Susan Ashley Wilson, program coordinator for the Center for Latin American and Caribbean Studies, has worked at Duke for 32 years. When an early retirement incentive package arrived in her mailbox Tuesday evening, Wilson said she saw a once-in-a-lifetime opportunity to leave her career and try new things.
Wilson said she will consider accepting the incentive although she may have to find another position because she is too young to draw Social Security benefits.
“One can never be certain what the future is going to bring,” Wilson said. “In this economic climate, one takes what is there, and with the incentive at least there is something interesting that provides you with some options.”
The University mailed 198 early retirement packages last Friday to employees receiving monthly salaries as part of its latest incentive aimed at cost-cutting, said Kyle Cavanaugh, vice president for human resources.
This latest early retirement package represents a small part of Duke’s effort to cut about $125 million from its budget over the next three years. An early retirement incentive offered to biweekly employees over the summer has already saved the University about $20 million.
Administrators announced at an employee forum last month that they would offer early retirement incentives to monthly salaried employees. Each department received a list of its qualified employees from the central administration, and department leaders chose the employees who would be offered the incentives, said Executive Vice President Tallman Trask.
For the retirement incentive to become available, an employee must meet the Rule of 75–their years of service added to their age must add to 75 or higher. Reaching the Rule of 75 would qualify employees for retiree health benefits, accrued vacation time up to 40 days and two weeks of pay for every year at the University up to 26 years. The position must not be funded more than 50 percent by grants, and ideally it could be restructured or eliminated.
Trask said administrators approved departments’ final lists of employees.
Wilson said the most difficult factor in accepting the package is the short notice employees were given to leave their positions. Employees have until 5 p.m. Dec. 8 to accept or decline the package and then an additional week to finalize their decisions, leaving little time to prepare their finances for retirement.
Those who choose to retire can select Dec. 31 or Jan. 29, 2010 as their official retirement date.
Trask said officials do not expect the same success they had with the biweekly-paid staff early retirement incentive that was offered over the summer. That package had an acceptance rate of about 35 percent.
Trask said he “would be surprised” if 50 employees accept this latest incentive.
“It depends a whole lot more on personal circumstances as to whether it’s attractive at this point, and we have no idea who it’s going to be attractive to,” he said.
This round of incentives targets employees who might be thinking about retirement in the next few years, Cavanaugh said. To help employees make their decisions, he said the University has focused on providing employees with as much information as possible. The packages include lists of frequently asked questions and a data sheet breaking down the values of the package and what benefits follow the employee into retirement, he said.
Cavanaugh added that HR is also running group sessions for general questions and encouraging eligible employees to make individual appointments to discuss their benefits.
Those conversations could be helpful for younger employees like Betty Henderson, a departmental business manager at the John Hope Franklin Center for Interdisciplinary and International Studies, who has worked at Duke for 29 years. Although Henderson is also not eligible to receive Social Security benefits yet, she is seriously considering her retirement offer. Henderson said her savings suffered during the recession and that she would probably have to take another job, like Wilson.
“I think it’s a huge decision for someone, particularly in my situation not being old enough to get the additional Social Security benefits. However, this is a lifetime of work almost, and you know that this opportunity may not come around for another lifetime,” she said. “So there’s some pretty significant choices to be made, and it’s a very exciting position to be in, actually.”
Although the retirement incentive is a voluntary package, Trask said layoffs are still not out of the question. Officials will know by next summer whether they will be necessary.
Still, he added that employees offered the incentive will not automatically lose their jobs if they choose not to retire.
“If you got a letter, it’s not a certainty you’ll be laid off,” he said. “If you got the letter and we do have to do layoffs, it’s more likely you’ll end up on that list than not.”
Future personnel decisions depend on market performance and how well current workforce reduction measures work, Trask said. Officials estimate that various reduction measures have eliminated the equivalent of about 372 positions as of Sept. 17.
Trask said he does not expect to see new centralized cuts before next summer. Next, Trask plans to examine non-personnel areas like Information Technology and facilities.
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