With Change in 'Age Factors'
60 Becomes Less Important at UC

For several years, a sage piece of retirement advice for University of California employees has been, "If you work until you're 59, work until you're 60." The value of staying on at UC until age 60 is about to change, however. In May, the UC Regents voted to alter the "age factors" under which UC Retirement Plan (UCRP) income is calculated. Where now the age-factor multiplier increases sharply between age 59 and 60, beginning next year, age factor increases will grade more smoothly between the ages of 55 and 60.

UCRP retirement income is calculated by multiplying an employee's years of UC "service credit" times the employee's highest average salary in three consecutive years times a multiplier -- the age-factor -- which increases with the age at which the employee retires. UCRP age factors were last changed in January 1992, at which time the Board of Regents shifted the age at which employees can attain the maximum age factor of 2.41 percent. Where previously employees had to be 63 to have this multiplier applied to their retirement calculation, after the Regents' action they only needed to reach age 60. In taking this action, however, the board compressed into a single year -- the change from age 59 to 60 -- the age-factor increases that previously accrued over the span of four years, from ages 59-63. As a result, UCRP age factors currently jump more between age 59 and 60 than they do in all the years from 55 to 59.

"It's an anomaly in the system that doesn't make sense," says Duncan Mellichamp, vice chair of the Senate's Academic Council and a member of the UC Retirement System Board, which proposed the recent change to the age-factors. "People who might make a decision to retire earlier can hardly afford to do it and, for employees and their families, the consequences of becoming seriously ill at 59 are considerable." The change in age factors, which becomes effective January 1, 1997, is set forth in the table below.