PA Creates Incentives for Early Retirement with New Plan

Phillips Academy will offer its employees a voluntary retirement incentive plan starting this July in order to “become more efficient and incentivize people who are thinking about retirement,” said Stephen Carter, Chief Financial and Operations Officer. The new retirement plans creates incentives or opportunities for those Andover employees who would like to retire voluntarily earlier than expected, according to Temba Maqubela, Dean of Faculty. PA will offer eligible employees health benefits for two years or until the employee reaches 65 years of age. In addition, the school will provide a certain percent of the employee’s salary for over 24 months. The prerequisites for the plan differ, depending on whether the employee is an administrator, staff member or faculty member. Administrators and staff wishing to register for the package must be at least 55 years old and have worked at PA for 10 years or more, with a minimum workweek of 20 hours a week. Faculty interested in the plan must be 59 years old or older and have worked for PA for at least 20 years, with a workweek of 20 hours a week or more. The previous retirement package, which lasted for five years, was eligible to all employees 62, 63 or 64 years old. Maqubela wrote in an email, “The current plan is viewed as a ‘buy-out’ plan designed for one year and exclusively for folks who have served the school for a minimum of 20 years, whereas the previous one was for those who had served the school for 15 years.” According to Carter, interested administrators and staff can begin signing up on June 29, while eligible faculty will receive the opportunity to register in the fall. Carter cited efficiency as one of the main goals behind the new retirement package, especially in terms of eliminating overstaffing. “We try not to lay off if we can help it. [This plan] will have them make their own choice,” he said. Carter said that retiring faculty members are not replaced if possible, but are replaced in larger departments with a younger teacher who makes less money. As a faculty member gets older, he or she makes more money, Carter added. Jon Stableford, Chair of the English Department, said, “I think it’s a great plan for some. It’s very imaginative on the school’s part.” Stableford said, “The plan will seem good to some people. To those already thinking of moving on, but for whom leaving did not make economic sense, this plan makes the departure more attractive financially.” Ruth Quattlebaum, School Archivist and Instructor in Art, will retire at the end of this school year. “The goal is to move out more ‘expensive’ and older faculty members that they can replace with younger, ‘cheaper’ and more vigorous employees. The downside is that [the school] loses the expertise and experience of older faculty members,” said Quattlebaum. She added, “[The school] gains enthusiasm and energy from the replacements of the older faculty.” “People make retirement decisions for many reasons that are not always financial,” said Quattlebaum. “[The new plan] is certainly an encouragement for faculty to think about retiring early or retiring at all.” Quattlebaum said that the change in plans is occurring at a time when PA needs to save money from its budget. Approximately half of the annual budget is allocated to faculty and staff compensation. Quattlebaum said that the previous plan was a little more generous than the current plan, but not by much. David Penner, Instructor in Math, said, “I turn 67 this fall, and I’m close to retirement. This looks like a very attractive plan. The plan will be a little expensive for the school in the short term, but the top people at the pay scale will retire earlier.” After the Board of Trustees met in March to discuss budget cuts, Carter, Maqubela, Barbara Chase, Head of School, and Maureen Ferris, Director of Human Resources, convened to form this new retirement package. “We finalized the plans in mid-April, and presented both plans during the Trustees meeting in May,” said Carter.