It’s never too late or early to start saving for retirement. The University offers eligible employees retirement savings programs that help plan for and build long-term financial security.
Changes to the Penn Basic Plan are coming in January 2023 that will help eligible participants save more. Effective on Jan. 1, 2023. Penn’s non-matching contributions to the Basic Plan will increase by 1%. For Penn employees who are eligible for the Basic Plan, Penn makes automatic non-matching contributions based on one’s age. The increase will apply to all age ranges.
“The University’s increase to its Basic Plan contributions benefits the whole Penn community,” says Jack Heuer, senior vice president, Division of Human Resources (HR). “It’s part of our strategy to attract and retain talented faculty and staff and maintain our competitive position as a top employer. This increase will give employees opportunities for greater investment, which allows them to take advantage of the power of compounding over the long term, so they experience greater financial health in retirement.”
For ages 21 to 29 the current percentage is 1.5%. That will increase to 2.5%. The age group between 30 to 39 will see the percentage go from 3% to 4%. And for those in the over 40 age group, their non-matching contributions to the Basic Plan will increase from 4% to 5%. These percentages are determined annually by the participant’s age on Jan. 1.
“The common guideline for retirement savings is 10-15% of your pay, which includes employee and employer contributions,” says Sue Sproat, executive director of HR Benefits. “If you contribute 5% to the Matching Plan to get the full employer match, your total contributions per pay period will be 12.5% to 15%, depending on your age. Of that total amount, 7.5% to 10% are coming from Penn. If you start early and give compound interest time to work in your favor, that can really add up over the years. If you’re getting a late start, that 7.5% to 10% from Penn is a huge help.”
No action is required by eligible employees to receive these higher contributions from the University. Participants will see the increase in their Basic Plan contributions reflected in their pay statements. Eligible weekly paid employees will receive the increase beginning with the pay earned for the first full week of January 2023.
“I am delighted that the University of Pennsylvania is boosting its basic retirement plan contribution effective January 2023, and I also welcome the elimination of the one-year waiting period for plan participation,” says Olivia S. Mitchell, International Foundation of Employee Benefit Plans Professor at the Wharton School. “Both developments will boost retirement preparedness and enhance future retirement well-being for our staff and faculty.”
Penn eliminated the one-year waiting period for the University Basic and Matching Plans on July 1, 2022. Participants are encouraged to review their retirement plan online at TIAA.org. They can also schedule one-on-one appointments with a TIAA retirement plan counselor at tiaa.org/schedulenow-upenn or by calling 800-732-8353.
“TIAA’s retirement plan counselors will meet with benefits-eligible faculty and staff at no cost to them,” says Lou Caccamo, human resources senior benefits specialist, “Also, TIAA counselors have a fiduciary duty to act in your best financial interest.”
This is also a great time to review and/or change beneficiary designations for each retirement plan contract to make sure they are up-to-date.
“Verifying your beneficiary designations is important because allowing your retirement plan to default to your estate and be distributed through probate can be costly and frustrating for your next of kin.” says Caccamo.
Plan participants can check their beneficiary information by logging into their TIAA account, calling the TIAA Retirement Call Center at 877-736-6738, or reviewing their most recent quarterly statement.