Re: switching to the BC College Pension Plan

[Julian Christians <jkchrist@sfu.ca>]

Hi
It should be noted that there are no guarantees with any plan. Depending on the funds in which you are invested, your current plan could lose a substantial proportion of its value if the market crashes.

The BC College Pension plan is evaluated every three years to assess its sustainability and, if necessary, adjustments may be made to the contribution rates or to the benefits. Note that changes to the benefits only occur on a go-forward basis (i.e., they do not change the benefits for the years that you have already accumulated). It is therefore true that benefits may be reduced in the future. However, this would only happen if market performance was reduced for a prolonged period, and such a scenario would also impact your retirement income under our current plan.  

One thing that the BC College Pension plan does is spread the risk of reduced market performance over members, e.g., in our current plan, if the stock market crashes tomorrow, that will have a huge impact on members close to retirement, but little impact on others. In contrast, with the College pension plan, a crash tomorrow would have a small effect on everyone, depending on how long it lasted. Obviously a slower recovery will have a greater impact in both plans.

Another issue is how well managed the plan is. The BC College Pension Plan's investments are managed along with the other provincial public sector pension plans (teachers, nurses, municipal workers)- this is a HUGE amount of money, so my feeling is that they are able to hire fund managers that are at least as competent as those of other pension plans (e.g., our current plan)- this is simply my opinion and I don't have any data to back it up, but it is important to remember that if one questions the competency of the college pension plan's management, one should ask similar questions about our current plan (and the management of any other investments you have). 

I don't know about union pension funds in the US, but the BC College Pension Plan is managed by a board with members appointed both by government and by the labour groups that are members. This balances the interests of the government (who have to pay into the plan, and don't want to pay more than they need to) with those of the labour groups (who will want to increase benefits to members). The evaluation of the plan's sustainability is done by a third party. For more detailed information about the BC College Pension Plan and how it is regulated, please see
college.pensionsbc.ca/

Cheers
Julian

----- Original Message -----
From: "George Kirczenow" <kirczeno@sfu.ca>
To: sfufa@sfu.ca, "Neil Abramson" <nabramso@sfu.ca>
Cc: academic-discussion@sfu.ca
Sent: Friday, April 22, 2016 10:47:12 AM
Subject: switching to the BC College Pension Plan

Hi,
Since the SFUFA is discussing with the admin the possibility of 
switching to the BC College Pension Plan, I think we should be 
aware that various union pension funds in the US are currently in financial trouble 
and are looking like they have to cut payments to
their retirees or eventually go bankrupt. See for example the recent Washington Post article
https://www.washingtonpost.com/news/get-there/wp/2016/04/20/one-of-the-nations-largest-pension-funds-could-soon-cut-benefits-for-retirees/
Is there any guarantee that the BC College Pension Plan will not get into
similar trouble down the road?
Cheers,
George