- Associated Press - Thursday, March 24, 2016

SAN FRANCISCO (AP) - The Board of Regents of the University of California on Thursday approved a retirement plan for new employees that President Janet Napolitano says will save the fiscally shaky system a significant amount of money.

The retirement plan would apply to future employees hired on or after July 1. It caps how much of salary can be used to calculate pension benefits, with anything above the annual salary cap of $117,020 going to a 401k plan.

New employees also could opt to put all of their retirement into a 401k.

The retirement plan is part of a 2015 budget agreement that gave the university system $436 million to help pay down the system’s massive unfunded pension liabilities. In return, Napolitano agreed to implement a pension cap in line with other state employees.

She says the changes will save the system about $99 million a year, on average, over the next 15 years.

The plan would not affect current employees, of which there are roughly 200,000 on 10 campuses, five medical centers and other offices throughout the state.

Registered nurses were among critics who urged the board Thursday to reject the plan, saying it would hurt the quality of patient care and reduce the system’s ability to recruit staff.

Critics also objected to a provision that grants a more generous contribution from the university system to faculty but not to staff.

Employees generally prefer traditional pension plans that guarantee a fixed monthly income, but the trend in recent decades has been toward 401k plans that may not be so secure for retirees.

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