An advisory committee for the Columbia-based University of Missouri System proposed that the school close its $3.7 billion hybrid plan to new employees starting in October 2019 and introduce a defined contribution plan for future hires, a spokesman confirmed.
The university currently has a DB plan in which 10,597 employees participate that was closed to new employees in 2012, as well as the hybrid defined benefit and defined contribution plan, in which 7,538 employees hired since Oct. 1, 2012, participate, the spokesman said. The system has a total of $3.7 billion in pension assets.
Under the proposal, new employees hired on or after Oct. 1 of next year would have only the option of a DC plan with an employee automatic deferral rate of 8% and vesting period of three years, according to the proposal, which was published on UMS' website. The maximum employer match would be 8% of new employees' pay.
Currently, the hybrid plan has an employer match of up to 3%, as well as a 2% automatic employer contribution. The vesting period for this plan is also three years, although employees are automatically enrolled at 3% of their annual salary, according to the proposal for the UM board of curators.
On Thursday, the university's Total Rewards Advisory Committee recommended the new DC plan to the board.
The committee expects to present a final recommendation to the board at its February meeting, but "that could change depending on what feedback we get," the spokesman said.
Any changes would not affect current active employees or retirees already in the defined benefit plan, he added, and are proposed only for new employees.
Board documents state that "beginning in fall 2017, the university began reviewing the financial and operational impact of continuing to offer a defined benefit retirement plan to new employees. Defined benefit plans are becoming less common in public higher education and come with long-term financial commitments. It is important that the university review and consider plan offerings in order to remain competitive with offerings typical of higher education organizations."
The University of Missouri System's pension plan is currently 83% funded, according to board documents.