Phased retirement
The phased retirement program is available for contributing Optional Retirement Plan participants who meet the following criteria. Faculty and staff who meet the eligibility criteria but who have an existing agreement to retire cannot rescind the existing agreement.
- At least 62 years old.
- Fully vested in the Optional Retirement Plan
- Sign an irrevocable, written legal agreement and release with ASU.
Phased retirement program benefits
You can reduce your workload and salary and make withdrawals from the Optional Retirement Plan for up to three years. A reduced workload will give you the opportunity to spend more time with your family and friends or pursue your favorite leisure activities. Your reduced work schedule is subject to negotiation and agreement between you and your dean or vice president.
You and your dean or vice president must decide together, based on the academic and business needs of your department, how much you can reduce your work schedule. In your written agreement, you must document the dates and percentages of your reduced work schedule. You can specify different percentages for different periods of your phased retirement. The standard range will vary between 50% and 95% time full-time equivalent.
Important note: If you reduce your schedule to below 50% FTE, you will lose your group insurance benefits, stop contributing to the ORP at the end of the fiscal year, lose the opportunity to apply for the Retiree Accumulated Sick Leave Program and not be eligible to retire from ASU. To retain group insurance benefits, apply for RASL, continue contributing to the ORP and retire from ASU, you must work at least 50% FTE.
Phased retirement duration
You may request up to a maximum of three years. The length of the phased retirement is subject to negotiation and agreement between you and your dean or vice president. The terms are irrevocable after you sign an agreement. However, if a participant and their dean or vice president mutually agree to either accelerate retirement or amend the reduced work schedule, the agreement can be altered. This option allows for unforeseen circumstances such as a change in health or the ability to fulfill the responsibilities of the negotiated phased retirement period.
Contact your dean or vice president as soon as possible if you need to accelerate your retirement date or amend your reduced work schedule, so the change does not adversely affect your department.
Faculty or academic professionals
Tenured faculty or academic professionals with continuing status irrevocably relinquish all status rights at the end of the phased retirement period. These types of employees will continue to be subject to regular employment contract renewals during the phased retirement period. Participation in the phased retirement program does not create a guarantee or implied agreement of continuous employment.
Benefits during phased retirement
How do I withdraw from my Optional Retirement Plan account?
Please allow 10 business days for your agreement to be submitted to Human Resources. Then you can contact your investment company to begin withdrawals. It could take several weeks for the investment company to process withdrawals. Please budget accordingly.
Do I have to continue to contribute to the Optional Retirement Plan during the phased retirement period?
Yes, if you are appointed 50% or more FTE. Both employee and employer contributions continue until your retirement date in accordance with Arizona Revised Statutes §15-1628C and the Optional Retirement Plan. Both contributions—your 7% and the ASU matching contribution—will be calculated on your reduced salary.
Will I continue to receive benefits during my phased retirement?
Yes, if you are appointed at 50% or more FTE, you may continue or elect participation in all ASU, ABOR and State of Arizona benefits plans—medical, dental, vision, basic and supplemental life, short-term and long-term disability, flexible spending accounts, reduced in-state tuition and other voluntary benefit plans (such as home/auto and long-term care). All benefits election changes, additions and cancellations are subject to open enrollment and qualified life event rules.
Your disability and life insurance benefits will be based on your reduced salary.
Am I allowed to contribute to the voluntary retirement plans?
Yes. You may continue or begin participating in the Arizona University System Voluntary 403(b) Plan and/or State of Arizona 457(b) Deferred Compensation Plan. You also can change your per-pay-period contributions to these plans.
Does phased retirement affect my sick and vacation leave accruals?
Yes, accruals will be pro-rated, based on your reduced FTE.
How does phased retirement affect my benefits under the Retiree Accumulated Sick Leave Program?
As long as you remain at 50% or more FTE, it does not affect the hourly rate of pay used to calculate the benefit; however, you will accrue sick leave at a reduced rate.
RASL formula:
Multiply your calculated hourly rate at the date of retirement by the number of unused sick leave hours (500 to 1,500 hours) at retirement. Then multiply that number by one of the following percentages:
25% — at least 500 but less than 750 sick leave hours.
33% — at least 750 but less than 1,000 sick leave hours.
50% — at least 1,000 up to the maximum of 1,500 sick leave hours.
If I am eligible for vacation, will my reduced work schedule affect my vacation payout upon retirement?
Yes. ASU bases the cash payment for accrued vacation leave on your current rate of pay and reduced accrual rate (determined by FTE) upon termination. You are encouraged to use your vacation during your phased retirement period.
Will I be eligible for retiree health insurance at the end of the phased retirement period?
Yes, as long as you satisfy the eligibility requirements for the State of Arizona retiree health insurance programs.
Arizona State Retirement System
Are ASRS participants eligible for this Phased Retirement Program?
No. This voluntary program is limited to contributing Optional Retirement Plan participants and is designed to allow participants to collect ORP benefits while working less than 100% FTE.
If I contributed to ASRS prior to joining the Optional Retirement Plan, will I be able to begin collecting ASRS benefits during the phased retirement period?
No. You only can begin distributions from ASRS (current system and previous plan) as defined under the plans when you terminate or retire from all ASRS participating universities and employers.
I am currently an ASRS participant but have an ORP account. Am I eligible for the Phased Retirement Program?
No. Only active Optional Retirement Plan participants are eligible.
Return to work after phased retirement
Am I allowed to work for ASU after the phased retirement period ends?
There is no guarantee of future employment after your formal retirement date, but the program does allow Optional Retirement Plan participants to return to work after retirement if positions are available. However, to protect the tax-deferred status of the retirement plans, it is imperative that no oral, written or implied agreement is made to work after retirement before the retirement date.
More info: ASU Return-to-work Rules
Note: If you also are collecting ASRS pension benefits, you will be subject to ASRS Return-to-work Rules.
If I return to work after my phased retirement period, will ORP distributions continue?
Yes, as long as distributions began before your return-to-work date.
If I return to work after my phased retirement period, will I be allowed to contribute to the ORP or ASRS retirement plans?
If you return to work at 50% or more FTE with the intent to work at least 20 weeks in the fiscal year, you must contribute to a mandatory retirement plan. This assumes you are not collecting ASRS pension benefits. View retirement eligibility information.
If I am collecting ASRS pension benefits and return to work after my phased retirement period, am I allowed to contribute to the ORP or ASRS retirement plans?
You cannot contribute to the ASRS if you are receiving pension benefits, but you have the option of contributing to the ORP. Any Arizona State Retirement System retiree who is considering returning to work for ASU or another ASRS employer should review the ASRS return-to-work rules and seek ASRS counsel before making any re-employment decisions. Call 602-240-2000 if you need assistance.
Will I be able to participate in the benefits program at ASU if I return to work?
Yes, as long as you are appointed at least 50% FTE for at least 90 days, you can participate in all ASU, ABOR and State of Arizona benefits plans: medical, dental, vision, basic and supplement life, short-term and long-term disability, flexible spending accounts, reduced in-state tuition and other voluntary benefits plans such as home or auto and long-term care.
May I re-enroll in the employee health plan if I have chosen the retiree health coverage?
Yes. If you already have enrolled in a State of Arizona retiree health insurance program, you can suspend your retiree health coverage and enroll in ASU health benefits. When you retire again, you must re-enroll in a State of Arizona retiree health insurance program within 31 days of your new retirement date.
Resources
ORP Phased Retirement Program Process
Fidelity, 800-343-0860
HR faculty services, 480-727-9900
TIAA-CREF, 800-842-2252