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Benefits

Phased Retirement

What You Need to Know: 

The University of Kentucky offers Faculty and Staff the ability to request Phased Retirement per Administrative Regulation 3:2. These procedures are for informational purposes and not intended to supersede AR 3:2 or any other policies. View A.R. 3:2 as a PDF.

Factors To Consider

  • Phased Retirees are able to begin taking distributions from their retirement accounts in order to supplement their income. Faculty employees should contact either Fidelity or TIAA‐CREF (Fidelity 1‐800‐343‐0860, TIAA‐CREF 859‐224‐6900) to initiate distributions.
  • Phased Retirement does not affect an employee’s health, dental, vision or life insurance. Mandatory Retirement contributions (the employee’s 5% and employer’s 10%) are prorated based on the Phased Retirement FTE.
  • Phased Retirees are no longer eligible for promotions or merit salary increases.
  • Once a Phased Retirement assignment has begun, it is irrevocable. However, if the department agrees, the employee can request to proceed with full retirement prior to the end of the approved assignment period.
  • If a Phased Retirement Assignment is subject to annual or periodic renewal, it’s the department or College’s responsibility for the administration of approving the renewal. However, the total time on a Phased Retirement assignment shall not exceed 5 years.
  • Keep in mind that Vacation Accruals while on Phased Retirement will be prorated based on the FTE. For example, many Faculty positions accrue 22 days(176) hours of vacation per year. If the Phased Retirement Assignment is at .5 FTE, the Faculty employee still accrues 22 days over the Fiscal Year, but this accrual is based on a 4 hour day instead of an 8 hour day. Accruing 22 days while at .5 FTE will result in 88 hours of vacation accrued throughout the Fiscal Year. Once a Faculty Phased Assignment ends, terminal Vacation payout upon retirement is paid in compliance with Administrative Regulation 3:6, Faculty Assignment and Vacation Leave.

Faculty Phased Retirement Procedure

1. Verify Eligibility Per AR 3:2: 
A Retirement Officer in the Employee Benefits Office will verify whether a Faculty employee is eligible to apply for Phased Retirement.  The Retirement Officer will verify the faculty member has 15 years of eligible service time and is age 60 or older.  A Service Check can be requested by calling 257-9519, option 3.  After you receive the Phased Retirement Agreement from the Employee Benefits Office, proceed to Step 2.

2. Complete the Phased Retirement Agreement , including other applicable documents: 
Requests for Phased Retirement should be submitted by the Faculty employee to the applicable Department Chair, Dean or Director at least 1 semester prior to the requested start date.  Here are items to consider.

  • Faculty Phased Retirement Agreement (access the form)
  • Distribution of Effort (DOE)
  • Research, Grant or Clinical Duties
  • Other Responsibilities
  • The FTE (Full Time Equivalency) shall be no less than .5 FTE, but less than 1.0 FTE
  • The salary is prorated by the FTE (additional assignments generally excluded)
  • Phased Retirement Agreements can stipulate the agreement is on a year by year basis and subject to renewal each fiscal year or can be greater than one year.  However, the agreement shall not exceed 5 years.
  • The Faculty employee must retire at the end of their Phased Retirement Assignment.
  • Once on a Phased Retirement assignment, the Faculty employee is not eligible for annual salary increases.

Phased Retirement is not an absolute right of the Faculty employee and each department or College should determine if Phased Retirement would be deemed in the best interests of the University.

3. Educational Unit Approval
The appropriate Chair, Dean or Director shall approve the agreement and forward to the Provost’s Office for final approval.

4. Forward a copy of the final Agreement to Employee Benefits: 
Upon final approval by the Provost’s Office, a copy of the fully executed Phased Retirement Agreement should be faxed or mailed to the Employee Benefits Office.  This allows Retirement Officers to track when the Faculty employee will ultimately be retiring.  Also, the Employee Benefits Office will make sure the Faculty employee’s benefits are not interrupted.

Employee Benefits, 115 Scovell Hall, Lexington, KY 40506-0064 or 323-1095 (fax)

5. Action is entered by the department in the payroll system (SAP):
It is each department’s responsibility to enter the Phased Retirement Action in SAP.  Directions for completing the action in SAP through PA 40 can be followed by clicking here.

There is an attribute that must be updated and it’s a good idea to contact a Compensation Analyst at 257-9555 option 6 or visiting their website.

The position number may have to be deleted and re-entered during the action, but can be the same position number used just prior to going on Phased.

Don’t forget to generate a Payroll Authorization Record (PAR) and forward to Compensation.

Additional Notes about Phased Retirement

Phased Retirees are able to begin taking distributions from their retirement accounts in order to supplement their income. Faculty employees should contact either Fidelity or TIAA‐CREF (Fidelity 1‐800‐343‐0860, TIAA‐CREF 859‐224‐6900) to initiate distributions. Phased Retirement does not affect an employee’s health, dental, vision orlife insurance. Mandatory Retirement contributions(the employee’s 5% and employer’s 10%) are prorated based on the Phased Retirement FTE.

Phased Retirees are no longer eligible for promotions or merit salary increases. Once a Phased Retirement assignment has begun, itisirrevocable. However, if the department agrees,the employee can requestto proceed with full retirement prior to the end of the approved assignment period. If a Phased Retirement Assignment is subject to annual or periodic renewal, it’s the department or College’s responsibility forthe administration of approving the renewal. However, the total time on a Phased Retirement assignmentshall not exceed 5 years.

Keep in mind that Vacation Accruals while on Phased Retirement will be prorated based on the FTE. For example, many Faculty positions accrue 22 days(176) hours of vacation per year. Ifthe Phased Retirement Assignmentis at.5 FTE,the Faculty employee still accrues 22 days overthe Fiscal Year, but this accrual is based on a 4 hour day instead of an 8 hour day. Accruing 22 days while at.5 FTE will resultin 88 hours of vacation accrued throughoutthe Fiscal Year.Once a Faculty Phased Assignment ends, terminal Vacation payout upon retirementis paid in compliance with Administrative Regulation 3:6, Faculty Assignment and Vacation Leave.

Staff Phased Retirement Procedure

1. Verify Eligibility Per AR 3:2: 
A Retirement Officer in the Employee Benefits Office will verify whether a Staff employee is eligible to apply for Phased Retirement.  The Retirement Officer will verify the staff member has 15 years of eligible service time and is age 60 or older.  A Service Check can be requested by calling 257-9519, option 3.  After you receive the Phased Retirement Agreement from the Employee Benefits Office, proceed to Step 2.

2. Complete the Phased Retirement Agreement, including other applicable documents: 
Requests for Phased Retirement should be submitted by the Staff employee to the immediate Supervisor three (3) months in advance.  

Supervisors should discuss the request with the administrator for their area or department. Here are items to consider.

  • Staff Phased Retirement Agreement (access the form)
  • Type of position, responsibilities, and work schedule of the employee. 
  • The department’s ability to “backfill” the position on a half-time basis and the duration of the agreement.
  • The FTE (Full Time Equivalency) shall be no less than .5 FTE, but less than 1.0 FTE
  • The salary is prorated by the FTE.
  • Phased Retirement Agreements can stipulate the agreement is on a year by year basis and subject to renewal each fiscal year or can be greater than one year.  However, the agreement shall not exceed 5 years.
  • The Staff employee must retire at the end of their Phased Retirement Assignment.

The department may decide not to approve the request. If the department does support the request for phased retirement, it is then submitted for approval to the Dean, Director, Associate Vice President or Vice President, and then in turn to the Executive Vice President/Provost.

FAQs about Phased Retirement

Can I retire earlier than the allowed 5 year phased retirement period?

Yes, you are able to retire any time during your phased retirement following regular retirement procedures.  Employees under age 65 must give a written notice to their department at least 3 months in advance of their retirement date.  Employees 65 years and older must give a written notice at least one month in advance.  Most phased retirement agreements are I one year increments; however, you must retire at the end of the 5 year phased retirement period.

Do I have to begin my phased retirement on a specific date?

Phased retirement does not have to begin at the beginning of the pay period anytime during the year.  When applying for phased retirement a request in writing must be sent to your immediate supervisor three (3) months in advance of the desired start date.  Your department will notify you if your request has been approved or if there may need to be some changes to your request.

How much sick and vacation time do I accrue during phased retirement?

The vacation and sick accrual rates are based upon the FTE for the position.  For example, an employee who works 8 hour day, 1.0 FTE will accrue 1 day of TDL per month at a rate of 3.69 hours per bi-weekly pay period.  When the employee moves to .5 FTE phased retirement they will accrue the same 1 day per month at the rate of 1.85 hours per bi-weekly pay period.

Will phased retirement affect my insurance plans?  My retirement contributions?

You will retain full-time status for benefits.  All your insurance plans will continue the same as if you were working a regular full-time assignment.  You will still continue to make contributions and receive the university’s match towards your retirement plan, but these contributions will be based on the actual prorated base salary paid. 

Can I access my retirement account during phased retirement?

Yes, you can access your retirement funds during phased retirement.  Contact your retirement carrier (Fidelity 1-800-343-0860, TIAA-CREF 859-224-6900) for distribution options and forms.

How do I apply for phased retirement?

Staff employees who are at least 60 years old and eligible to retire (contact Employee Benefits for a “service check” – 257-9519 and press option 3) and are interested in phased retirement should make the request in writing to their immediate supervisor three (3) months in advance.  Once the employee’s request has been granted, the “Agreement for Staff Phased Retirement” form will be completed by the department and signed by all parties involved.

What do I do when I’m ready to retire from the university?

If your phased retirement assignment is ending or you would like to retire earlier, you must follow the established retirement procedures.  Employees under age 65 must give a written notice to their department at least 3 months in advance of their retirement date.  Employees 65 years and older must give a written notice at least one month in advance.  Final approval of phased retirement is then sent to the compensation department in Human Resources.