The Defined Benefit (DB) Plan (pension plan) is the core retirement plan for:  

  • Active, benefit-eligible employees hired prior to 10/01/12. 

  • Returning benefit-eligible employees hired on or after 10/01/12 but before 10/01/19 who were vested in the DB Plan upon termination and did not take a retirement plan distribution.  

Summary of the DB Plan

Multiplier Formula 

2.2% of pay, average of 5 highest consecutive years of salary, service credits 

Vesting 

5 years of creditable service 

The DB Plan is structured as a typical . You are automatically enrolled in this benefit as an eligible employee. You do not need to actively enroll. Your benefit is determined by your age at retirement and your:  

  • Creditable service 

  • Average of highest five consecutive years of salary; including summer appointment salary 

  • A 2.2% multiplier. 

You earn service credits by working as a benefit-eligible employee. To estimate your potential benefit, visit the Milliman pension benefits portal.  

Vesting 

In order to receive a benefit from the DB Plan, you must complete five years of creditable service to vest and become a qualified member.  

Employee Contributions 

Employees contribute 1% of their first $50,000 of eligible salary. Once the employee reaches a threshold of $50,000 in year-to-date earnings, the contribution increases to 2% of eligible salary. Contributions reset to 1% each January 1.  

Retirement 

You are eligible to retire as early as at least age 55 with at least 10 years of service credit, or at least age 60 with at least five years of service credit. If retiring early, a reduction in benefit may apply and one year of service credit must be achieved after age 54.  

Accruals 

If you are in a position which accrues paid time pursuant to HR-404 and HR-421 your unused accruals as of your retirement date are handled as follows: 

  • Sick accruals: When you retire, you will receive day-for-day service credit for any unused banked sick leave in your final retirement benefit calculation.  

  • PTO accruals: Up to a maximum of 80 hours of unused PTO accruals will be paid to you as a lump sum payment on the next available pay period, after your last day worked. Service and salary for the unused PTO time that is paid out in a lump sum (up to the maximum of 80 hours) is creditable when calculating the retirement benefit. 

Rehire at the University after Retirement 

If a retiree is at least 59 ½, there are no restrictions or waiting periods for rehire at the University. Retirees under age 59 ½ must have a bona fide retirement from the University, meaning you cannot be rehired pursuant to a discussion, understanding or agreement (written or oral) that occurred prior to termination from employment or commencement of the retirement benefit.  

All employees who are hired or rehired on or after 10/01/19 are automatically enrolled in the Defined Contribution (DC) Plan, which does not have a pension component. Retirees who are rehired at the University are not eligible to resume participation in the same plan for which they are receiving a monthly benefit. Therefore, the benefit they are receiving will not and cannot be stopped as it is a lifetime benefit. 

Survivor Benefit 

If a vested member dies while actively employed, the plan provides a minimum benefit that is usually no less than two times your regular annual salary as of the date of your death. 

Beneficiary Designation 

Naming a beneficiary ensures your benefit is handled according to your wishes. You should review your beneficiary designation periodically and update it as needed, especially after important life events such as marriage, divorce, or the birth or adoption of a child.  

To designate a beneficiary, complete a beneficiary form and return to the UM System Office of Human Resources Service Center.

Employee Resources 

How you plan for retirement is personal. This information is intended to help answer commonly asked questions and is not meant to fully address all provisions of the plan. Additional resources are available: