When the UC Retirement Plan starts taking members' contributions again next year, Chancellor Larry Vanderhoef hopes to see a tiered system like the one that the university uses for health care premiums.

For health care coverage, the university has four assessment levels; people in the highest pay ranges pay the most, and premiums are less for people at lower ranges.

"I strongly support" the same kind of system for retirement contributions, Vanderhoef said last week after his quarterly brown bag chat with the university community.

The contribution system and assessments must be bargained with various unions, and Vanderhoef noted that contract bargaining is handled exclusively by the Office of the President, with talks carried out on a systemwide basis.

The Board of Regents decided in March to restart member contributions in July 2007. The university will contribute, too, the regents decided. The total contribution must be 16 percent of covered wages, the regents declared, but they did not decide how much members would be charged and how much the university would kick in. The regents could consider the split as early as their May meeting.

At the start of the April 13 brown bag, Vanderhoef's audience in a Memorial Union meeting room numbered about 50. It then doubled midway through when union demonstrators entered en masse to show their opposition to what they described as "pay cuts" — meaning that if the UC system takes a percentage of wages for retirement, workers will see their take-home pay go down.

Organizer Cody Potter of Local 3299 of the American Federation of State, County and Municipal Employees said the demonstrators primarily consisted of service workers — including custodians, groundskeepers, mail processors and delivery drivers — whom Potter described as the campus's lowest paid career employees. They wore buttons reading "We Struck. We're Stronger. We're United," referring to last year's one-day strike.

The demonstrators did not disrupt the brown bag. They stood quietly at the side and back of the room until some of them spoke up during the question-and-answer session that is a routine part of the chancellor's brown bags.

"Has the university taken into account that these changes would put us into poverty?" science lab custodian Marlene Slichter asked the chancellor.

Student Housing service custodian Chris Moore said: "We can't afford pay cuts and we would like you to back us up."

Vanderhoef responded: "People know my position," referring to his support for a tiered contribution system.

Retirement plan members have paid nothing into the plan for 15 years, because it had a surplus and a healthy return on investments, according to the university. Now the returns are less, and the surplus is dipping to a point where officials fear the plan will become less than 100 percent funded, officials have said.

"Today the plan is still healthy, but soon there will need to be more money in the plan so that it can keep paying benefits to today's retirees — and to those who will retire in the future," Vanderhoef told the brown bag audience.

When the regents set the contribution rates, the full amount will not be charged all at once, officials said in March. Instead, the regents decided to phase in the full amount in a multiyear strategy. Vanderhoef speculated on a 1 percent or 2 percent member contribution rate "initially."

But Potter said AFSCME is making the "assumption" that the contribution rate eventually will be 8 percent. A flier handed out last week reads: "We fought hard for gains last year, and we will not go backwards by accepting an 8 percent pay cut to fund the pension."

Last year's "fight," which included the April 14 strike across the UC system, netted pay increases of 3 percent in 2005 and 2006, and 4 percent in 2007, consistent with the university's budget compact with Gov. Schwarzenegger, subject to state funding appropriations each year. The contract includes equity adjustments "that will ensure that all UC service workers will earn at least $9 per hour," according to a UC news release. Also participating in last week's demonstration were people who identified themselves as being affiliated with University Professional and Technical Employees, or UPTE, and UCUAW, representing teaching assistants, readers and tutors.

The AFSCME flier also stated: "UC's attack on low-wage workers is especially painful as we learn more and more about how UC executives misspent taxpayer money."

Earlier in the brown bag meeting, before the demonstrators arrived, Vanderhoef addressed the executive compensation controversy in the UC system. He said the university had done nothing illegal, but nevertheless must revise its compensation policies to make them more transparent to the public.

His comments came just a few hours after a Board of Regents task force released its report on executive compensation. Vanderhoef cited comments by the co-chairs, Robert Hertzberg and Joanne Kozberg, saying they noted that "by and large, university employees were not overpaid," and that it was the "workarounds and lack of disclosure that's gotten the university into this mess."

The "mess" involves extra compensation to recruit and retain executives in a competitive marketplace, Vanderhoef said. "You will not see something that is strange and unusual with regard to comparable institutions," he said.

"While that helps explain, it doesn't excuse workarounds of outdated and inadequate policies. We must and we will do better."