Recruitment, Retention and Retirement in Higher Education Building and Managing the Faculty of the Future
Building and Managing the Faculty of the Future
Edited by Robert L. Clark and Jennifer Ma
Chapter 13: The costs and benefits of early retirement plans
13. The costs and beneﬁts of early retirement plans John B. Shoven 13.1 INTRODUCTION Mandatory retirement had certain advantages for higher education. It facilitated planning for faculty renewal, it avoided delicate issues of competency and, for many faculty, it provided an automatic answer to a diﬃcult question – namely when to retire. Many colleges and universities believe that fresh ideas often result from new appointments of young faculty, and that the number of slots available for such new hires would be seriously curtailed if senior faculty remain on the job far longer than before the elimination of mandatory retirement. For these and other reasons, many colleges instituted early retirement incentives following the lifting of mandatory retirement in 1994. The purpose of this chapter is to describe the features of those plans and to assess the costs and beneﬁts that they oﬀer. While the plans will be described generally, I will outline the Stanford plan in some detail as it is the one that I know best. 13.2 DESIGN FEATURES I am going to describe early retirement plans that can be used in an environment of deﬁned contribution pension plans. Deﬁned beneﬁt (DB) plans, such as those at many state universities, have their own set of issues. Quite typically, DB plans oﬀer a pension beneﬁt at age 65 depending on ﬁnal salary and years of service. Early retirement incentives are easy to incorporate into such plans, both permanent and temporary ones. The DB...
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