Despite Changes In Benefit Plans, Retiring Scientists Still Have Options

Sidebar: For Further Information - Retiring Scientists Retirement, like many other facets of employment, has changed greatly over the last generation. Rare are the employees-researchers included-who spend 40 years at the same job and retire at age 65, living the remainder of their years off Social Security benefits and traditional company pensions. Instead, today's workers often switch jobs several times during the course of their careers, and when they retire, they are more likely to pay the bills with earnings from investments both they and their employers made. With the end of federally mandated retirement ages, first in government and private industry and most recently in academia, scientists are finding many ways to be productive well into their golden years. It has now been two years since the mandatory retirement age of 70 for tenured faculty members was abolished (B. Goodman, The Scientist, April 18, 1994, page 1), which has allowed many researchers to continue teaching. Other schools, fearful of paying the higher salaries and benefits commanded by senior faculty members, now offer early-retirement packages that allow those scientists to keep working after stepping down as full-time employees. ATTRACTIVE COMBINATION: Ken Marsi is retired, but continues to teach part-time at Cal State-Long Beach For example, Ken Marsi, who turned 68 in December, retired last August after 35 years in the department of chemistry at California State University, Long Beach, where he spent the last 21 years as chairman. Under the early-retirement plan he accepted, Marsi earns his full retirement pay-nearly 90 percent of his faculty salary-and makes extra money by teaching half-time. "The motivation [for retiring was that] the last couple of years as a full-time faculty member I was making less money than I would make under the retirement program," Marsi notes. "I probably would have continued to teach full-time for another couple of years if it weren't for the fact that the retirement program was so attractive, both financially and [with] part-time teaching. I really love teaching, so this was an attractive combination." TAKING ADVANTAGE: Former Stanford University CFO William Massy believes that early-retirement plans "are generally popular among faculty." When the age barrier finally was lifted, fewer faculty members stepped down at age 70, states William Massy, a former chief financial officer at Stanford University. "The concern in academia was that you could sort of half-retire . . . and be a professor and get full pay. When mandatory retirement ended, the average age of faculty went up. To get around that, the institutions decided that they would try to buy out tenure with early-retirement packages." Retirement plans consist of defined-contribution and defined-benefit programs. According to Massy, most colleges and universities offer the former, in which both the institution and the employee contribute a percentage of the employee's salary. That money is then invested by a company such as the New York-based Teachers Insurance and Annuity Association-College Retirement Equities Fund (TIAA-CREF). Upon retirement, the value of that fund is converted to an annuity to which the retiree has access. Defined-contribution plans usually are individually tailored and are portable, allowing employees to take them from job to job. Because colleges and universities differ from each other in such areas as number of students, faculty size, and fiscal health, they need to set up their own investment programs with the companies that administer the plans. "The institution itself, often working closely with us, designs a plan that they feel is going to put them in a position to meet the expectations of their faculty members, within the constraints of the institution," explains Dave Shunk, TIAA-CREF's senior vice president for pension and annuity services. POSTPONEMENT: TIAA-CREF's Dave Shunk points out that educators are starting to take their retirement benefits from his company at later ages. However, some institutions-particularly public colleges and universities that are included in state retirement systems-offer defined benefit plans, which Massy calls "the more traditional industrial model." In these programs, the institutions are solely responsible for contributing and investing funds so that employees who retire are able to earn a pension. Anticipating the end of mandatory retirement for faculty members, Massy instituted an early-retirement package at Stanford in the early 1980s. In most such plans, the institution pays the retiree a lump sum that ranges from six months to two years or more of salary, plus benefits agreed to upon hiring. Some faculty members then continue to teach or conduct research for pay on a part-time, year-to-year basis. "I think these programs are generally popular among faculty. I've not heard much objection to them," says Massy, who now teaches in Stanford's School of Higher Education and runs his own collegiate consulting firm, the Jackson Hole Higher Education Group of Jackson Hole, Wyo. Not every academic institution offers an early-retirement plan. Harvard University, for example, has a fairly standard retirement package that allows faculty members to invest money with TIAA-CREF, Fidelity Investments of Boston, the Vanguard Group of Malvern, Pa., and Scudder, Stevens & Clark of New York. However, Harvard decided not to go with an early-leave program. "We've done a great deal of analysis as to what other schools have done and the effects of those offerings," states Kyle Upton, Harvard's deputy director of retirement programs. The benefits of those programs have not yet been proved, she says. "We've found that they're expensive ones, that they haven't changed the statistics that much, [and] that our retirement rate is equal to or greater than [other universities']." Still, Upton points out that because mandatory retirement was lifted so recently, "statistically it isn't really clear whether we're going to have a problem" with faculty members retiring much later than they do now. As a result, Harvard committees continue to investigate whether an early-retirement program would benefit the university. STATUS QUO: The end of mandatory retirement has had little impact, according to AAUP's Ann Franke. If the experts are right, most educators will continue to step down by age 70. In 1991, a National Research Council committee examined the issue under congressional orders and forecast no great increase in the number of faculty members working well into their 70s (P.B. Hammond, H.P. Morgan, eds., Ending Mandatory Retirement for Tenured Faculty, Washington, D.C., National Academy Press, 1991). That prediction seems to be accurate so far. States Ann H. Franke, counsel for the Washington, D.C.-based American Association of University Professors (AAUP): "It doesn't seem to have changed things too much across the general landscape of higher education." American Association of University Professors: 1012 14th St., N.W. Suite 500 Washington, D.C. 20005 (202) 737-5900 http://www.igc.apc.org/aaup/ Fidelity Investments: 82 Devonshire St. Boston, Mass. 02109 (617) 570-7000 http://www.fidelity.com Scudder, Stevens & Clark: 345 Park Ave. New York, N.Y. 10154 (212) 326-6200 http://www.scudder.com Teachers Insurance and Annuity Association-College Retirement Equities Fund (TIAA-CREF): 730 Third Ave. New York, N.Y. 10017-3206 (800) 842-2733 http://www.tiaa-cref.org The Vanguard Group: P.O. Box 2600 Valley Forge, Pa. 19482-2600 (610) 669-1000 http://www.vanguard.com NRC Reports: The National Research Council (NRC) report Ending Mandatory Retirement for Tenured Faculty is available, via the National Academy Press's World Wide Web site, at http://www.nap.edu/readingroom/records/0309044987.html. Also available is NRC's Assessing Knowledge of Retirement Behavior, a 1996 report by the Panel on Retirement Income Modeling of the Committee on National Statistics. The document examines current data and research to recommend changes in policies pertaining to retirement income. It can be found at http://www.nap.edu/readingroom/records/0309055474.html. According to Franke, AAUP unsuccessfully lobbied the 104th Congress to consider requiring institutions to offer early-retirement incentives to tenured faculty participating in defined-contribution plans, not just defined-benefit plans. "I assume we will be working on it some more in the 105th Congress," she notes. Although the end of mandatory retirement has caused many colleges and universities to develop alternative plans, it did little to the companies that administer them. But while the end of mandatory retirement has had no effect on the kinds of packages his company offers, TIAA-CREF's Shunk is quick to add: "It's safe to say it has had an impact on the way the participants and the institutions choose to take advantage of the flexibility offered under the plans. . . . We have seen a movement [of] people beginning to take retirement benefits from us at later ages. They're postponing the time at which they commence the payoff." Scientists who work in the public sector and in private industry also have seen changes in the structure of their retirement plans. However, like their academic counterparts, they say that financial benefits are only one factor in a fulfilling retirement. Gary Wedemeyer, a 32-year federal government scientist, was chief of the National Biological Survey (NBS) branch in Seattle. NBS consisted of scientists from the research arm of the United States Fish and Wildlife Service, who had been separated out into a new unit. After the 104th Congress transferred the group to the U.S. Geological Survey, Wedemeyer retired in mid-1996. As a government retiree hired before 1984, Wedemeyer earns a pension equal to about half his working salary; the package for those hired after 1984 includes a smaller government pension, Social Security benefits, and 401(k) earnings. Wedemeyer says he stays busy by working on a book and returning to his old lab as a volunteer. "After you retire, the opportunity to keep on contributing to science in a volunteer capacity at a government laboratory is an opportunity that people should take advantage of," he concludes. Making his mark in a different way is Charles H. Walkinshaw, who stepped down amid government downsizing a year ago, after spending 30 years as a plant scientist with the U.S. Department of Agriculture's Forest Service. In addition to his day job, Walkinshaw had spent decades working to help minorities advance in science. Shortly before retiring, he opted to switch his volunteer focus to promoting science to elementary and junior high school students. He now spends about 1,200 unpaid hours a year with local youths and other scientists. Walkinshaw also examines science textbooks used in schools in Savannah, Ga., where he now lives, comparing them with those used here to "make a list of ideal things that could be done to beef up what the kids get." He explains: "Most modern texts play down things like parts of flowers. Well, that just happens to be an ideal thing that someone can explain to them when they go on these field trips to see different kinds of plants." FEELING GOOD: After retiring, Jack Cohen went to work for a small biotech company. At 60, he is "ready to work." While government employees are subject to the whims of Congress, life scientists working in the private sector traditionally have had access to good benefit plans, according to Jack Cohen, the vice president of quality and compliance at Scios Inc., a small biotechnology company in Mountain View, Calif. Cohen notes that because pharmaceutical and biotech companies manufacture products for the health-care market, they recognize the need to provide for their employees' health care and retirement. Cohen, who turns 60 this month, retired after 27 years with Syntex Corp. of Palo Alto, Calif., from which he draws a pension. He has been with Scios for the last four years. Like most biotech companies, Scios does not offer a traditional pension plan. Its retirement package consists of a 401(k) plan in which employee contributions are matched by the company, up to $3,000 annually, and invested for the future. Retirement benefits have not been as large an issue in the fledgling biotech industry as here, observes Cohen. "In biotech companies, people are not concerned about long-term pension benefits, because it tends to be an industry with very young people in it," he notes. The majority of Cohen's colleagues are in their 20s and 30s, and he feels that they are more interested in their medical than retirement benefits, a situation Cohen predicts will change as the industry and its employees age. "As people get older and start thinking about retirement . . . benefits become even more important," Cohen states. "And the amount of money they see socked away in the 401(k) becomes more important because that's what they live off of. People are living longer these days, and in reasonably good health." BACK TO SCHOOL: Charles Walkinshaw has found fulfullment in retirement by volunteering with schoolchildren. Is there life after retirement? Regardless of the kinds of benefits they receive, many retirees say yes. Because he is freed from the duties that come with being a department chairperson, Cal State-Long Beach's Marsi has more time to spend with his students and on professional activities such as reviewing journal articles, writing book reviews, attending meetings, advising a student group, editing a newsletter, and raising funds for his department. He may even return to research. "I am really enjoying this [retirement] very much, primarily, I guess, because I don't have the responsibilities that a department chair has. Someone is worrying about budgets and scheduling and that sort of thing." "Any scientist who wants to can be very, very helpful to the school system and the community," declares Forest Service retiree Walkinshaw, who compares volunteering to repaying a debt to society. "Even though in his current [retired] position he might be of less value than some other type of scientist new on the street, I think the older scientist has a really nice perspective to offer the students," Walkinshaw states. Asked when he will retire for good, Cohen, the Scios vice president, replies that he doesn't know. "It's hard to tell. People are working longer [and] are healthier." Noting his 60th birthday, he adds: "I used to think of that as old. I don't anymore. I feel completely vigorous and ready to work."

Despite Changes In Benefit Plans, Retiring Scientists Still Have Options

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