When negotiating termination or retirement agreements with individuals, either to induce an individual to leave the University, or to encourage him/her to stay, the following should be considered:

• Purchase of service credit is not considered earnings and will not impact the 6% calculation.
• Severance or separation payments are not considered earnings and will not impact the 6% calculation.
• Retirement incentive payments are not considered earnings and will not impact the 6% calculation.
• Base salary increases count toward the 6% rule.

Generally, payments that are directed toward increasing an employee's retirement annuity post-retirement are subject to the 6% rule. Lump sum incentive/separation payments are not.