premiums due from the retiree and/or eligible dependents are deducted from this fund until the funds have been exhausted. Thereafter, funds are deducted from other accounts. Unused credits (funds) in the Grantor Trust revert to DePauw upon the death of the retiree and eligible dependents.
DePauw makes monthly tax-free contributions to a VEBA (Voluntary Employee Benefit Association) investment account designated for the future benefit of each active, benefit-eligible employee. If the employee satisfies the rule of 80 before retiring, upon retirement the retiree and eligible dependents may use these funds and tax-free earnings for qualified medical expenses, as recognized by the IRS (QMEs) including most insurance premiums, deductibles, co-pays, etc. The active employee and subsequently, the retiree, may select any of the funds provided by the financial custodian as investment options. An employee, or a qualified retiree, may make after-tax contributions to the VEBA investment account for the benefit of the employee and eligible dependents to be used for QMEs (qualified medical expenses recognized by the IRS, including most insurance premiums, deductibles, co-pays, etc.) Insurance premiums due from the retiree are deducted from this fund after any funds in the Grantor Trust are exhausted and prior to deductions being made from other accounts (retiree-designated checking or savings accounts). Unused funds in a DePauw VEBA account (due to unqualified retirement or early departure of an employee from employment at DePauw, death of the retiree and eligible dependents or dependents meeting the age of majority) revert to DePauw.
Faculty members wishing clarifications of any aspect of this policy are welcome to consult the Vice President for Academic Affairs.