Retirement
Retirement Policy
The University of Otago Retirement Policy seeks to support staff preparing for their retirement. Early planning for retirement is mutually beneficial in that it gives both staff and the University a more secure future, and enables both parties to plan with confidence.
Retirement Gratuities
Under the University’s terms of employment, retirement is described as:
“The employer will approve a request to retire from an employee where that employee is clearly at the end of their career and is withdrawing permanently from substantially paid employment. Approval may be given in other circumstances by mutual agreement including retirement on medical grounds. The notice period is 3 months for General Staff, and normally 6 months for Academic staff.”
When can I retire?
There is no particular age, but individual circumstances and genuineness of their retirement are taken into account. We have staff retiring from late 50’s through to late 60’s, and staff have many reasons why they want to retire, from being well planned and wanting to access their superannuation pension and looking forward to it, through to feeling burnt out, not having the energy to cope with the demands of the job, through to not wanting to teach any more, or not wanting to research and only teach. Some staff want to retire, but on checking their entitlements, and financial situation, realise thay can not afford to retire, which can cause them stress.
At the same time, while staff may want to retire from full time employment, many want to contribute more and part time work appeals. From this, the phased Retirement Policy was born, which I will talk about in a moment.
What will I get when I retire?
All Academic Staff, and General staff employed prior to 9 March 1988, (these are staff on Grandparented conditions) may receive a Retirement Gratuity based on years of service:
| After years of service | A lump sum Gratuity equivalent to: |
|---|---|
| 10 years | 3 months salary |
| 14 years | 4 months salary |
| 17 years | 5 months salary |
| 20 years | 6 months salary |
For General Staff who are employed after 9 March 1988, and for some Librarian staff employed earlier than this, the Gratuity is calculated on working days, and shall be paid as follows:
| After years of service | A lump sum Gratuity equivalent to working days of: |
|---|---|
| 10 years | 22 working days |
| 15 years | 44 working days |
| 20 years | 65 working days (3 months) |
| 30 years | 86 working days |
| 40 years | 131 working days (6 months) |
Notes:
- There is a table starting from 10 years service, increasing for each 2 month period of service to 20 years, and then again from 25 years to 40 years service.
- While both academic and general staff can take this payment as retirement leave, in 23 years of experiency at the University, we have found that everyone has taken the lump sum Gratuity payment, rather than the leave.
This lump sum is taxable, so many staff choose a retirement date in April/May/June to reduce the amount of tax they have to pay on the payment. If received late in a tax year, and the person has already received greater than $70,000 gross, the gratuity is effectively taxed at 39%, where as at the start of the tax year, the effective rate is much lower.
In addition to the gratuity, staff are entitled to be paid for any annual leave that has not been taken, but staff with excessive balances are expected to reduce this to within reasonable levels, as this is a considerable cost to departments.
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