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  • Statement by the Provost
    Academic Council The processes used by each committee as well as the academic cultures of individual departments and schools all differ slightly but the findings of the committees are startlingly consistent Each report documents bias against women faculty The bias takes many forms ranging from inequities in compensation and resources to more subtle forms of marginalization such as exclusion from substantive decisions at the departmental level The overall result is the same women faculty members are not equal participants in our faculty community A comment is repeated over and over that MIT is a man s world This must change We must redouble our efforts to change our environment to one where all colleagues are valued without bias according to either gender or race Increasing the number of women and minority faculty must be a focus of our efforts With this goal in mind we have restructured our processes for faculty searches to set higher standards for aggressive and thorough canvassing of the applicant pool for women and minority candidates With the support of the deans of MIT s five schools we are creating new processes to identify an increasingly large pool of women and minority candidates Initiatives for faculty recruitment must be coupled with faculty compensation and benefits that make a faculty career at MIT a very attractive option As you know under the leadership of Professor Lotte Bailyn and the Council on Faculty Diversity we have recently created or revised a number of policies in order to help our faculty balance their professional and personal lives We revised our promotion policies to delay the tenure decision by one year for women faculty who bear a child We also have put in place a policy that would provide paid release from teaching and service for one semester to any

    Original URL path: http://web.mit.edu/faculty/reports/provost.html (2016-02-01)
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  • Report of the School of Architecture and Planning
    Report Architecture and Planning Engineering Humanities Arts Social Sciences Sloan School of Management Science Overview Statement by the Provost John de Monchaux Bernard Frieden Terry Knight Chair Rosalind Picard Karen R Polenske Mitchel Resnick PDF for full report 449kb 63

    Original URL path: http://web.mit.edu/faculty/reports/soap.html (2016-02-01)
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  • Report of the School of Engineering
    Sloan School of Management Science Overview Statement by the Provost Mary C Boyce Penny Chisholm Edward F Crawley Lorna J Gibson Chair Karen K Gleason Nancy A Lynch John B Vander Sande This report was written with the assistance of

    Original URL path: http://web.mit.edu/faculty/reports/soe.html (2016-02-01)
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  • Report of the School of Humanities, Arts, and Social Sciences
    Planning Engineering Humanities Arts Social Sciences Sloan School of Management Science Overview Statement by the Provost Alan Brody Deborah Fitzgerald Co Chair Ellen Harris Diana Henderson Jean Jackson Co Chair Paul Joskow Anne McCants Ruth Perry PDF for full report

    Original URL path: http://web.mit.edu/faculty/reports/sohass.html (2016-02-01)
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  • Report of the School of Science
    Architecture and Planning Engineering Humanities Arts Social Sciences Sloan School of Management Science Overview Statement by the Provost 2002 update 1999 report PDF of update and full report 236kb 23

    Original URL path: http://web.mit.edu/faculty/reports/sos.html (2016-02-01)
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  • Report of the Faculty Policy Committee's Subcommittee on Examination and Term Regulations
    Institute of Technology May 1999 Revised March 2000 This report was presented to the Faculty at its meeting on March 15 2000 A motion to amend the Rules and Regulations of the Faculty was presented at that time and held over for a vote at the April 19 2000 Faculty Meeting The final motion was approved at the April 19 Faculty Meeting and Sections 2 10 and 2 50 of Rules and Regulations were amended effective July 1 2000 The current regulations governing examinations and assignments are outlined each term by the Faculty Chair To print a formatted copy of the Report download it in PDF format requires Adobe Acrobat Reader Full Report including appendicies PDF format 944 KB Appendicies only PDF format 853 KB Table of Contents Summary of Proposed Changes to Regulations I INTRODUCTION II METHODOLOGY III PRINCIPLES IV SPECIFIC FINDINGS AND RECOMMENDATIONS V RECURSION APPENDICES A M A Charge to the FPC Subcommittee on Examination and Term Regulations B 1998 Evening Exam Survey Results C Current Term and End of term Regulations D Summary of Violation Reports Fall Semester 1998 E Current Regulations on Scheduling Academic Exercises and on Evening Examinations F A Partial History of the

    Original URL path: http://web.mit.edu/faculty/reports/exam-termregs/ (2016-02-01)
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  • Preliminary Findings and Recommedations of the Educational Design Project
    not sufficiently emphasizing the long term relevance of the freshman curriculum we create an environment that encourages superficial learning of the fundamentals The effect as noted by many faculty in our meetings is that many students reach the sophomore year with a brittle understanding of concepts covered by freshman year subjects This particular problem with the MIT curriculum is nothing new It was noted in the first half of this century for example by no less a luminary of the MIT community than Vannevar Bush Bush attacked the reliance on fragmentary courses that students must pass in rigid sequence Students tended to take courses instead of studying subjects When the course is passed he forgets it as far as possible Our system degenerates into a series of forgetting points Bush bemoaned the failure of teachers to show students how to tackle a comprehensive engineering problem in its entirety drawing his tools from various sources ranging across mathematics physics chemistry and even economics Instead students were usually taught by a narrow specialist with an interest in the minutiae of a very limited field As a result The student is hounded Bush insisted His hours are crowded and closely scheduled he has little time for reading and reflection and he does little such All but the exceptional students become automatons 3 Bush s call for more cross disciplinary educational integration was echoed a half century later by the Boyer Commission who went on to articulate the structural problems that might be responsible In the earlier decades of the century research was characteristically confined within traditional boundaries of disciplines that had themselves been defined only a few generations earlier But in the years since World War II the continuing appearance of new departments and new programs that merge fields has proven repeatedly the permeability of the lines between disciplines Individual researchers find that pushing the limits of their field takes them into new territories and that the work they are doing may have much more in common with that of colleagues across the campus than with members of their own departments The principal barrier to interdisciplinary research and study has been the pattern of university organization that creates vested interests in traditionally defined departments Administratively all educational activity needs to belong somewhere in order to be accounted for and supported that which has no home cannot exist Courses must be offered under some kind of sponsorship students are asked to place themselves in one discipline or another The limitations on this kind of structure are recognized in every university by defining new departments approving new programs and creating new centers within in which to house courses often experimental that do not fit into the disciplines But those centers repeatedly must call on the departments to teach the courses knowing that the departments may balk at doing so since since the interdisciplinary programs deplete staffing for their own departmental courses 2 While it may be impractical to expect the Science Core for example to be taught in a fully integrative way many in the MIT community believe that we should do more to establish better connections among our curricular offerings for freshmen The Need for More Excitement in the Freshman Year The EDP found general agreement with the observation of the Task Force that our students enter the freshman year with great excitement and enthusiasm but many become disenchanted in the first semester Some of this is undoubtedly a natural consequence of the transition from learning in a high school environment to learning in a college environment But the EDP spoke with many students faculty and alumni who believe that our current curriculum does not do enough to sustain student enthusiasm for learning or to leverage upon their enthusiasm and sense of academic direction to achieve better educational results Differences Among Constituencies Although we found general agreement on many issues regarding the freshman year our meetings with student faculty and alumni representatives did reveal some differences of perspective In particular students want a freshman year that Serves as a transitional period from high school to college in terms of both social and intellectual development Encourages collaborative and not just competitive learning Provides more opportunity for self motivated and self directed learning Nurtures critical thinking skills and does not overemphasize the mere absorption of subject material transmitted through lectures Forges a link between classroom learning and the research enterprise at MIT and Prepares students to make a well informed choice of major Alumni emphasize that the freshman year should Encourage the development of good social skills and teamwork capabilities Place more emphasis on intellectual creativity Establish good communication skills Nurture a sense of intellectual fearlessness and self confidence and Build a sense of citizenship and an appreciation of world affairs Faculty especially want Students to learn quickly that satisfactory college level work involves dedication and mental self discipline Students to be more engaged in the subject material Students who want to be full partners in the learning process A freshman curriculum that builds a robust foundation for more advanced learning particularly in math and physics and No modifications of the freshman curriculum that require excessive demands on faculty time A Call for Change Our committee found general agreement that the freshman year curriculum as currently constituted does not serve our freshmen as well as it should Given anticipated changes in the educational needs of our students as articulated in Section 3 of the Task Force Final Report and an increasingly discerning clientele we feel that the gap between what students expect and what we deliver in the first year is widening Consequently we urge the Institute to take a proactive approach to this problem and recommend the following first steps toward a better freshman program Recommendation 1 Develop and Publicize an Institutional Strategy for the Freshman Year We believe that the freshman year educational program should be viewed as having strategic importance for MIT because it largely defines the tenor of the remainder of the academic experience here As a consequence the Institute as a whole and not just the departments and schools responsible for teaching freshman level subjects must develop a cohesive freshman program that can be adapted quickly to serve the rapidly evolving educational needs of our students This may require changes in the way we do business The department centric structure of MIT provides a good environment for undergraduate education once a student has decided on a major but it leaves the planning of the freshman year to an unfocussed and inadequately conceptualized process We are doubtful that the faculty will self organize adequately to permit the development of a powerful freshman year program without prompting by the Senior Administration and a conspicuous display of leadership in this direction We encourage the Senior Administration to make it clear that it will be a strategic priority of the Institute in the coming years to develop a carefully programmed freshman experience that will sustain and nurture the enthusiasm of the entering students in the face of extraordinary academic demands In publicizing this initiative they should be explicit that providing the resources for this revitalization of the freshman year will be a priority of the upcoming fundraising campaign Recommendation 2 Define An Improved Freshman Year Curriculum The single most effective way to revitalize the first year curriculum is to ensure that all freshmen participate in at least one substantive inquiry based educational activity Exactly how best to accomplish this remains a matter of active debate in the EDP Our research suggests that simply expanding the UROP program to involve more freshmen is an improbable solution because most faculty believe that most freshmen arrive at MIT without sufficient grounding in fundamental scientific concepts to be productive researchers in working laboratories Another possibility would be to modify existing freshman level GIRs by injecting significant components of inquiry based learning We hope that such modifications will occur naturally over time as inquiry based learning becomes better established as the educational paradigm but we feel it would be a strategic error for MIT to simply wait for this to happen Based on our deliberations thus far it appears that the most expeditious course of action is to introduce one or more additional requirements to address educational gaps identified by students faculty and alumni Our committee has discussed three different models for such additional requirements they are briefly described in the next three recommendations We believe that the CUP and the Institute in general should sanction and fund curricular experiments to explore their feasibility None of these experiments should be undertaken until we have established and found funding resources for a formal assessment program We encourage the Institute to build on the work of our committee by empowering a task force to design an improved freshman year curriculum There are at least two possible models for the proposed task force One is to simply view it as the next evolutionary stage of the EDP a group that includes representative members of the faculty and one or two students After due deliberation and experimentation this group could make specific recommendations to the CUP which would then in collaboration with the Committee on Curriculum bring a proposal for a redesigned freshman program to the full faculty for a vote The problem with this model is that the entire process hinges on acceptance by the full faculty of a detailed freshman program and we believe that there would be great potential for derailment by technicalities Another model is to first charge the EDP with developing a set of guidelines for freshman curricular design that would be fine tuned by various faculty committees and ultimately go on to a vote before the full faculty Such guidelines might be viewed as the list of core competencies and academic credentials that we expect students to have before entering the sophomore year In this case the faculty vote would be to accept or reject a set of principles rather than a specific set or sequence of subjects It would then fall to the task force which might include designated faculty representatives of all schools and should include students to act with power in redesigning a freshman program that would adhere to principles adopted by the full faculty This model is not unlike the Institute s approach to the development of specific subjects in the General Institute Requirements For example our faculty mandates that all students take two subjects in Physics but it is left to the Physics department to design the content of these subjects and to implement them By analogy the faculty might mandate that all students engage in some independent research as part of their freshman program but it would be up to the task force to decide how that principle would be implemented Presuming that this second model is the better choice of the two recommendations 3 through 5 below are designed to provide the task force with the background information needed for selecting the best implementation strategy Recommendation 3 Sanction Experimental Freshman Mini Courses While most of the engineering curriculum is inaccessible to freshmen who lack prerequisites many engineering concepts can be introduced to students with limited backgrounds Providing an early opportunity for new students to explore engineering fields would encourage more informed choices of majors We envision a variety of half semester six unit subjects without prerequisites that are specifically designed for freshmen We propose them as mini courses of limited duration so that students can mix and match to explore interests that might lead to major choices and so that students can adjust their load depending on the demands of other subjects While these subjects ought to be creatively linked with the evolution of the Freshman Advising Seminars their spirit and style is intended to be very different Although the first module instructor may very well be the student s advisor the advising process would be more in the traditional cluster mode In the spirit of the Task Force s call to develop better integration of student life and learning this part of the curriculum could be residence based in those cases where special facilities are not needed Recommendation 4 Sanction An Experimental Freshman Mission Project based learning a model that has been very successful in departmental major programs at MIT should be a fundamental part of a revitalized freshman curriculum An experiment that might demonstrate the viability of one implementation strategy is Mission 2003 The Concept Mission XXXX where XXXX stands for the graduation year of the freshman class would be a new 12 unit required freshman subject designed to review and reinforce concepts from the Science Core and the humanities to require the creative integration of those concepts to address complex problems and to encourage students to collaborate on finding solutions to those problems Mission 2003 could be a pilot version designed to explore the feasibility of such a class At its first meeting students would be given a vague but intellectually challenging mission to design a program to determine whether or not life has existed on Mars Their goal for the semester would be to develop a Mission 2003 web site to articulate fully their proposed program For the remainder of the first class the students would brainstorm to decide on how the problem might be broken down into ten distinct tasks raising funds for the mission designing a biological test for signs of current or past life designing a delivery vehicle for the test apparatus etc Each of these tasks will be assigned to a 5 person working group and these groups will coordinate their efforts to create the final web site Structure and Staffing The pilot would accommodate 50 second semester freshmen preferably having sufficient credits to qualify for sophomore standing so that taking an additional subject would not slow them down in their progression through the standard curriculum The subject would be lead by an educational team consisting of two faculty supervisors or a faculty supervisor and a graduate assistant a technology coordinator and ten upperclass mentors The faculty would bear the responsibility of establishing the overall structure of the subject and of modifying that structure during the semester as necessary The technology coordinator would ensure the development of a web based communication infrastructure for the subject The upperclass mentors would be responsible for facilitating team development as the semester progressed Classroom Requirements The subject would meet formally for three hours each week The Monday meeting will be devoted to lectures by the faculty and other guests on subjects pertinent to the mission Preferably these meetings would take place in a lecture hall with excellent audiovisual capabilities The Wednesday meeting would will be run by each team in turn for weeks 2 11 Each team would present their plan for carrying out their task and the faculty would lead a whole group discussion during which other teams would give the team of the week advice and offer any suggestions they may have to improve their effectiveness The Friday slot would be a specified time for breakout meetings of the teams and would require 10 classrooms or preferably casual meeting spaces for 6 8 people Grading Grading would be based on team performance on the Wednesday presentations and the final web project and on individual participation during discussions Recommendation 5 Sanction Trial Laboratory Subjects for Freshmen A different way to incorporate project based learning is to require each freshman to take one of a variety of more specialized laboratory subjects We have referred to this model informally as the Freshman Project The Concept The central aim of the Freshman Project would be to incorporate inquiry based learning in the first year and to provide students with hands on experience through laboratory subjects that include a strong experimental design component In steady state it might consist of 20 40 Freshman Project Laboratory subjects that are created and taught by a individual faculty members or multi disciplinary teams of faculty with the help of advanced undergraduate teaching assistants The students would work in teams to devise a solution to a problem defined by the faculty member or members leading the class The project in each subject would involve an experimental or design component broadly defined In fact it is not appropriate to be too rigid about the form and content of the proposed new courses since they will span a variety of disciplines including experimental science engineering design social science studies etc There should be however a set of principles and guidelines formulated by what we might think of as a Freshman Project Steering Committee drawn from the ranks of the faculty and charged with approving proposals for new laboratory subjects established to consider and approve proposals for these courses The guiding principle could be drawn directly from the description of the current undergraduate Laboratory Requirement as described in the MIT Bulletin In these subjects the student plays a substantial role in planning the design of the experiment selecting the measurement technique and determining the procedure to be used for validation of the data The laboratory subjects emphasize as much as possible work of project type rather than routine experimental exercises The subjects are designed to stimulate the student s resourcefulness and ideas In order to accommodate the Freshman Project into our first year program we might substitute it for the current Laboratory Requirement and Freshman Advising Seminars In this scenario all first year students would enroll in the Freshman Project for 3 6 units in the Fall semester During this phase faculty instructors would lay out the background to problems that ultimately would be addressed by the student projects These subjects would be run much like the current Freshmen Advising Seminars Students would choose three different sections and rotate through these sections during the fall faculty would thus present their section to three different groups of 25 50 freshmen At the end of the semester students would choose which project they wished to enroll in for the

    Original URL path: http://web.mit.edu/faculty/reports/edp.html (2016-02-01)
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  • Final Report.html
    employees who have not retired and for whom MIT continues to hold an account After April 1 1999 all Plan participants will pay investment expenses associated with the expense ratios of the particular investment option that they have chosen MIT will bear the cost of the transition between MIT and Fidelity Investments With the exception of funds invested after January 1 1999 in the money market account no account was charged investment expenses and received gross return on the assets until April 1 1999 MIT will continue to pay the MIT based expenses of operating the Plan such as the communication and counseling that individuals receive from the Benefits Office and any on campus record keeping With the transfer of funds to Fidelity Investments participants receive net investment returns as occurs for a traditional mutual fund investment account Expense ratios are for the Fixed Fund an annual expense ratio of 22 of assets for the Variable Fund an expense ratio of 28 of assets Other choices will bear other expense ratios One option available to MIT participants as a core fund is access to the Fidelity institutional S P 500 Index fund at an expense ratio of 1 of assets roughly 50 below the best rate available to individual investors Also available through Funds Net is access to the Vanguard Institutional Index Fund at an expense ratio of 06 See Appendix 2 for a table of Annual Expense Ratios for Various Mutual Funds The Subcommittee has considered several issues in reviewing the transfer of MITRP investment expenses to participants With the move to participant choice of investment options each account will bear a specific cost depending on options chosen by the participant It has been suggested by some that MIT continue to pay the costs of the Fixed and Variable Funds expecting individuals to pay the costs of the other options they choose Another suggestion was for MIT to fund an equivalent portion of the expenses for all funds or to pay a portion of the costs for all participants in the MITRP for a transition period Alternatively MIT could transfer additional funds to individual accounts as an offset against future expenses These suggestions must be viewed in light of the fact that the Plan s investment options will include mutual funds and other funds that use the mutual model for funding expenses Mutual fund accounting systems are structured to deduct expenses daily so that net returns are reported In addition the daily deducting of expenses is outlined in a mutual fund s prospectus and must apply to all account holders as outlined by the prospectus This makes it virtually impossible to track gross returns for MIT participants There has been a shift away from being able to recover pension plan cost from the portion of the Employee Benefit Pool supported by federal contracts And with the move to supporting full faculty salaries on Institute funds MIT now pays a much greater share of the employee benefit expenses for faculty out of its general budget We also recognize that the faculty will benefit in other ways from the cost savings to MIT if Plan participants pay investment costs because the change will free up discretionary funds for educational and research purposes Thus the Subcommittee believes that this cost shifting should not be considered in isolation but evaluated in the context of all changes some of which increase costs to MIT and more generally in terms of the overall retirement benefits package For all of these reasons we believe this is a reasonable proposal 3 1d Change in Fixed Fund Accounting to Market Value Prior to 1999 a participant s Fixed Fund account value was expressed as its book value defined as the sum of MIT and individual contributions plus interest and dividends and a portion of net capital gains experienced by the Fixed Fund The aggregate of book values could differ from the aggregate market value of the fund Market value is defined as the sum of MIT and individual contributions plus interest and dividends and all net capital gains experienced by the Fixed Fund At the time of payment of the participant s account such as at retirement if the market value of the fund exceeds the aggregate of book values the book value of the fund was increased by a market value adjustment which multiplied the book value of an individual account by the ratio of aggregate market value to the aggregate of book values At all times since this book value market value procedure has been used the market value has exceeded the book value The amount by which market value has exceeded book value is the market value adjustment The possibility of crediting a benefit at a value other than the account s market value violates IRS qualification requirements Therefore the concept of book value and the associated smoothing procedure must be abandoned As a result all Fixed Fund accounts received a market value adjustment based on returns through Dec 31 1998 These funds were allocated in proportion to the asset value of the individual accounts and on January 1 1999 all participant Fixed Fund accounts were given the market value adjustment of 17 8 This is equivalent to allocating the funds as if everyone were retiring on this date From now on the accounts will be at market value each day Some faculty have raised the question of whether this method of allocating the unallocated funds is fair After considerable deliberation the Subcommittee has concluded the process used was appropriate The Subcommittee s reasoning is described in Appendix 3 3 1e Addition of Immediate Vesting As of January 1 1999 vesting is immediate That is a participant will immediately have a right not only to his her own contributions but also to the MIT contributions to their account This provides an obvious financial benefit to new participants Also under this change the Plan will no longer be required to test pre tax contributions to insure that high income individuals are not overly weighted in the Plan Therefore there will no longer be the possibility as has occurred of cutbacks of the contributions of highly compensated participants The IRS defines highly compensated individuals as those with salaries above 80 000 for 1999 3 1f Elimination of Post Tax Contributions on January 1 2000 Under the current Plan contributions to the Supplemental 401 k Plan can be either on a pre tax or post tax basis Pre tax means that you do not pay federal or state income taxes on the amounts contributed but do pay these taxes when the contributions are withdrawn Post tax means that you do pay federal and state taxes on amounts contributed but not when the contributions are withdrawn Because MIT accepted post tax contributions MIT was required to test contributions across the Plan to insure that higher compensated individuals were not over represented in the Plans benefits Because of the complexity expense and effects of this requirement MIT proposes to eliminate post tax contributions to the MITRP as of January 1 2000 As a result of this change MIT will no longer be required to carry out testing Many participants in the Plan have taken advantage of this option through MIT provided TDAs and will need to consider what the elimination of the post tax option will mean for them Post tax tax sheltered annuities TSA will still be available from outside providers TIAA for example sells them Like TDAs a TSA will also shelter earnings from taxation until withdrawal This would allow individuals to have the maximum earnings deferred from taxation The Benefits Office will be contacting all participants who currently contribute post tax to the MITRP to discuss their individual needs 3 1g Loans available with IRS restrictions Loans will be available under the new Plan for purposes such as the purchase of a home education or medical expenses This should encourage younger participants to put assets into the Plan knowing that they will be available under IRS restrictions for other uses Under these rules a loan will be available from 1 000 up to 1 2 of the value of the account not to exceed a loan of 50 000 The loan will have a 5 year payback period and payroll deductions will be used for repayment A longer period for home purchase will be available Spousal consent will be required to obtain a loan from pension assets Payment of a reasonable interest rate is required on these loans 3 1h Options Initiated on January 1 1999 As an intermediate step towards increased flexibility on January 1 1999 the MITRP introduced two options for Plan participants a new investment option and the ability to transfer funds among accounts When the transfer of funds to Fidelity was completed these were folded into the set of increased options The Employee Retirement Income Security Act ERISA gives advantages to retirement plans that have at least three investment options The MITRP met this criterion on January 1 1999 by offering a money market fund through Fidelity Investments into which participants can shift account assets The money market fund bears an expense ratio of 42 of assets thus reporting returns net of this charge ERISA also gives advantages to retirement plans that offer participants the opportunity to transfer assets among all available investment options at least quarterly Previously the MIT Retirement Plan restricted transfers of assets between the Fixed and the Variable Funds As of January 1 1999 a participant may transfer funds monthly among three funds Fixed Variable and the new money market fund without any restrictions on age After May 1999 with the new access to and information about individual accounts daily transfers are permitted across all of the options 3 2 401 k Post Retirement Withdrawals Annuities and Lump Sum Distributions With the move of participant accounts to an outside vendor Fidelity Investments there is a significant increase in the post retirement withdrawal options that are now available to Plan participants For many faculty pension assets represent an important part of their total assets Tax and estate planning is a complex area that each individual must consider based upon his her situation and it is not the charge of this Subcommittee to discuss these issues The Subcommittee has explored whether the MIT Retirement Plan allows the full range of payout flexibility with its potential for tax and estate planning that is permitted under IRS regulations governing 401 k plans Also we have considered whether the communication material available to Plan participants lays out these options in a clear manner 3 2 a MIT 401 k Withdrawal Options Participants do not begin drawing assets from the MITRP until they retire no matter at what age this occurs This is in contrast to IRA plans which require minimum distribution payments to begin at age 70 1 2 Plan participants who retire before age 70 1 2 have the option to take Plan assets either in part or in total as lump sum distributions scheduled or flexible payments rollovers into various IRAs or through purchase of various annuity contracts or to leave all assets in the Plan Once the retiree is over age 70 1 2 an election of a method to begin minimum distribution payments must be made The choice of the participant s beneficiary can determine the size of the minimum distribution payments to the participant Two provisions are specific to the MITRP Supplemental 401 k Plan and are not required by all 401 k plans First the MITRP requires that 50 of the MIT contribution to the MIT RPSM remain in the Plan or be transferred to an annuity and that these assets be paid out over a period of at least 10 years Thus this portion is not available as a lump sum payment or for rollover into an IRA Second the MIT 401 k Plan requires spousal consent for any payout plan that results in less than 50 of Plan benefits being available to the spouse However with spousal consent it is possible upon retirement to rollover Plan assets exclusive of 50 of the MIT contribution to the RPSM into an IRA The governing IRS framework for the distribution of retirement plan assets of IRAs is described in IRS publication 590 Many participants will find this option attractive We believe that in general the provisions governing the MITRP Supplemental 401 k Plan provide the complete flexibility of withdrawal options for Plan participants and their beneficiaries that are allowed by IRS regulations governing 401 k plans However there is at present no document that lays out Plan options for withdrawal in a clear and comprehensive manner Appendix 5 presents withdrawal options for both the MITRP 401 k Plan and the alternative IRA options for payments to participants and beneficiaries 3 2 b Provision for Early Distribution of Plan Assets Under the new Plan distribution of Plan assets will be available to an individual who is at least 59 1 2 and who arranges to work less than 50 time 3 2 c Addition of New Annuity Options An annuity is a specific contract for payout of all or a portion of plan assets It includes a choice of either fixed payments or variable payments that depend on the investment performance of the annuitized assets It can include a specific time for payments or provide payments for life It can include a specific beneficiary and additional specifications All of these options affect the schedule of benefit payments under the annuity contract Information about annuity options is available from the Benefits Office Once an annuity contract has been defined it cannot be changed Under the new Plan MIT will continue to offer its traditional annuity for the defined benefit portion of the Plan MIT will continue to take Supplemental 401 k RPSM money back into the Benefits Fund to provide an annuity for the defined contribution portion of the Plan using the same interest rate assumptions and mortality tables as have been used in the past MIT will also offer annuities at negotiated group rates from outside carriers to provide a choice For its annuities MIT s interest rate is the trailing 12 month average rate of 10 Year Treasury notes determined quarterly limited not to go up or down more than one quarter of one percent from the rate used in the preceding quarter so that interest rate lags market increases and decreases While faculty who benefited from slowing interest rate declines may have been pleased those who were hurt by slowing interest rate increases expressed dissatisfaction If MIT continues to offer the choice between an annuity from MIT and from an outside carrier the difference in interest rates offered by MIT and the outside carrier could create an additional expense to MIT since participants will likely make the choice of an MIT annuity only when the MIT rate is more favorable than the commercial rate The issue of MIT continuing to offer annuities is currently being re examined 3 2 d Death benefits Since Plan assets can represent an important part of the total assets of Plan participants it is important that participants give some thought to how these assets will be passed on to beneficiaries at the time of death With spousal consent in the case of married participants participants have considerable flexibility in designating beneficiaries to receive Plan assets at the time of death Payout of Plan assets upon death depends upon the choice of beneficiary spouse non spouse and age and whether minimum distribution payments have begun The choice of beneficiaries not only affects the disposition of asset after death it can determine the size of minimum distribution payments to the participant during retirement Payments under an annuity contract follow the terms of the contract Plan documents and IRS regulations govern distribution of undistributed non annuitized Plan assets to beneficiaries Spousal beneficiaries are allowed to rollover lump sum distributions into spousal IRAs or to continue to receive Plan distributions Non spouse beneficiaries of Plan participants who die before retirement or before minimum distribution payments have begun receive a single lump sum payment Under current IRS regulations they may leave the assets in the Plan for five years or for a designated beneficiary plan assets may be distributed over the expected life of the beneficiary However no MIT Annuity will be available for this distribution Non spouse beneficiaries of Plan participants who have begun minimum distribution payments continue the payment schedule set up by the participant See Appendix 5 4 Changes Effective January 1 1999 in The Basic Plan The noncontributory defined benefit portion of the Plan is referred to as the Basic Plan It was created in 1989 with the merger of the RPE and certain benefits from the RPSM MIT will continue to pay all of the expenses associated with the Basic Plan Under the Basic Plan a retiree receives the larger of the annuity calculated using two different methods of calculation This maximum approach is a consequence of the earlier merging of two separate Plans One calculation is an annuity equal to 1 65 of the sum of salaries received in all years between 1989 and the date of retirement actuarially adjusted to provide the full benefit at normal retirement age NRA The second calculation is the annuity that could be purchased given annuity pricing at the time of retirement by the amount in a notional or shadow account which is credited with 5 of salary each month and earns a notional rate of return To date the 1 65 calculation has yielded larger retirement benefits for almost all retirees since this maximum approach was initiated However for those who were members of the RPSM there is an alternative Although a Qualified Spouse Benefit QSB is available to all RPSM pre 1989 Plan members under both the 1 65 and the 5 account methods the QSB for the 5 account is higher Thus to receive the higher QSB an RPSM participant must elect the annuity from the 5 account even if that results in lower payments than that from the 1 65 calculation 4 1 Pre Retirement Changes 4 1 a Accumulation of Benefits for the 5 and the 1 65 Accounts In the past the investment growth of the Fixed Fund was used to determine the growth of the notional 5 account This account also received a market value adjustment on December 31 1998 in the same way as the Fixed Fund as described above Under the current IRS regulations the continued use of the Fixed Fund appreciation as it is managed by MIT is not an option since IRS now requires an arm s length method to compute account growth Therefore to compute the growth of the 5 account after January 1 1999 MIT must select some market index whose growth is outside the control of MIT To increase the notional balance in the 5 account each month MIT has chosen to use the following method The first step is to calculate the return over the previous 12 months in an index based 75 on the Lehman Bond Index and 25 on the Russell 3000 stock index This index was chosen because it approximates the investment practice of the fixed fund the return on which was used in the past The second step is to apply a floor of 0 and a ceiling of 15 to this annual return Then the annual rate of return is converted into a monthly rate of return and applied to the balances in the 5 notional accounts A floor of at least zero is required by the IRS for a defined benefit plan such as the Basic Plan In the presence of a floor and without a catch up procedure a ceiling to balance the costs for MIT seems appropriate The Subcommittee finds that this method is reasonable This issue is further discussed in Appendix 4 However if we should have a period of prolonged moderate inflation it is likely that there would be more trimming of high returns than of low ones and it would be appropriate for MIT to revisit the 15 ceiling and raise it at least temporarily or make some other adjustment such as the introduction of a catch up provision Continued monitoring of the workings of this system is an important part of the provision of benefits The Subcommittee is also concerned that the present method of calculating the 1 65 Basic benefit is subject to risk for participants in the event of significant inflation We have examined this issue Appendix 4 and concluded that past contributions in the 1 65 account are eroded by inflation both for a long period of moderate inflation as well as a short period of high inflation It is not the place of this Subcommittee to recommend a particular change in this element which is not being changed otherwise However we urge the MIT administration to examine and possibly redesign the 1 65 accounts 4 1b Benefits Accrued past Normal Retirement Age NRA To avoid age discrimination benefits must continue to be earned for participants who work past normal retirement age Thus during one s working life at MIT both 5 of salary and interest on the 5 account will continue to be credited For the 1 65 account benefit two calculations will be done The first is the annual payment that would be paid with the participant s account credited with the additional 1 65 of salary for the years worked after NRA with no actuarial benefit for starting the payments at an age past the NRA The second calculation is the benefit that would be paid if the salary contributions up to the NRA were used to fund an annuity starting at an age beyond NRA that is payments that are increased by an actuarial adjustment Under the Plan the participant receives the greater of the benefit from these two calculations Thus if a participant who retires past NRA receives benefit payments that are increased actuarially to reflect a later starting date they will not also receive the benefit of the 1 65 of their salary accumulation for the years that they worked beyond NRA On the other hand if the payments calculated by crediting the participants account for 1 65 of salary for years worked beyond NRA are larger they will not also receive the actuarial credit for the later start of their annuity payments 4 1 c Pre Retirement RPE Under the pre 1999 Plan little or no RPE benefits were payable to the beneficiaries of unmarried RPE participants who die prior to beginning annuity payments Effective January 1 1999 the entire RPE benefits of unmarried participants are payable to their beneficiaries as a single lump sum or as annuity payments 4 2 Post Retirement Changes 4 2 a Changing of the Normal Retirement Age for the Basic Plan from 65 to 62 Under the pre 1999 MIT Pension Plan the normal retirement date was July 1st following the 65th birthday An individual retiring on this date who is entitled to receive the 1 65 benefit received the full sum of 1 65 of salary as an annuity Actuarial adjustments were made for individuals who chose to retire earlier than the Normal Retirement Age NRA The Executive Committee of the Corporation has approved a limited time change to the Normal Retirement Age NRA for the Basic Plan from 65 to 62 effective January 1 1999 and continuing through December 31 2003 They also backdated the calculation of the 1 65 pension benefit with an NRA of 62 to 1989 so that benefits earned since 1989 have an effective NRA of 62 This change will be revisited before the end of the fifth year to ascertain whether the assets of the Plan continue to support the decrease in normal retirement age to 62 and to determine if the change has resulted in an increase in faculty retirement As a result of this change participants may elect to retire at age 62 and receive annuity benefit payments from the accumulation in their 1 65 account since 1989 without the current reduction for early payment Or if participants elect to retire before age 62 the reduction for early retirement will be less than would be the case if the normal retirement age were 65 Finally for those who retire after age 62 two calculations of the benefit will be done and the larger of the two will be paid to the participant as discussed in section 4 1b The benefit under the 5 account is not affected by the change in NRA The decrease in normal retirement age from age 65 to age 62 adds a permanent increase to all benefits earned since the Basic Plan began on July 1 1989 January 1 1990 for some union members and to all benefits that will be earned as long as the NRA of 62 is in place If the normal retirement age rises back to 65 after December 31 2003 the higher age will apply only to benefits earned after December 31 2003 The effect of age 62 normal retirement age on benefits earned while it is in effect will not be lost For all Plan participants upon their retirement benefits will be the sum of the benefit earned during years when the NRA was 62 and that earned when the NRA was 65 Thus this change increases permanently the Basic Plan benefit for all participants no matter when they retire This occurs because the calculation of benefit for each year of employment will use an actuarial table adjusted to provide the full benefit at that year s NRA with corresponding increases for those who retire later In addition this change affects the Cost of Living Adjustments under the Basic Plan After Basic Plan benefit payments begin they will increase once every three years as determined by a cost of living formula The first increase is scheduled three years after normal retirement age By decreasing the normal retirement age from 65 to 62 the first cost of living adjustment for a person who retires at age 62 or earlier would be due at age 65 instead of at age 68 as under the current Plan 4 2 b Lump Sum Payout Under the previous MITRP a single lump sum payout was available if the value of the payment was less than 10 000 Under the current Plan a single lump sum payment will be available if the participant was employed less than 10 years with no dollar limit 4 2 c Annuity Payments Under the previous MITRP an MIT annuity payment option was the only option available if the value of the payment was greater than 10 000 Under the current Plan the annuity option is used if the participant was employed for 10 years or more 5 Participant Services 5 1 Communications The Benefits Office has carried out seminars for participants on these retirement issues and prepares written material in the form of annual reports and information about changes This effort has been increased in order to keep participants apprised about the changes under way now Also detailed fund descriptions and descriptions of services and options are being prepared and will be mailed to participants by mid to late April However it has been the experience of our Subcommittee that a great deal of time and effort is needed given the current documentation to master even the essential details jargon acronyms etc that are needed to understand the Plan and to make intelligent individual financial decisions One reason for the difficulty is that the Institute lacks the written material that is needed to help busy faculty and staff members learn what they need to know to manage their retirement affairs This report itself is an indication of the problem in the amount of descriptive material we have had to include in order to support our view of the changes It is our view that interests of faculty and staff have been well served by the MIT Administration in the way it has managed the Plan Perhaps lack of full understanding of its details was not so critical in the years when individual choice was limited But now there are more options in terms of both investment choices and choices about the form in which to take benefits With the expanded options it is important for an individual to understand the concept of the risks associated with investing as well as the risk of inflation and to understand the basics of investing and asset allocation so the value of material carefully crafted to educate participants is greatly increased This will be the continuing focus of the educational programs and resources that will be made available to the MIT community with the assistance of resources that will be forthcoming from Fidelity and others Similarly with increased options to take lump sums and to choose among annuities and scheduled payments in different forms it is important for participants to understand the benefits and limitations from annuitization and the differences across different kinds of annuities We need to devote resources to ensuring that those making these choices have the benefit of a good educational program The increased options for Plan participants within the 401 k framework requires that increased information be available There is a fundamental dilemma in providing precise information about 401 k plans as contrasted with IRA and Keogh plans For IRAs and Keogh plans the governing plan regulations and documents are well defined Since individuals have total discretion to change vendors for their IRA and Keogh assets vendors have a competitive reason to provide clear and precise information to plan participants If participants are dissatisfied with this information or with features of their plans they are free to immediately move their assets With respect to 401 k plans the situation is more complex 401 k plans are employer sponsored within a framework of IRS law and regulation 401 k plans are not uniform and different employers have different provisions Thus there is not single set of plan descriptions and reference materials available for 401 k plans which participants can access outside of their plan administrators Outside financial service vendors deal with the institution and not with the individual Therefore financial service institutions have less incentive to provide clear and precise information to plan participants about their options We feel that the current information available which describes the MITRP Supplemental 401 k Plan is not adequate and we recommend that the Benefits Office and Fidelity work to develop a Plan document for participants that has the level of clarity and precision that is typically available to describe IRAs 5 2 Counseling In the past the Institute has guided the investment policy for Plan assets even though almost all day to day investment decisions were made by outside firms Consequently the Institute assumed fiduciary responsibility for the risk of avoidable unsatisfactory performance After January 1 1999 each member of the MIT Retirement Plan is individually responsible for the management of his her Supplemental 401 k Plan assets The Benefits Office and Fidelity Investments will provide information concerning investment risks and returns but will not provide investment advice Fidelity Investments has made available a money market fund as well as two funds the Fixed Fund and the Variable Fund which are intended to continue the investment strategy that the Treasurer s Office employed in the past in exercising its fiduciary responsibility for the two funds available to participants in the Supplemental 401 k Plan They are intended as investment vehicles for individuals who are not experienced investors and who have been satisfied with the past performance of the funds managed by the Institute Each participant must decide whether these Cloned Funds are suitable investment vehicles for the long term future The possibilities for investment of participants funds are vast Beyond the many additional mutual funds that will be available through Fidelity Investments after May 1999 the establishment of a brokerage account by a member will permit access to any listed mutual fund as well as to securities issued by the United States Treasury As mentioned in 3 1b purchase of individual stocks is not permitted Individuals who are not experienced investors should seek professional advice concerning appropriate investment asset allocations The Benefits Office will have information available on the Fixed and Variable Funds the money market fund and the 8 10 core funds that have been selected by the MIT Supplemental 401 k Plan Oversight Committee At some later time Fidelity will provide a software package called Portfolio Planner which will be available to assist participants in selecting an appropriate mix of investments This software package will be populated with information about the core funds to aid individuals in allocating assets across the risk reward spectrum We urge participants to consider the spectrum of investment and withdrawal options now available and if they feel uncomfortable about the options to seek advice The Benefits Office has traditionally provided counseling to participants as they contemplate retirement We urge participants to seek information about withdrawal options and consider their personal situation well in advance of retirement Appendix 1 Glossary of terms Annuity a promise of income usually in the form of a contract that guarantees a fixed or variable payment to the recipient usually at retirement In a fixed annuity the amount will ultimately be paid out in regular installments varying only with the payout method elected In a variable annuity the payout depends upon the value of the underlying investments Annuity purchase rate the interest rate used to determine the factor for converting an account balance to an annuity income MIT s interest rate is the trailing 12 month average rate of 10 Year Treasury notes determined quarterly except that it will never go up or down more than one quarter of one percent from the rate used in the preceding quarter Basic Plan the Massachusetts Institute of Technology Basic Retirement Plan a defined benefit plan fully funded by MIT Benefits Fund the fund from which all fixed benefits are paid including any cost of living increases and for certain people who were members of the Retirement Plan for Staff Members the qualified spouse and early retirement supplement benefits All Basic Plan Benefits are paid from this fund Book value refers to Fixed Fund account balances prior to 1999 Contributions and credited earnings to accounts are known as the book value of the accounts Bond Index a weighted average of the value of selected bonds Cloned funds a term describing The Fixed and Variable Funds after transfer to Fidelity Investments management Defined benefit plan plan that promises to pay a specified amount to each person who retires after a set number of years of service Defined contribution plan plan whose contributions generally are defined by formula and allocated to individual participant accounts Benefits consist of the amount accumulated Generally each participant decides how to invest from among options offered Benefits consist of the amount accumulated in each participant s account ERISA Employee Retirement Income Security Act 1974 law governing the operation of most private pension and benefit plans The law eased pension eligibility rules and established guidelines for the management of pension funds Expense Ratio annual investment management fees charged to specific mutual fund accounts expressed as a percentage of account assets Fixed Fund an investment option under the Supplemental 401 k Plan The Fund is a balanced fund consisting primarily of bonds with some stocks Fixed Fund distribution rate the monthly credited investment return to accounts in the Fixed Fund The rate was determined by formula and reflected all interest and dividends realized and unrealized gains or losses on common stocks and other equity securities and realized gains or losses on bonds and other fixed income securities To maintain a relatively stable distribution rate gains and losses were distributed

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