In 1941 the legislature passed a bill (prepared by Dean Witham, of the College of Law) that enabled the university to implement a retirement plan that essentially mandated retirement at age 65 and provided that individuals and the university would each contribute 3 percent of salary per month to the plan. The plan was revised in 1942 to allow 1.5 percent of maximum salary, multiplied by the number of years employed, to a maximum of 40 percent of maximum salary to be paid to retiring employees.
A Joint Contributory Retirement System was established in May 1955, effective September 1, 1955, and a noncontributory retirement plan was instituted in 1981. In the Joint Contributory Retirement System, employees and UT contributed equally, at 5 percent of gross pay. In 1981 the state assumed the employee share of the contributions, in lieu of a portion of the funds that would have been distributed in raises. Employees in that year received an across-the-board 2 percent pay increase, and those employees who had been participating in the retirement plan were relieved of the obligation to make further contributions. Because retirement benefits from the state are based upon the highest years of salary and the effect of assuming the retirement contributions would adversely affect retirement calculations, all employees’ salaries were “indexed,” adding 3.6 percent annually for 10 years to salaries, partially to offset the calculation of the move to noncontributory retirement on the calculation of the highest five years of salary.