Employees' Pension Plan

Last Updated 04/03
Applies to Staff
Related Policies:

Policy

The University provides a Pension Plan for eligible staff. This is a defined benefit plan which guarantees that benefits will be paid to plan participants when they reach retirement age. Prior to July 1, 1997 employees contributed to the plan. Since that time, there has been no employee contribution required and the University maintains sole responsibility for both funding the plan and bearing the investment risk.

Eligibility

Staff members age 21 and older who have completed one year of service are automatically enrolled in the Employees' Pension Plan. There are also a few administrators who were grandfathered into the plan.

Definitions

  •  Year of Service - a calendar year in which an employee works 1,000 or more hours
  •  Normal Retirement - age 65 with at least five years of service
  •  Early Retirement - either age 55 with 15 years of service or age 62 with 10 years of service, whichever occurs first. Early retirement requires a reduction in the amount of retirement income because the benefit will be paid over an extended period of time.
  •  Pay - W-2 earnings, which includes any amounts the employee pays for benefits under the ND Flexible Benefits plan and the 403(b) Supplemental Retirement Account (SRA).
  •  Vesting - employee's right, usually earned over time, to receive some retirement benefits regardless of whether the individual remains with the employer.
  • employees are 100% vested after 5 years (60 months) of service.

Benefit

The Employees' Pension Plan bases the retirement benefit on the employee's five-year "Final Average Pay." As that average pay increases, so does the benefit applied to all their years of service. The retirement benefit formula is:

1.45% X Final Average Pay X Years of Service = Retirement Benefit

The employee is vested after five years of qualifying service. There is no partial vesting. If for any reason the employee leaves the University before being vested, their personal contributions, if any, plus interest are returned. (Employee contributions were required prior to July 1, 1997.)

Payment Options

An employee can receive retirement benefits from the Employees' Pension Plan through a number of payment options: Single Life Annuity, Joint and Survivor Annuity, and a Life and Ten Years Certain Annuity. 

Life Annuity - pays benefits for employee's life only

Joint and Survivor Annuity - pays reduced benefits for the lifetime of the employee and upon the employee's death either 100%, 75%, or 50% of the reduced benefit for the lifetime of their beneficiary based on option selected at retirement.

Life and Ten Years (120 months) Certain Annuity - pays a reduced benefit for the lifetime of the employee, and if the employee dies before receiving 120 monthly payments, continues the reduced benefit to the beneficiary for the remainder of the 120 month guaranteed period.

Disability Retirement (Employees' Pension Plan)

An employee is eligible for a disability retirement under the Employee's Pension Plan if they have at least five years of service as of the date of their termination of employment with the University due to disability, and are totally and permanently disabled.

Death Benefits for Employees' Pension Plan

Under the Employee's Pension Plan, if an employee dies while actively employed, it is possible the employee's contributions to the plan may be refunded to the employee's designated beneficiary, or a survivor benefit may be paid. Certain factors such as the employee's marital status and years of vesting service will determine the payment of the death benefit.

Staff who made contributions to the plan before July 1, 1997 may change their beneficiary designation by contacting the Office of Human Resources. Those who began participation after July 1, 1997 and are married must designate their spouse as their beneficiary.

Plan Documents and Summary Plan Descriptions are available for review at the Office of Human Resources, 100 Grace Hall.

Procedures

Staff should contact the Office of Human Resources three months before their anticipated retirement to obtain information about retirement benefits, discuss retirement benefit options, and select the preferred payment method option.

Staff may contact the Office of Human Resources at any time to obtain a projected calculation of retirement benefits.