November 19, 2001 Regents approve deferred compensation program By Paul Schwartz In an effort to mitigate this year's disappointing salary shortfall, UC Regents approved a modified deferred compensation program on November 15 that will give all eligible employees additional financial reward by way of a special retirement account. The special account, called a Capital Accumulation Provision, will be available to all eligible UC employees who are members of the University of California Retirement Plan. "All our employees work very hard to help keep UC a premier educational institution and they deserve to be recognized accordingly. Since we are only able to give modest raises on a systemwide basis this year, we wanted to try and find additional forms of rewarding people financially," said Joseph P. Mullinix, senior vice president for business and finance. "And even though this won't change employees' incomes this year, it does give eligible employees throughout all of UC a financial boost later on." Due to the recent economic downturn and resulting decline in state revenues, the University of California received significantly reduced state funding for 2001-02 salary increases. The special account, called a Capital Accumulation Provision (CAP), will be available to all eligible UC employees who are members of the University of California Retirement Plan (UCRP). The CAP being proposed will put the equivalent of 3 percent of the employee's salary into a separate retirement account in UCRP where it will earn a specified rate of interest (currently 7.5 percent) until the employee begins to draw on retirement funds. This is not the first time UC has offered employees a CAP program. In the 1990s, when the state's budget was also under severe pressure, eligible employees received CAPs to offset disappointing salary increases. In the last 10 years, UC has offered five separate CAP programs. To be eligible to receive the CAP accrual credit, employees must be active UCRP members on April 1, 2002. This would include UCRP members on sabbatical or approved leave of absence. Disabled, retired, and inactive members would be excluded.