BCCPP's penalty for leaving SFU before retirement

Dear colleagues,

I would like to expand on Michael and Nilima's point #3:

"3: If you decide to move to a different university/company which is not
   in the college pension plan, say at age 50, you lose in the college
   pension plan. Why? Because the college pension plan payout is
   multiplied by the average of your best 5 years of salary.
   For most of us that will be the 5 years before we retire.
   An example.
   Consider someone who starts at SFU at 35 years old and at 50
   is earning $120,000 per year and would earn $150,000 per year
   on average between 60 and 65 if they stayed at SFU until 65.
   If they leave SFU at 50, they give up 20% of the value of
   their savings in the college pension plan.
"

This issue is dramatically compounded when one leaves even earlier, because a huge chunk of progress-through-the-ranks component of salary growth is missed. It is not unfair to say that progress through the ranks from age 40 on could raise salary by 50% or even double it -- after inflation (which is accounted for by asset returns under either plan). In other words, consider:

- two colleagues who both join at age 30

- they make equal progress until age 40, when colleague A leaves SFU

- colleague B retires at SFU at 65, with salary 1.5 times to twice as high than it was at 40

So B gets 1.5 times to twice the pension claim as A on the years when both paid in the same. Since the overall pensions budget must be balanced, this means that when colleague A leaves at age 40, her pension contributions get raided to the tune of 30-50% and given to colleague B.

Please let me know if this calculation is correct or if I overlooked something important!

If it is correct, I think this is a huge equity issue. People may need to leave SFU young for all sorts of reasons, including:

- caring for children or parents

- following a spouse out of town

- being denied tenure

One more thing to ponder as a union: if we do move to the BCCPP, would there be any way to compensate or mitigate this issue?

Best regards

Lucas Herrenbrueck

Assistant Professor of Economics
Simon Fraser University
http://herrenbrueck.weebly.com