Retirement Vesting Rules to Change for Newly Hired Faculty, Staff

As part of an effort to reduce costs and enhance retention, Duke will change the vesting rules for new hires who are eligible for the Faculty and Staff Retirement Plan, the 403(b) plan funded both by Duke's contributions and an individual's voluntary contributions. The change, effective Jan.1, 2012, will require all newly hired faculty and staff to have three years of credited service before they are vested, meaning they own Duke's contribution to the plan. Anyone who ends employment before completing three years of credited service would forfeit Duke's contribution. The change has no impact on existing faculty and staff."Most of Duke's peer institutions already have a similar vesting requirement as a means to encourage longer employment among new hires," said Kyle Cavanaugh, vice president for administration. "In 2010, Duke paid out more than $116 million in contributions to the Faculty and Staff Retirement Plan. That investment has less impact when individuals leave after only a couple years."Duke projects the change will save about a quarter million dollars annually based on those who typically leave within their first three years. This change does not affect current faculty or staff members or those who are hired before the end of 2011, all of whom are immediately vested in the Faculty and Staff Retirement Plan. The new vesting rules will only affect those hired on or after Jan. 1, 2012. The change also does not affect eligibility for when an individual can start receiving the Duke contribution, nor does it apply to an individual's voluntary contributions to the plan. Information about the Faculty and Staff Retirement Plan will be updated on the Human Resources website before the end of the year, and details about vesting will be reviewed with new faculty and staff as part of their orientation.