Regents Policy 5601: Policy on University of California Retirement Plan Funding

Approved September 18, 2008
Amended September 16, 2010
Amended September 17, 2015

1. The funding policy is effective with the July 1, 2008 actuarial valuation and determines total funding policy contributions starting with the Plan Year beginning July 1, 2009.
2. Each year the funding policy contributions will be calculated for the Plan Year starting one year after the date of the actuarial valuation.
3. Each year the Regents will determine both the actual total contributions and the split between Member Contributions and University Contributions based on the total funding policy contributions and various other factors, including the availability of funds, the impact of employee contributions on the competitiveness of UC's total remuneration package, and collective bargaining. In no event shall the University Contributions be lower than the Member Contributions.
4. The funding policy will determine total funding policy contribution rates based on an actuarial valuation of the non-laboratory segment of the University of California Retirement Plan (UCRP) (e.g., campuses, medical centers and Hastings College of the Law). The Lawrence Berkeley National Laboratory will contribute according to the funding policy outlined in the terms of the University's contract with the Department of Energy. The Lawrence Livermore National Laboratory and Los Alamos National Laboratory Retained Segments in UCRP will be subject to the funding policies outlined in the University's contracts with the Department of Energy. Throughout this policy the term “UCRP” shall refer to the non-laboratory segment of UCRP.
5. The total funding policy contributions to UCRP will consist of the Normal Cost plus an amortization charge for any Unfunded Actuarial Accrued Liability (UAAL) or minus an amortization credit for any surplus.
6. The Regents' Consulting Actuary will conduct an annual actuarial valuation of UCRP. The Normal Cost and the Actuarial Accrued Liability (AAL) in each actuarial valuation will be determined under the Entry Age Actuarial Cost Method, using actuarial assumptions adopted by the Regents.
7. The asset smoothing method used to determine the Actuarial Value of Assets will be based on the Market Value of Assets adjusted for “unrecognized returns” in each of the then last five years. Unrecognized return is the difference between actual and expected returns on a market value basis and is recognized over a five-year period.
8. As of the effective date of this policy, any initial surplus as of that date will be amortized as a level dollar amount over a period of three years, as was specified by the Regents in the adoption of this policy.
   1. Any changes in surplus after the effective date due to actuarial gains and losses (including contribution gains and losses) will be amortized as a level dollar amount over 15 years.
   2. Any change in surplus due to a change in actuarial assumptions, cost method or asset smoothing method will be amortized as a level dollar amount over 15 years.
   3. Any change in surplus due to a Plan amendment will be amortized as a level dollar amount over 15 years.
   4. In the first year after the effective date when UCRP has a UAAL, all amortization bases will be considered fully amortized and contributions will be determined under the remaining provisions of this policy.
9. For any future year when UCRP has a UAAL, the calculation of the UAAL will be maintained by source (as listed below) and each new portion of or change in UAAL will be amortized as a level dollar amount over a fixed amortization period. For any UAAL identified prior to the July 1, 2015 actuarial valuation, the following applies:
   
   1. Any initial UAAL (after a period of surplus) or change in UAAL due to actuarial gains and losses (including contribution gains and losses) will be amortized over 30 years.
   2. Any change in UAAL due to a change in actuarial assumptions, cost method or asset smoothing method will be amortized over 15 years.
   3. Any change in UAAL due to a Plan amendment will be amortized over 15 years, unless the nature of the Plan amendment suggests a shorter period.
10. For any UAAL identified beginning with the July 1, 2015 actuarial valuation (including the 2014-15 actuarial gain or loss), the following applies:
    1. Any initial UAAL (after a period of surplus) or change in UAAL due to actuarial gains and losses (including contribution gains and losses) will be amortized over 20 years.
    2. Any change in UAAL due to a change in actuarial assumptions, cost method or asset smoothing method will be amortized over 20 years.
    3. Any change in UAAL due to a Plan amendment affecting non-active members will be amortized over 10 years.
11. For any future year in which UCRP has a surplus, such surplus will be amortized as a level dollar amount over 30 years, and all prior UAAL amortization bases will be considered fully amortized.
12. Effective July 1, 2010, all UAAL amortization bases as of July 1, 2010 will be combined and the combined base will be amortized as a level dollar amount over 30 years.
13. This funding policy supersedes any previous funding policies.