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Eligible employees with a pension benefit under their core retirement plan (either the DB Plan or the Hybrid Plan), or rehired employees in the DC Plan with a deferred vested pension benefit will have an opportunity to transfer the lump sum value of their pension benefit to the DC Plan  during a one-time election window in 2026. Employee participation in the DC Opt-In Program is voluntary.
If an eligible employee chooses to participate in this program, the value of their pension will be converted to a lump sum and transferred to the DC Plan. Going forward, future retirement benefits will be earned under the DC Plan.
The DC Plan Opt-In Program does not make any changes to the DB Plan or the Hybrid Plan. No action is necessary for eligible employees who prefer to remain in their current core retirement plan or for eligible DC Plan participants who wish to retain their deferred vested pension benefit separate from their current DC Plan benefits.

The university's pension plan (the Retirement, Disability and Death Benefit Plan (the ¡°RDD Plan¡±), referred to as the DB Plan or as the DB component of the Hybrid Plan)) is in good financial health. Members who remain in the DB Plan or the Hybrid Plan can count on receiving the benefits they¡¯ve earned.

Timeline

During Fall 2025, eligible employees will receive more information regarding their options and how the voluntary DC Opt-In Program works, including a personalized statement showing the lump sum value of their pension benefit and comparing the growth of their retirement benefit under the DB Plan or Hybrid Plan with the potential growth of the lump sum value of their pension benefit if that amount were transferred to the DC Plan. 

• June 2025: Program approved by the Board of Curators
• October 2025: Program announcement flyer mailed to home address of eligible employees
• November 2025: Eligible employees receive personalized statements to their mailing address outlining benefits and options
• November 2025 ¨C April 2026: Education sessions (webinars, one-on-one, Fidelity support, etc.)
• January 15, 2026: Deadline to request an election packet*
• February 9, 2026 ¨C April 10, 2026: Election window
• By September 1, 2026: The pension benefit of participating employees is converted to a lump sum amount and that amount is transferred to a tax deferred account in the DC Plan, accessible to the participating employees through Fidelity

*Election packets will only be mailed to eligible employees who are interested in the program and request to receive a packet.  Requesting a packet does not lock eligible employees into a decision, they will have until the end of the election window to decide if they want to participate by completing and submitting an election packet.

Why the university is offering this program

Employees have frequently requested the ability to transfer their pension benefit to a defined contribution plan over the last several years with the implementation of the Hybrid Plan in 2012 and the DC Plan in 2019. Following the successful implementation of the lump sum distribution window for former employees with pension benefits in 2024, the University recognized current employees may prefer to earn their retirement benefits under a defined contribution plan instead of a defined benefit plan and developed the voluntary DC Opt-In Program.

How this program relates to programs offered in the past such as early retirement incentives or retiree insurance

The DC Opt-In Program is not a voluntary early retirement incentive program (VERIP). The DC Opt-In Program is designed for those who intend to continue University employment but prefer to earn their retirement benefits entirely under a defined contribution plan. The DC Opt-In Program converts the employee¡¯s pension benefit to a lump sum and transfers the amount of the lump sum to the DC Plan. 
Employees currently participating in the DB Plan or the Hybrid Plan who choose to participate in the DC Opt-In Program will retain their same access to retiree health insurance so long as they meet the eligibility requirements when they separate from the University.  Rehired employees participating in the DC Plan became ineligible for retiree health insurance as a result of their prior separation.

Financial status of the pension plan

The DC Opt-In Program will not adversely affect the RDD Plan¡¯s financial position. The RDD Plan is in good financial health and members who remain in the RDD Plan (employees participating in the DB Plan or the Hybrid Plan) can count on receiving the benefits they¡¯ve earned under the RDD Plan. The DC Opt-In Program will not have an impact on the benefit levels for retirees currently receiving benefits from the DB Plan or Hybrid Plan or those who choose to remain in the DB Plan or Hybrid Plan. 

The University is committed to the sound fiscal management of the RDD Plan and contributes millions of dollars each year to ensure the financial health of the RDD Plan. 

Optional programs like the DC Opt-In Program are a common practice for defined benefits plans and will marginally improve the RDD Plan¡¯s funded status and reduce its liabilities. The DC Opt-In Program benefits the University by reducing the number of RDD Plan members and reducing financial risk faced by the University by decreasing the RDD Plan¡¯s liabilities.

Eligibility

Employees eligible to participate in the DC Opt-In Program will be those who, as of September 1, 2026, are: 

• Active benefit-eligible employees who are:
  • Vested in the DB Plan or DB component of the Hybrid Plan, and
  • Not eligible for normal retirement (age 65 with at least 5 years of service or age 62 with at least 25 years of service).
• Active benefit-eligible employees who:  
  • Were rehired on or after October 1, 2019, and as of September 1, 2026, have a deferred vested pension benefit under the DB Plan or Hybrid Plan that they have not yet started to receive. These employees will only have the option to transfer the lump sum value of their pension benefit to the DC Plan.  

Employees not eligible to participate in the DC Opt-In Program include those who, as of September 1, 2026, are: 

• Active benefit-eligible employees participating in the DB Plan or the Hybrid Plan who:
  • Are eligible for normal retirement (age 65 with at least 5 years of service or age 62 with at least 25 years of service), or
  • Were hired or rehired on or after October 1, 2019 (unless they have a deferred vested pension benefit under the DB Plan or the Hybrid Plan).
• Active employees in a non-benefit eligible position who have a frozen pension benefit under the DB Plan or DB component of the Hybrid plan.  
• Terminated employees:
  • Including those with a deferred vested benefit who have not been rehired, or
  • Those who have been rehired but did not earn a vested benefit under the DB Plan or the DB component of the Hybrid Plan.
• Employees with an approved Division of Benefits Order (DBO) on file with the University.
   

How the program works

If you choose not to participate, there are no changes to your current core retirement plan. If you prefer to remain in your current core retirement plan or if you are an eligible rehired DC Plan participant who wishes to retain your deferred vested pension benefit, no action is required on your part and nothing will change for you.  

If you elect to participate in the Defined Contribution Opt-In Program:

• Active DB Plan or Hybrid Plan members: your core retirement plan will switch from the DB Plan or the Hybrid Plan  to the DC Plan.* You will not lose the value of the pension benefits you have earned so far ¨C the lump sum value of  your pension benefit as of September 1, 2026, will transfer to the DC Plan, your new core retirement plan.  
• Eligible rehired DC Plan members: the lump sum value as of September 1, 2026 of your deferred vested pension benefit will transfer to your current core retirement plan.  You will retain the same benefit plan design for the DC Plan.

*To comply with IRS regulations, individuals in the DB Plan or Hybrid Plan who participate in the program will have a 2% minimum required employee contribution under the DC Plan.  This contribution will be into their 457(b) Plan. Participants also qualify for a 100% match from the university up to 8%.

*You can change the voluntary portion of your employee contributions to the Defined Contribution Plan, but you must contribute at least 6% to the 457(b) Plan in addition to your mandatory 2% in order to receive the benefit of the full 8% matching contribution from the University.  

A personal decision

Choosing between retirement plans is an important choice; one only you can make for yourself. To make an informed decision, it¡¯s important to understand how each of the retirement plans work and how they apply to your personal situation and retirement goals. The University is committed to providing you with the tools and resources you will need to make the decision that¡¯s right for you. 

If you are eligible to participate in the DC Opt-In Program, you will receive a personalized statement in Fall 2025 comparing your current pension benefit (or deferred vested benefit if you are a rehired member in the DC Plan) to the DC Plan along with the estimated lump sum value of your current pension benefit. Additional resources such as webinars and one-on-one availability with a Fidelity Workplace Financial Consultant will be available to help you decide what is best for you. 

Moving to a defined contribution plan may be right for some, but not for others. After you receive your personal statement, we encourage you to meet with a Fidelity Workplace Financial Consultant or your personal financial advisor to discuss whether or not this program would benefit you. Topics you may want to be thinking about include: 

• Goals for retirement
• Personal financial situation
• Health situation
• Desire for access to a lump sum vs monthly annuity payments
• Desire to leave money to heirs 

Keep in mind that under the DB Plan and the Hybrid Plan you can receive your pension benefits in a form that guarantees either you or you and a joint annuitant will receive monthly payments for your life and for a set period following your death or the life of your joint annuitant. There is no distribution options currently offered under the DC Plan which guarantee that you and/or your beneficiary will receive monthly payments for life.

Learn more about your current retirement plan on the core and voluntary retirement plans webpage. If you need assistance identifying your retirement plan, contact the HR Service Center.

Reasons someone in the DB Plan or Hybrid Plan may prefer a defined contribution plan over a defined benefit (pension) plan

The DC Opt-In Program allows you (if you are eligible) to transfer the lump sum value of your pension benefit to a defined contribution plan and receive matching contribution that were not available when you joined the University.  If you participate in DC Opt-In Program you will no longer have a pension benefit and will only earn future benefits in the DC Plan.  Participation in the DC Opt-In Program is voluntary and contingent on your timely return of all the applicable election paperwork.

In general, the amount of a defined contribution plan retirement benefit grows based on contributions to the plan and returns on the investment of such contributions, producing an account which the retiree can withdraw from during retirement as they wish. 
Participants in the DC Plan may select how to invest their contributions (and the University¡¯s contributions to the DC Plan on their behalf) and the amount of their retirement benefit is determined in part by the performance of the investments selected by the Participant.  Investment returns are subject to market volatility and other economic forces that are outside the control of the University and the participant.

Some may prefer a defined contribution plan because they want: 

• Spending flexibility in retirement (they may expect their needs to change over time or don¡¯t expect to live long in retirement).
• To choose their own investments and/or the opportunity for their benefit to grow through investment returns.
• The ability to take their full benefit with them if they leave the University before retirement.
• To receive their benefit as a lump sum*, as opposed to in monthly payments, so they can continue to earn investment income in retirement and mitigate the effects of inflation.
• To more easily be able to pass money on to their heirs. 

*The voluntary DC Opt-In Program allows DB Plan or Hybrid Plan members, who choose to participate, access to the full lump sum value of their retirement benefit when they separate, which is not a current option under the plan for those who attain retirement eligibility (minimum of age 55 with 10 years of service, or age 60 with 5 years of service).

Reasons someone may prefer to remain in a defined benefit (pension) plan over a defined contribution plan

In general, a defined benefit pension benefit grows during employment based on pay and years of service to provide a fixed monthly benefit for life in retirement. 

Some may prefer a defined benefit retirement plan because they value: 

• Lifelong monthly income: A set monthly benefit for their life in retirement, and if they elect, the life of their beneficiary.
• Protection from market fluctuations: Under a defined benefit plan the employer bears the investment risk, so the members¡¯ benefits are not impacted by market fluctuations.

Under the DB Plan and the DB component of the Hybrid Plan, payment options differ depending on when you leave the plan. To understand more how you receive your income in retirement under the DB Plan or Hybrid Plan, review the individual plans Summary Plan Descriptions (section ¡°What Happens When I Leave the University¡±).

Understanding your Benefits 

How you plan for retirement is personal. Understanding your benefits and thinking about your plan for retirement is well worth your time. Here are ways you can get started: 

• Learn about your current retirement plan. It¡¯s important to know what your current retirement benefits are and to think about how those benefits fit into your plan for retirement, when considering whether you are interested in exploring the Defined Contribution Plan Opt-In Program.
• Gather all your retirement resources ¨C not only from the university. Go to the website to download your Social Security statement. Make a list of retirement benefits you have from previous employers and/or your spouse¡¯s retirement benefits, as well as your other savings.
• Look at your plan for retirement. Do you have a plan for when you want to retire and how to get there? Are you on track? Schedule a free one-on-one consultation with Fidelity Workplace Financial Consultant or make time to check in with your own financial advisor.
• Check out the UM System retirement planning checklist for more information.
• Consult (exit UM System site).