Hi all,
Thanks once again for many excellent comments, I want to
respond briefly to a few now, though there are still
some older ones that I hope to get to later.
First, I would like to mention that my colleagues
Michael Monagan and Nilima Nigam are organizing an info
session on possible downsides to the DB proposal at *AQ
4100* for *1:30pm tomorrow* (Thursday).
This is independent of this discussion (I think they,
like many people, are not on this list) and organized
for the benefit of the Math Department. However, I
asked their permission to advertise it more widely.
Note I probably will not be able to make it there myself
- I am Surrey based ... one of the reasons I'm
discussing this via e-mail vs. rather in person or
attending fora. I've never talked with Michael or
Nilima about pensions, but I find them to be very
insightful generally.
I can add that I wish that there had been a more open
ended discussion earlier in the process. I feel that
I'm learning a ton through this thread (though sorry for
the mailbox overload), in many ways more than I did
through SFUFA's resources including the recorded fora.
Which nevertheless are quite helpful, for anyone
joining late, do read: <
http://www.sfufa.ca/current-issues/pensions/resources/>.
I will comment that some of the information there is
arguably misleading. The pension cost calculator in
particular frames the costs in a way that I don't find
reasonable (ignoring inflation, for instance) and I fear
may gives some people the impression that they'll be
paying nothing after 3 years. Incidentally, I'd like to
thank David Broun and Julian Christians for offering
some drop in times to discuss pension issues during the
vote, I think this is a good idea.
A couple of other things I would like to reply to
quickly:
Chrsitof, thanks for the clarification, and also the
discussion about the implications of continuing past 65,
which for me has been the clearest explanation so far.
I certainly encourage other to read it. Personally I'm
ambivalent about how I feel about [dis]incentivizing
working past 65, but I encourage those who feel strongly
about it one way or the other to read that e-mail to
understand how each plan works for those near retirement
(if you are currently confused, as I was).
Martin, thanks for your clarification on your position.
I think I understand it now, but I also feel I
disagree, at least to an extent.
The point for me here is that I don't think there is
symmetry between the DC option (where considerable
choice is left to the individual) and the DB option
(where no choice is left).
In some sense I might say that there are at least 3 ways
you can plan under DC, say "Real Estate" (RE), "Life
Income Fund" (LIF) and "Annuity" (Ann). You could also
chose a combination of them, or something else (for
example, bringing your parents to Canada). Under DB,
there's only one choice, which is like the Annuity.
Let's take for granted that's much better, and call it
(Ann++). Even if everyone feels that (Ann++) is better
than (Ann), probably many think that (RE), (LIF),
bringing parents to Canada, etc. are better than
(Ann++). Arguably if people clearly understand there
options and vote self-interest, then one can use that to
justify a move to (Ann++). But I think there's a good
case that a bare majority for (Ann++) won't be
altruistic in that the difference between (Ann) and
(Ann++) is probably a mild gain for that group, but may
be a very significant loss the others.
Let me propose a hypothetical. Suppose that there were
an opportunity to implement mandatory contributions to
some kind of pooled retirement fund, which would provide
the kind of smoothing of benefits that some would like.
Suppose this followed a new law that made all these
contributions tax-advantage (so no 8% or 10% limit).
Would you favour joining such a plan? What % of
everybody's salary would you suggest we invest in this
fund? How would we determine this? I think it is a
complicated question. I could certainly imagine
interest in some fairly high numbers from faculty who
would do very well in such a scenario. If we have a
process where younger faculty are not engaged, it seems
that a possible outcome is that we'd end up with a
contribution of something like 25% passed by a
referendum where 40% of the (mainly older?) faculty
vote. (If the last one is any indication.)
I may be getting carried away here. I'm not generally
opposed to collective action, but I feel that 10% is a
lot to ask. (25% certainly would be).
In terms of altruism, in a situation, like here, where
the costs and benefits are somewhat ambiguous, but one
alternative provides much more freedom to adapt than the
other, I feel that the option with more freedom is
likely to be more altruistic, even if we have a very
limited understanding of other people's preferences
(such as will be obtained from a low participation
yes-no vote).
Best regards,
Tamon
________________________________________
From: Martin Hahn <
mhahn@sfu.ca>
Sent: November 14, 2018 10:00 AM
To: Tamon Stephen;
academic-discussion@sfu.ca
Subject: Re: Pensions vs. Mortgages
Thanks for another thoughtful contribution, Tamon. As
you seem puzzled by the conclusion of my note, let me
clarify. My argument was:
- What would be best for most people depends to a large
extent on personal preferences.
- We cannot know how these are distributed
- Thus there is no way to know how to vote
altruistically.
[I did not mention that everyone's voting for what is
best for them will, in fact, give us an _expression_ of
the distribution of personal preferences]
So everyone should vote in their self-interest.
In doing that, consider the fact that you do not now
know which plan will give you the most cash ( I agree
with Oliver that it looks like DB will be better, but I
also agree his numbers are too optimistic). Only actual
number crunching for your own case will tell you that.
But if DB is adopted, you will have be able to make the
decision to switch or not after the numbers are
crunched.
So (especially if you have only a few years of 10%
contributions to make), self interest provides no reason
not to vote for switching to DB. And if you were hired
after 2001, upping that ridiculous health benefits cap
is worth a lot (my own family would run out of benefits
in 2-5 years in its present state of health.)
Hope this makes my conclusion a bit less surprising.
M