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Hello all, I've found this discussion helpful and interesting. I wasn't able to attend SFUFA's info sessions on the pension proposal and so it's beneficial to be able to hear these different perspectives from colleagues at different points in their
career. However, I want to push back on the idea that a switch to the DB pension plan is by and large a bad deal for younger faculty. I understand Tamon's points and they are legitimate points. But it's not obvious to me that they generalize
to most or all younger faculty and I believe many younger faculty stand to benefit a great deal from a switch to the DB pension plan.
Tamon is right that younger faculty find themselves in an economic position very different from faculty who were hired 15 or 25 years ago found themselves in when they arrived. Tamon's point is that many such faculty have very high mortgage
payments (in addition to other debts and obligations) and taking money out of their biweekly paychecks will make attending to these debts and obligations unduly difficult. But there are many younger faculty who don't have high mortgage payments precisely because they arrived so late that they weren't able to afford a mortgage at all. I suspect this is especially true for younger faculty with families.
And this is going to be true for many faculty hired now and in the future. Barring a significant change in the market, these are faculty who will not be able to rely on home equity for their retirement. And these are faculty for whom their current pension
plan is likely to be entirely insufficient to support retirement as a renter in Vancouver. SFU puts an amount equivalent to 10% of our biweekly salary into our pension accounts. Faculty without mortgages of course could put an additional 8% into an RRSP or some other retirement vehicle - if they can afford it. But it's not
clear that doing so is more affordable for them than it is for faculty with mortgages, given that rent prices have vastly outpaced inflation over the past 10 years and these faculty need to live close to campus. But even maxing out their RRSP would leave them
in a worse position than the new DB plan. And the reason for that is that Canada
permits a greater percentage of your total income to count as tax-deferred if you have a DB pension plan than if you don't. If we switch to the DB pension plan, then for every paycheck, an amount equivalent to 20.35% of your salary will be contributed (10.25%
from the university and 10.15% from the faculty member). So this is a difference of 2.35% of each faculty member's salary compounded every year until retirement. I'm sure we all know enough about compound interest to realize that this is likely to be a substantial
sum of money at retirement age. So for faculty members who have given up hope of buying property in Vancouver's current market conditions, the truly altruistic vote would be to give them an extra 2.35% of their salaries compounded annually for 30 or 35 years upon retirement.
Of course, this is also altruistic for those who have mortgage debts and other obligations: this is money that the law would not permit them to defer taxes on otherwise, even if taking advantage of it is difficult to do. So I'm not suggesting that Tamon's argument is not a good argument. I'm just suggesting that it perhaps doesn't accurately portray the situation that many or most younger faculty find themselves in and that faculty who are considering
following his advice to vote no might well consider a perspective that suggests doing precisely the opposite. Dai Heide *** Dr. Dai Heide Senior Lecturer & Undergraduate Chair Dept. of Philosophy Faculty Teaching Fellow, FASS Simon Fraser University |