Thursday, December 18, 2014

U of M Puts Halt on Proposed Retirement Plan Change for Temp Workers

Posted By on Thu, Dec 18, 2014 at 1:43 PM

click to enlarge uofmlogo280k_hr.jpg

This Friday, six days before Christmas, a two-week layoff period will begin for temporary workers at the University of Memphis. They will have the opportunity to reapply for positions on or after January 5th.

In addition to the layoffs, temporary workers were informed earlier this month that the university would cease from contributing funding into their Social Security retirement plans. Rather, they would have workers enroll into a separate "temporary employee retirement plan." 

The proposed change in coverage received negative feedback and opposition from workers. And Wednesday afternoon, the university's Human Resources office sent out a message informing workers that the U of M will refrain from implementing the change until further notice.

If enacted, the alternate plan would mandate temporary workers to contribute 7.5 percent of pre-taxed wages into a private retirement fund. The university wouldn’t contribute anything into the fund.

However, the university and employees would continue to contribute the 1.45 percent Medicare tax into Social Security. 

Presently, temporary workers and the university equally contribute 6.2 percent of their earnings into Social Security.

"As is often the case with privatization schemes, the numbers don't add up," said a representative from the United Campus Workers. "Implementing this plan would be horrible for Social Security and Mid-south seniors, pillaging potentially a million dollars a year from the Social Security trust fund. And the plan would be a real raw deal for the workers. [The] 401(a) retirement accounts under-perform Social Security on returns and reduce the percentage of workers' wages invested in retirement from 12.4 percent (6.2 percent employee funded and the matching 6.2 percent university funded portions) to 7.5 percent — funded solely by the employee. The chart [Human Resources] gave to employees was misleading, leaving out the employer-funded portion of Social Security and unethically presenting this policy as beneficial to the employees."

According to the U of M, the retirement plan change would enable temporary workers to have full control of the investment options within their retirement plan. They would also be eligible to withdraw retirement funds upon separation from employment.

A PDF of a chart provided by the university's Human Resources office regarding the temporary employee retirement plan can be clicked and viewed below.

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