Overview
The Phased Retirement Program enables participants in the Optional Retirement Plan (ORP) to gradually retire over a maximum period of three (3) years.
At the beginning of the phased retirement period, the employee's full-time equivalent (FTE), salary, and workload will be reduced. Unless requested otherwise, the FTE will not be less than 0.50 (equivalent to 20 hours per week), to ensure the participant retains retirement plan eligibility and remains eligible for university and Arizona Department of Administration benefits. The specific reduction amount is determined through a negotiation process between the participant and the relevant dean or vice president.
Participation in phased retirement is:
- Voluntary
- Subject to negotiation with your dean/vice president
- Established by a binding written legal agreement
- Subject to approval by the provost.
The dean/vice president retains the authority to balance college/division business continuity needs with requests for phased retirement.
Eligibility
To participate in the Phased Retirement Program, ORP participants must:
- Be at least 62 years old
- Be fully vested in the ORP, and
- Enter into a written Phased Retirement Agreement with the university.
The Written Agreement and Duration of the Phased Period
A standard written Phased Retirement Program Agreement records the specific terms of each participant's phased retirement period, workload, FTE, salary, and retirement date.
You have the right to take up to 45 days to review the terms of the agreement. During this period, the university cannot withdraw the offered agreement. However, if you do not need the full 45 days to review the agreement, you can proceed without waiting. It is important to note that once you sign the agreement, the terms of the Phased Retirement Agreement are permanent, unless you choose to retire earlier due to an unforeseen circumstance.
You can retire earlier than planned during phased retirement, but not later. Tell the dean/vice president if you plan to retire early. This helps the college/division plan for business continuity and deal with unexpected situations like participant illness.
Tenured Faculty and Individuals with Continuing Status
A tenured faculty member or professional with continuing status irrevocably relinquishes all status rights at the end of the phased retirement period.
Year-to-Year Professionals
Year-to-year professionals are subject to annual employment contract renewals during the phased retirement period. Participation in phased retirement by non-tenured/non-continuing personnel does not create a guarantee or implied agreement of continuous employment during the phased retirement period.
Access to ORP Accounts
Participants may withdraw funds from vested ORP account(s) as desired during the phased retirement period. There are no withdrawal restrictions. To begin withdrawals:
- Confirm with your departmental business office that Human Resources has received and approved the Phased Retirement Agreement.
- Contact the investment company with which you have your Optional Retirement Plan account.
- Please also contact HR Solutions (520) 621-3660 or hrsolutions@arizona.edu so that Human Resources can process the employer authorization for the withdrawal. Please allow up to 30 days for employer authorization.
Note about ORP Contributions: Both employee and employer contributions to the ORP continue through the participant's retirement date in accordance with Arizona Revised Statutes 15-1628C and the ORP. All contributions will stop after your retirement date.
Return to Work
The Phased Retirement Program Agreement formally defines your retirement date. You may return to work full-time or part-time after this retirement date, but under ORP rules, an arrangement to return cannot be made prior to your retirement, either verbal or written. If you return to work in the future, you will not be eligible for tenure or continuing status.
If you return to work, you may rejoin the Optional Retirement Plan, or join the Arizona State Retirement System, if you return to work in a retirement-eligible position.
Note: If you elect the ORP and are already receiving any ORP withdrawals, then you must complete five years of service to vest.
Frequently Asked Questions
The 7-day revocation period is also required by federal law whenever an employee is waiving any potential age discrimination claims. Once you sign the Phased Retirement Agreement you have up to 7 calendar days to change your mind and rescind the agreement. The Phased Retirement Agreement does not become effective, and any payments due under the agreement will not be paid, until after the 7 calendar days have passed.
Participation in the Phased Retirement Program does not affect the existing Supplemental Compensation policy.
Benefits directly affected by a change in position FTE include benefit eligibility, annual vacation accrual, paid sick time accrual, and levels of coverage available through voluntary supplemental life insurance.
The Arizona Department of Administration defines benefits eligibility. As long as you remain employed at least 20 hours per week (.50 FTE), you will remain fully benefits eligible.
Annual (vacation) accrual is prorated based on your FTE. Multiply 22 days by your FTE to determine your annual accrual.
Paid Sick Time accrual is also based on your FTE. The accrual rate is 8 hours per month of full-time employment. Multiply this full-time rate by your FTE to determine your accrual.
Voluntary supplemental life insurance coverage is based on your salary. If your FTE and salary are reduced, the available coverage is reduced accordingly. For more information, see Voluntary Supplemental Life Insurance.
Due to lower vacation and sick time accruals, the total hours available for vacation payout and Retiree Accumulated Sick Leave (RASL) may be less.
Payout of vacation accrual upon Separation: Employees are paid for accrued vacation up to one year’s accrual on separating employment. The number of hours you can be paid will be based on how many you receive in your final year.
Retiree Accumulated Sick Leave (RASL): Employees who have accumulated at least 500 sick time hours are eligible to apply for RASL, a payout on retirement. The payout is based on a percentage of your hourly pay rate, up to a maximum dollar amount. Changes to your sick time accrual may affect how much payout you receive.
Participation in the Phased Retirement Program does not affect existing guidelines and IRS limits for contributions to either the 403(b) Plan or the 457 Plan.