Voluntary Separation
Incentive Program
Presented by: Mary Kay Sankey
Staff Benefits Manager
UW-Stout Human Resources
Voluntary Separation Incentive
Program Eligibility Criteria
• Faculty member; academic staff member with an indefinite, rolling horizon
or fixed-term renewable contract; unclassified limited appointee; or
classified permanent staff member
• At least 55 years old before July 1, 2015
• Are vested with the Wisconsin Retirement System (WRS) as of July 1,
2015 and are eligible to receive an annuity under the Wisconsin
Retirement System (WRS)
• Have an UW-Stout original start date on or before July 1, 2010
Effective dates of Separation will be determined by the
Chancellor in the best interest of the University
Dates of separation will be as follows:
• Faculty and instructional academic staff:
• Between 7/3/2015 and 1/31/2016, unless authorized by the
Chancellor because of exigent circumstances
• All other eligible appointment types:
• Between 7/3/2015 and 8/31/2015, unless authorized by the
Chancellor because of exigent circumstances
Dates to Remember!
Deadline to submit completed application for
consideration in the Voluntary Separation Incentive
Program:
• No later than Wednesday, May 20, 2015
• Not a binding agreement
Chancellor’s decisions on who will be offered Voluntary
Separation Incentives will be communicated to
applicants:
• No later than Friday, June 5, 2015.
VSIP Benefit Amount
• Your benefit amount is arrived at by taking 50% of your base pay,
prorated for your FTE
• Base Pay does not include:
• Overloads
• Winterim, Summer Service / Summer Session amounts
• Overtime
• Standby pay
• Weekend, night, shift differentials, etc.
• Any other payments above base salary
• Your Incentive is highlighted on Calculation #2 in your
packet after Your Employer Additional Contribution
Balance
Example Classified Staff:
Hourly Rate (no add ons): $17.623
X
2080 (x FTE if Part-time)
= 36655.84
X
50%
= $18,327.92 Separation Incentive Amount
Example Unclassified Staff:
Academic Year/Annual Base Salary
(x FTE if Part-Time)
$60,000
X 50%
$30,000 Separation Incentive Amount
VSIP Distribution Options
Employees are able to have the one-time 50% base salary separation payment
distributed by any one or a combination of the following:
• Lump Sum Payment
• Contributions to
• Health Savings Account (must have HDHP)
• 403(b)
• 457 (subject to established plan limits)
• Additional Employer Contribution to WRS Account
Note: ETF Actuarial Reduction Program option has been removed since the
Additional Employer Contribution to WRS Account option became available and
provides the same benefit and is available to all employees
Employee Responsibility When
Selecting Payment Option(s)
Employees are responsible for consulting with a
tax advisor as to potential tax consequences of
choices of separation payment methods.
Option 1: Lump Sum Payment
Lump sum cash payment at employment end
(payment will be processed within 60 days of separation date)
Points to consider:
• Change withholding exemptions
• Complete a new W-4 and return the form to HR
• Work with HR on the date to use for your form.
• Seek counsel from a tax advisor as to potential tax
consequences
Option 2: Pre-Tax Investment Options
Employee may choose to use any of the pretax investment options we offer:
• 403(b) Tax Sheltered Annuity Program
• 457 Deferred Compensation Plan (WDC)
• Health Savings Accounts (must have a
HDHP)
Option 2 Pre-Tax Investment Options:
Points to consider:
• 2015 Plan Limit for Employee age 50 and over
• 403(b) TSA Program - $24,000
• Employees with 15 or more years of service with the
UW may have an additional catch-up opportunity
(check with HR)
• 457 WI Deferred Compensation - $24,000
Employees can contribute the maximum to both programs!
• HSA contributions limits for 2015 (must have HDHP):
• Individual = $3,350
• Family = $6,650
• HSA “catch-up” contributions for 55+ = $1,000
Option 3: WRS Employer Additional Contributions
• Credited to the employee account and increases employee’s
monthly annuity at retirement
• Payable only as a life annuity
• Benefit purchased by Additional Contributions is not subject to the
formula benefit maximum - 70% of Final Average Salary (65% for
Protective Occupations)
• The amount added as Employer Additional Contributions has the
same effect as using the amount to purchase the Actuarial Age
Reduction
Actuarial Reduction Benefit (WRS)
No longer an option since we have learned the Additional WRS Employer
Contributions provide exactly the same benefit and is much easier to
calculate and make payment for. Also, the Additional WRS Employer
Contribution option is available to all employees (not just those with a
higher formula benefit).
The option reviews your WRS retirement annuity amount now and
compares it to what it would be at the point you reach an unreduced
formula benefit.
ETF uses a formula to determine the cost associated with funding that
higher monthly annuity payment amount.
The Unreduced formula amount provides a higher benefit than the
estimate using your current age and service
Actuarial Reduction Benefit (WRS)
Example: Employee is Age 56 with 32.36 YOS
Estimate #1 (Based on retirement date of 7/03/2015*)
3 Highest Years of Earnings
WRS Creditable Years of Service through 07/03/2015*
Reflects Age Reduction Factor
Normal Retirement Age (NRA) = 65, or age 57 or more
with 30 years of WRS creditable Service
* Date may vary based on your actual retirement date
Actuarial Reduction Benefit (WRS)
Example: Employee is Age 56 with 32.36 YOS
Estimate # 2 - Retirement date based on the date eligible for
unreduced formula benefit (Age 65 or time at which employee is 57 or
older and has at least 30 years of WRS Creditable Service)
3 Highest Years of Earnings
Creditable years of service up through 7/03/2015*
Reflects Age Reduction Factor - should say NONE
since at unreduced benefit
* Date will vary dependent upon your actual retirement date
Actuarial Reduction Benefit Example Continued
Determine if an Actuarial Reduction Exists:
1. If calculation #2 is </= Calculation #1 - there is no actuarial reduction to purchase
This happens when the Money Purchase benefit is greater than the Formula
benefit in Calculation #1, or if no Age Reduction exists in the formula calculation
2. If calculation #2 is > Calculation #1, an actuarial reduction exists
Meaning the unreduced benefit is greater than the current benefit from
Calculation #1
Actuarial Reduction Benefit Example Continued
Determine the Cost of the Actuarial Reduction:
1.
Calculation 2 For Annuitant Life Only Amount:
$1,812.41
2.
Subtract Calculation 1 For Annuitants Life Only Amount:
(1732.66)
3.
Result:
79.75
4.
Divide by Calculation 1 Money Purchase Factor:
÷ 0.005610
5.
Cost of Actuarial Reduction:
$14,215.68
Review WRS Estimates Provided
Calculations #1 and #2
• Both Calculations use information from your 1/1/2015 WRS
Annual Statement of Benefits, provided in packet
• Adds earnings and service through 7/3/2015 (Does Not
include Military Service, if Applicable)
• Money Purchase Amount updated for those with a higher
Money Purchase Calculation
Estimate Calculation #1:
• Regular Retirement Benefit calculated for a retirement date
of 7/3/2015
Review WRS Estimates Continued
Estimate Calculation #2:
• Voluntary Incentive Amount is highlighted after the Your Employer
Additional Contribution Balance
• Calculation #2 results reflect your retirement benefit amount assuming the
entire incentive is applied as Employer Additional Contributions to increase
your monthly annuity for your lifetime
• You are not required to select Employer Additional Contributions for
your incentive disbursement, it is just an option
• Use the Department of Employee Trust Funds online WRS Benefit
Calculator: http://etf.wi.gov/calculator.htm to determine your benefit
amount if you choose not use Employer Additional Contributions or use
a different amount
• WRS Calculator Instructions are posted on the HR website
Health Insurance
 Retiree pays full premium cost
 Converted Sick Leave Credits pay premiums until exhausted, available to
spouse/DP/dependent child(ren) upon death of annuitant if family plan is in
effect
 Can be escrowed if you have comparable coverage
 After credits are exhausted, premium taken from annuity check if large enough,
otherwise health plan bills retiree –CANCEL coverage if you don’t want it to
continue
 Annual It’s Your Choice Open Enrollment Opportunity
 Premium reduces when retiree/spouse/DP are eligible for Medicare, age 65 or
disability. Must apply for Medicare B when first eligible if retired
 Change Plans - move from area 3 or more months
Sick Leave Conversion
Highest Rate
X
Hours of Sick Leave
including supplemental hours, if eligible
UW System Sick Leave Calculator:
https://www.wisconsin.edu/ohrwd/benefits/sle/
Supplemental Sick Leave
Must have 15 years of State Adjusted Continuous Service
Will match up to 52 hours for each year, 1– 24
Will match up to 104 hours for each year 25 +
 500 hours restored for catastrophic illness
 If 500 hours are used within 3 years of retirement for one
catastrophic illness
 Restored hours are not matched
 Craftsworkers not eligible for Supplement
Sick Leave Conversion Credit Program Brochure:
http://etf.wi.gov/publications/et4132.pdf
PAID LEAVE
 Personal Holidays are not pro-rated upon retirement
 Vacation is given up front in assuming you will work
the entire calendar or fiscal year. If you retire prior
to the end of the calendar year (Classified) or fiscal
year (Unclass) vacation is pro-rated
 Unclassified: Jen Schermitzler,
schermitzlerj@uwstout.edu
 All Unclassified leave reports must be in to certify
sick leave and payout any used leave
 Classified: Annette Koleno, kolenoa@uwstout.edu
PAID LEAVE, Continued
 Applicants will not be permitted to use accrued
leave balances to extend a Voluntary Separation
Incentive Program approved date of separation
(i.e. vacation, ALRA, termination sabbatical,
personal holiday, compensatory time)
 However, the last day physically working at UWStout may be before the Voluntary Separation
Incentive Program approved date of separation
and remaining paid leave may be used to reach
the separation date.
Return to work After Separation?
Participants will not be eligible to be
employed by UW-Stout for two years
from the date of separation unless
authorized by the Chancellor because of
exigent circumstances after all break of
employment rules and requirements are
met
NEXT STEPS
• Order Official WRS Estimates if seriously considering
retirement -- No Obligation to Retire
• Packet is good for one year
• Takes 3-4 weeks to receive
• Order on-line from ETF website
• Contact HR to order on your behalf
• Request form available on HR website
• Call ETF toll-free at 877-533-5020
ETF Additional Resources
Webinars: ETF has many webinars available. You can find them
on their website under the Webinar tab:
http://etf.wi.gov/member_education.htm#tab2
Group Appointments: ETF also has many group appointments
for members who have a retirement packet from ETF. It is listed
under the Face to Face tab. You will need to click on the West
Central district or you can use this link.
http://etf.wi.gov/members/westcentral.htm
Videos: ETF also has videos available 24/7 listed on
the Video/Media tab.
You are encouraged to
contact ETF, your tax advisor
attorney, and/or financial
planner to discuss your
individual situation!
QUESTIONS?
Thank you!