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President Charles M. Vest has announced the establishment of a one-time special early retirement incentive program.
In making the announcement, he said, "As the Institute faces the prospect of staff reductions and changes in the way work is conducted, there have been many inquiries from faculty and staff about the possibility of MIT's offering an incentive for early retirement, in addition to the programs already in place. Careful consideration has been given to this possibility, and last Thursday the Executive Committee of the Corporation approved a special early retirement incentive to be made available in the spring of 1996."
Those eligible for this program include all faculty and employees who are at least 55 years old and who have 10 years of MIT benefits-eligible service as of September 30, 1996. Approximately 1,200 people will be eligible for this option. Those wishing to take advantage of this option must delare their intention to do so between March 1 and April 30, and must retire between April 1 and October 1, 1996. (Members of the Academic Council and officers of the MIT Corporation are not eligible for this program.)
Commenting on the decision to offer a special retirement incentive, President Vest said, "Over the past few years, the Institute has been operating in a very challenging environment. MIT is dealing with fewer federal dollars for research and has limited opportunities for increasing income from traditional sources. At the same time, there has been significant growth in the size of the staff in order to support growing needs in many areas including, for example, research administration, financial management, fundraising and computation services. These changes have put an enormous strain on MIT's budget. As a result, the Institute is reengineering a wide variety of services in order to achieve new levels of efficiency and productivity and to ensure our continued excellence and financial health.
"One of the implications of these improvements, however, is that MIT needs to be a smaller organization. The special retirement incentives are intended to reduce the need for involuntary terminations while helping to further the strategic goals of the Institute. We are committed to a process of modest `downsizing' that is as fair and compassionate as possible and that recognizes the valuable contributions of the many individuals who have helped sustain MIT as a preeminent institution for so many years."
Dr. Vest also noted that the Faculty-Administration Committee and the Committee on the Strategic Review of Benefits will continue to look at the overall design of the Institute's Retirement Plan, which was created at a time when retirement was mandatory at age 65.
The special retirement incentive will add to an individual's monthly retirement benefit an amount equal to 10 percent of the person's current monthly base pay.
For example, a person with a salary of $36,000 earns $3,000 a month. So the special retirement incentive would add 10 percent of $3,000, or $300 each month, to that person's retirement benefit. In addition, the special retirement incentive will provide a temporary bridge payment of $500 a month for those between 55 and 62, who are not yet eligible for Social Security benefits. Thus, this individual would receive $800 a month ($500 plus $300) until the age of 62 and $300 a month thereafter, in addition to his or her regular MIT pension.
A person who qualifies for the special retirement incentive also has the option to retire from MIT, begin receiving the special incentive payments (10 percent of salary and, if applicable, the Social Security bridge), and defer receipt of his or her regular MIT pension until a later date. In that way, the individual's regular MIT retirement benefits would continue to grow.
Statements with personalized calculations will be mailed by mid-February 1996 to those eligible for the special retirement option. In order to provide the best service to these individuals and to continue to provide day-to-day services to the entire MIT community, the Benefits Office will set up a special team to answer questions and concerns of those eligible for the programs. This service will begin after the individualized statements are mailed in February. Those wanting a rough estimate of their regular MIT pension benefit before then can refer to their 1994 Statement of Retirement Plan Benefits and check the "total benefit" line on the front of that statement. The Benefits Office requests people to wait until they receive their personalized statements before calling for more detailed information.
Additional information about the special retirement incentive(s) will be made available through Tech Talk articles and through specific communications to those eligible. Members of the MIT Benefits Office will also hold group meetings and conduct individual counseling sessions.
In addition to the special retirement incentive available to all faculty and employees, the Executive Committee approved an additional plan to encourage faculty retirement in the interest of promoting intellectual renewal of the faculty. (See the accompanying article for details on this plan).
A version of this article appeared in MIT Tech Talk on December 6, 1995.