Tag: early retirement

MBTA has decided to cut down on its workforce by offering early retirement to its personnel. The public transit agency wants to save some money and reduce its deficit by offering retirement. The employees who are not yet near retirement are also encouraged to leave the company if they are interested. The agency has taken this step first time since 1991.

The Early Retirement Plan

The Massachusetts Bay Transportation Authority wishes to save about $25 million by cutting off about 300 workers via the early retirement plan and several related benefits. The savings are expected to be used to ensure that the rising deficit of the agency is narrowed down some. This was stated by the agency officials. It is pertinent to add here that the budget deficit stands at $80 million currently.

What’s in Store for Workers Opting for Retirement

About 1,100 current employees of the agency are supposed to be eligible for the early retirement plan because all these people would be retiring by the end of the year. If one such employee opts for the voluntary retirement plan, he or she is offered a one-time incentive via cash. The average payment of such an incentive is around $16,500.

Voluntarily Leaving the Agency

The agency is also hoping that some of the employees who are not yet eligible for retirement would also be interested in leaving the agency. All the employees who have worked for the agency for over 5 years would be eligible for leaving the agency. Currently, about 2,200 are counted in this category.

If an employee who has served the agency for 5 to 10 years decides to quit the job, he or she is eligible for getting an incentive of $5,000. On the other hand, if the employee has served the agency for more than 10 years of experience would likely get $10,000 for leaving the agency. The agency has over 6,500 employees currently and hopes to see this number considerably reduced in the near future.

The Fact

The Chief Administrator of MBTA, Mr. Brian Shortsleeve recently stated that the agency had taken similar steps in the year 1991. It was done to reduce the expenses related to payroll. This shows that offering early retirement is not a new thing for the agency. It would be interesting to see how the employees will react to these new schemes of the agency that are nothing but an attempt to save money.

The University of Arkansas at Little Rock has resumed the early retirement benefits provision again. The University had discontinued it for tenured faculty members two years ago. The resumption of the benefits was done so that the programs can become more efficient and the university can save some money. University officials believe that the staffing changes due to this step would not impact students.

The Impact of Offering Early Retirement Benefits Again

The school’s director of budget and strategic initiatives, Sandra Robertson recently stated that the University officials were expecting that about 25 tenured and 5 non-tenured members would opt for early retirement and it would help the University to save $850,000. But only 11 have applied for early retirement so far.

The Cost Factor

The University officials admitted that they were hoping that this step would reduce the operating costs of the university and make the programs more efficient. The officials think that opening the option of early retirement is a better method than terminating employees to reduce operational costs.

The Real Savings

The fewer numbers of university members making use of the retirement benefits have reduced the savings amount predicted by the University. It now stands at $500,000. The University has not yet calculated the exact amount of savings generated from the 11 members who have opted for retirement. The savings figure depends on how many of the 11 agreements are approved and how many newly empty spots are filled, says Robertson.

The Numbers

The number of university members who have opted to enjoy their retirement benefits by applying for early retirement is far too low. It’s just 7 % of the 161 members eligible for the early retirement. The total number of the university staff is much higher and the 11 members are just 1% of it.

Retirement Benefits for Early-Retirees

Robertson has stated that the early retirees used to get an early-retirement incentive year-round. This benefit was equal to the nine-month salary withdrawn by a tenured faculty member. Now that the situation has changed, the university is just offering a one-semester benefit to the entire eligible tenured faculty opting for retirement. They would be eligible for the benefit only if they retire before the end of this summer.

Little Impact on Students

The university officials believe that the early retirement and retirement benefits changes of the faculty members would not have much impact on students. Some of the students may miss a favorite teacher but the changes in staffing would have the bare minimum impact on the number of sections and the progress to a degree.