Thanks to all involved in setting up the forum and all others who have tried to shine light on this issue, including SFUFA executives.
For me, and potentially many others in my age bracket (less than 50), the following are strong
cases against voting for the DB plan:
- While many colleagues are fortunate enough to be able to save considerably for their retirement, there is a good number of
us who may have difficulty in putting aside additional funds (thanks to the costs of housing, raising kids, etc.). Even though saving for retirement will be beneficial to us in the long run, many may have short term needs for the funds.
- The fact that one cannot will the principal to dependents is a major negative, especially for the first generation immigrants
to Canada who have started from zero in Canada and want to help out their kids.
- If one moves from SFU or BC, one’s savings will take a major hit.
- Lastly, under the DB plan, much of one’s choices are taken away (if to invest, how to invest, how much to invest, etc.). Obviously,
there is some piece of mind in having some guarantees, but I personally do not think they are worth the choices we are giving up, especially considering points 1 and 2 in the above.
Thanks to all for the helpful discussions and scrutiny.
Behraad
From: George Agnes <george_agnes@sfu.ca>
Sent: Wednesday, November 21, 2018 5:34 PM
To: academic-discussion@sfu.ca
Subject: Faculty Pension Options - Follow-up with some information that came out of a public discussion on Monday Nov. 19th
All,
Some of the information that was discussed on Monday’s open forum is;
(a) professional financial planners queried, and people who understand person finances better than I, have been unanimous is advising all individuals to
"obtain professional advice prior to casting your vote".
And to emphasize this point, I quote from one of our colleagues, sample questions to ask yourself and your financial planner are;
“ -What is the overall ROI / value that I expect to get from each option (based on contributing the same amount of income)?
- Should I be more concerned about the amount of capital available at retirement or the predictability of my income in retirement?
- Is this my only source of retirement income? Do I have other means to 'smooth' my retirement income?
- Do I expect to have longevity risk (risk of out living my savings)?
- Either way, do I need / want some of my income to be guaranteed?
- Do I want to be locked into contributing at this level from a cash flow perspective, or would I prefer to plan to contribute voluntarily each year and have the flexibility to adjust my contributions based on my cash flow needs?
- Do I want to be able to pass on a legacy to someone other than my spouse? Do I need this vehicle to be able to do that?
- How do I feel about the governance of each option?
- Personally, I'm also asking which vehicle has the greater potential to align with my values around responsible investment. “
(b) Related to (a), if you are unable to be as informed as you think you should be prior to casting your vote, do not remain silent, write to the senior executive of SFUFA explaining your situation and ask for a delay in the date of closure
of the vote.
(c) Everyone should familiarize themselves with the information contained on the BCCPP webpages regarding payout selections at retirement.
If you have a partner, you are automatically categorized into Joint-Life Option, and the ‘entitlement rate’ is shown below. For your own situation,
Plug this into the formula, maximum annual benefit = (rate from table below) x (average best five years salary) x (number of years serviced);
(Thanks to Dr. F. Lee for doing the background work and providing the above table.)
There is an analogous table in the SFUFA FAQs.
(d) Please vote.
On behalf of Dr. TIm Beischlag and I, and the participants in the Monday forum, we hope this information is helpful.
George Agnes