Re: Pensions vs. Mortgages

One could view the proposed plan as beneficial to those that retire at 65 (I plan to be in my office well past 65). Alternatively, one could view the plan as providing choices as one gets older.  Nobody says one has to retire, but future health and family issues may require that you do so – i.e., security.  You never know.  The trade-off, for some, is choices now (e.g., paying down a mortgage faster, a nicer home, different investments, ...) or choices later (e.g., the proposed pension plan).

Finally, in the late 1990’s, the University and SFUFA agreed to a health benefits plan that allows for post-retirement benefits for existing SFUFA members, but not for those who started in the 2000’s.  Under the proposed pension scheme, there is the (surprising?) benefit that allows for post-retirement health benefits for everyone… again, as I understand it.

Derek Bingham

Professor

Department of Statistics and Actuarial Science

Simon Fraser University

From: Ronda Arab <ronda_arab@sfu.ca>
Sent: Monday, November 12, 2018 11:19:17 AM
To: Ellen Balka; Tamon Stephen
Cc: academic-discussion@sfu.ca
Subject: Re: Pensions vs. Mortgages

Hi all,

On the retirement issue, a few things to keep in mind. One does not, of course, have to retire at 65, although the DBP would make it possible for more people to have the option to retire at 65.

For those who plan to retire late or never: By Canadian law, at age 71 all contributions to pension plans must cease, and members of the plan must start withdrawing some money from their plan. This is the case on all pension plans. You can continue to work and draw a salary, but you will pay tax on the combined income of salary and pension benefits.

Best,

Ronda

Dr. Ronda Arab

Associate Professor of English

Simon Fraser University

From: Ellen Balka <ellenb@sfu.ca>
Sent: 12 November 2018 10:10:37
To: Tamon Stephen
Cc: academic-discussion@sfu.ca
Subject: Re: Pensions vs. Mortgages

Hi all-
As someone who is close to retirement who is both following this issue and has been to an information session I’ve decided to weigh in.

I’ll be voting yes in spite of the fact that as someone closer to 60 than 50 it will benefit me very little if at all.

In contrast to previous posters my sense is that
a) it will not particularly benefit those of us close to retirement unless we choose to buy back years of service, which we will have to do at our current earning rate; and

b) once taxes related to pension adjustments etc are accounted for I suspect that the difference in one’s net / take home pay for most people will be negligible;

c) between cost of living raises and step progressions any potential shortfall related to paying down a mortgage would be short lived.

I can’t comment on monetary grounds that it will be disadvantageous for people to work past 65 as I haven’t used that lens to evaluate options, but I can comment that in some circumstances having a top heavy department can be very problematic in that it can stifle change and contribute to disengagement which in turn can have long term consequences.

I’m a saver and good with money. I’ve maxed my RRSP out every year I’ve worked and I was in a tenure track job at 31 (though I lost some pensionable years leaving my first employer just past tenure). Under the current pension system my income will drop considerably when I retire. Under the proposed system had I been in it at the start I’d have a much better income at retirement.

Apologies for brevity- sent from my phone. -Ellen.

On Nov 11, 2018, at 3:44 PM, Tamon Stephen <tamon@sfu.ca> wrote:

Dear all,

SFUFA will soon ask us to vote on significant changes to pension plans. I appreciate SFUFA's efforts on this, in particular in identifying issues with the current plan. I've learned a lot from their resources*. However, I believe that we should vote NO in the referendum.

The proposal will _require_ all current SFUFA members to contribute 10% of salary (7% after taxes) to their pensions. This is a lot to ask, especially given the housing market here. Many SFUFA members have significant mortgages. For someone who is putting this 7% into reducing their mortgage, moving this to the pension is effectively having them borrow an extra $5000+/year to fund their contribution.    Other members are saving for down payments, sending money to family overseas, etc. I do not think that we should require them to contribute this money to a pension plan instead.

The question in the previous (2015) pension proposal was quite different, as people could opt out. Roughly, in that previous vote, 31% voted yes, 9% voted no, while 60% did not vote. So many people are not paying attention to SFUFA's pension proposals**. If anything, I feel there has been less discussion this time. I encourage those of you who are not paying attention to 1. learn about what is being proposed* and 2. if you are not sold on this to the extent of _requiring_ your colleagues to invest tens of thousands of dollars (which they may have to borrow), then please vote NO.

Note that since SFUFA considers this a referendum, they will proceed to implement this on a mandate of half of cast votes. So e.g. 26% for, 24% against, 50% not voting means _required_ contributions from 100% of SFUFA members, including the 24% who voted NO and the 50% who did not vote.

Best regards,

Tamon Stephen

* SFUFA has posted some resources which I found quite helpful:
<http://www.sfufa.ca/current-issues/pensions/resources/>

** I expect that those close to retirement are following this very closely, while those far from retirement are paying very little attention. As I understand the proposal, it may be beneficial to someone very close to retirement (esp. people who own homes outright), but not for younger members (esp. those who have mortgages or plan to).