Retirement Planning: New Faculty Orientation

Most Colleges/Universities require all full-time employs to be a member of a Retirement System, whether the choice is defined benefit or defined contribution. When the distinction is made clear, probably 85 to 90 percent of employees select the defined contribution approach over the more strict requirements of the defined benefit approach. The term used at Wendell University is Optional Retirement Program (ORP) that requires each employee to contribute 6.65 percent of the salary while Wendell University contributes 6.0 percent. This 12.65 percent of the employee’s salary is sent to the employee’s choice of a Carrier for investment. At the request of the Dean of the College of Business of Wendell University, Jack Pettyjohn, an investment advisor of Lovell & Co., makes a presentation every year as part of the new faculty orientation. Jack has a license to sell securities along with a license to provide investment advice. He has a preference for investment advice rather than selling securities. Consequently he receives calls frequently to make presentations to Corporations sponsoring 401(k) plans to their employees. Wendell University’s retirement plan is a 403(b), which is similar to the corporate 401(k) plan. Jack enjoys making presentations to University Faculty more than to the attendees of the corporate 401(k) plans. Jack considers Wendell’s Provost a friend, having had finance classes with the Provost when he was a faculty member in the College of Business. The Provost is also a contact man when other departments or Colleges at Wendell request similar presentations. At each presentation Jack believes that he was being challenged. He did not want to be considered to be a salesman with so many teachers looking forward to his presentation. He knew the audience was expecting tangible and useful data on retirement plans. The case is appropriate for all academic units that have retirement plans sponsored by the State or private schools. In addition however, the case would be appropriate for all businesses or organizations that sponsor retirement programs for their employees. Time to prepare for the presentation would be no more than three hours and for another hour for discussion.