Retirement incentives (sometimes referred to as buy-outs) have become accepted practice among institutions of higher education since the end of mandatory retirement. Incentives are designed to encourage tenured faculty members to retire prior to age seventy. More than 38 percent of responding institutions reported that since 2000 they had offered one or more institution-wide financial-incentive programs for retirement. Only a small number of institutions indicated that their most recent plans were offered before 1994 (n=13), in 1994 (n=8), or between 1994 and 2000 (n=13). Fifty-two percent of the institutions that reported having a previous plan indicated that it was introduced after 2000. The 9 percent of institutions that reported having two previous plans indicated that their most recent plans had also been initiated after 2000. Figure 7 (.pdf) shows the percentage of institutions reporting that a legislature, a collective bargaining unit, or a governing board or administration originated the incentive plans. Clearly, governing boards or administrations originated the highest percentage of the most recent plans at surveyed institutions.
At most of the responding institutions, faculty were automatically eligible to participate in whatever retirement-incentive program was on offer once they met a plan’s age or years of service requirement. However, most plans were available only for a specified time. Among the most recent retirement-incentive plans institutions provided, ages fifty (25 percent), fifty-five (34 percent), and sixty (25 percent) were the most frequently reported minimum ages to participate. Ten (33 percent) and fifteen (25 percent) were the most frequently reported minimum years of service required to participate. Nine percent of institutions reported that faculty members could participate in the most recent plan if they had five years of service. Seven percent of institutions reported permitting faculty members to participate only after they had accrued twenty years of service. Characteristics of previous plans were generally similar.
Most of the institutions that reported providing one-time additional cash payments indicated that the payment totaled less than nine months’ salary. Figure 8 suggests, however, that the amount of cash payments may be increasing. Any such increase would give faculty an incentive to wait to see if a more generous buy-out might be offered in the future. Institutions may be increasing the amount of the cash payments to make buy-outs more effective.
Among institutions offering credit for additional years of service as part of an incentive plan, three years of credit was the most commonly offered benefit. However, fewer institutions offered three years of service credit in their most recent plans compared with their previous plans, and the percentage of institutions providing less than three years additional service in their most recent plans increased. The data also suggest that at least a few institutions may be experimenting with offering more than three years additional service credit (see figure 9). (.pdf)
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(2/15/07)