Is it possible to stay with our DC plan for those of us nearing
retirement if the vote is to go for a DB plan?
Sorry if this question has been answered 100 times already.
Gervase
R. Bushe
Professor
of Leadership and Organization Development
Beedie
School of Business
Simon
Fraser University
www.gervasebushe.ca
"But the
more I read these threads the more I realize
that the fundamental issue here is not
choosing between a DB vs a DC plan. This vote
it is essentially about allowing or denying
each of us to have the possibility to have
that choice. "
There is no
choice to have a DB plan, if the vote is no.
If you are woman and you want to buy an
annuity with your savings, it will cost
considerably more than if you are a man (I
think it was about 30% more?). For me, a no
vote forces uncertainty about my retirement;
I will not inherit a cent from parents and my
pension will be reliant entirely on market
forces.
A no vote
is also denying decent health care benefits
from those that want them. Yes, we could try
to negotiate with SFU for better health care
benefits, but it will cost us. SFU is not
going to simply give us more expensive
post-retirement health care benefits. It will
mean those 1% or 1.5% raises will be reduced
considerably. Or it will mean our step raises
will be reduced. For those with market
differentials, these losses in salary quite
possibly do not mean a lot. For those who are
paid on the scale, these small improvements in
pay do mean a lot.
Dr.
Ronda Arab
Associate
Professor of English
Simon
Fraser University
Dear
Yildiz and Eugene,
Thank you very much for sharing your personal
situation. I can totally relate and would love
very much to retire at 71 with a decent DB plan.
But the more I read these threads the more I
realize that the fundamental issue here is not
choosing between a DB vs a DC plan. This vote it
is essentially about allowing or denying each of
us to have the possibility to have that choice.
By voting yes we are starting a path that will
eventually force everyone including the ones who
would prefer to stay with the current plan to
save a considerable part of their salary in a
way they don't appreciate. This is despite the
BCPP fund substantially operates very much like
any other financial fund (the proposed 10.15% is
based on the "calculative logic" that most of us
abhor). Moreover it appears that we could
already use the current SunLife DC plan to put
that 10.15% in a fund that will substantially
allow to have the benefits proposed by the BCPP
plan. So although I am very much in favor of
having the possibility to join a DB plan, I
realize that the path that SFUFA is currently
proposing will have a serious impact on the
financial flexibility of each member of our
community. Thus, I am torn because I see an
element of selfishness more in voting yes than
in voting no.
Francesco
________________________________________
From: Yildiz Atasoy [yatasoy@sfu.ca]
Sent: November 24, 2018 10:46 AM
To: Krishna Pendakur; Tamon Stephen
Cc: Eugene McCann; academic-discussion@sfu.ca
Subject: Re: pension plan
Dear all,
I made my decision and voted in favour of
switching to the college plan. I don't have a
financial advisor or an accountant. I earn my
salary and pay my mortgage. I have no inherited
wealth. Thus, my financial situation is simple
and straightforward. I do not allow a
'calculative logic' to dominate my life choices
either.
The 10 per cent personal contribution required
by the proposed plan makes sense to me.
Sincerely,
Yıldız
Dr. Yıldız Atasoy
Director, Centre for Sustainable Development<http://www.sfu.ca/cscd>
Professor, Sociology<http://www.sfu.ca/sociology-anthropology/People/faculty/yildiz-atasoy.html>
Associate Member, the School for International
Studies
Associate Member, Department of Geography
Simon Fraser University
NEW BOOK: Commodification of Global Agrifood
Systems and Agro-Ecology: Convergence,
Divergence and Beyond in Turkey<https://www.routledge.com/Commodification-of-Global-Agrifood-Systems-and-Agro-Ecology-Convergence/Atasoy/p/book/9780415820509>
Mailing Address:
Simon Fraser University
Department of Sociology and Anthropology
8888 University Drive,
Burnaby, BC, Canada V5A 1S6
E-mail: yatasoy@sfu.ca
Fax: +1 (778) 782-5799
________________________________
From: Krishna Pendakur <krishna_pendakur@sfu.ca>
Sent: Saturday, November 24, 2018 9:35:59 AM
To: Tamon Stephen
Cc: Eugene McCann; academic-discussion@sfu.ca
Subject: Re: pension plan
Regarding tamon’s last point: Sfufa can
negotiate over retiree health benefits and could
seek to improve them, eg to equalize them with
pre 2001 hires. Whatever this costs would have
to be given up from other improvements to salary
or benefits (as usual).
Krishna
Sent from my iPhone 6!
> On Nov 24, 2018, at 9:02 AM, Tamon Stephen
<tamon@sfu.ca>
wrote:
>
> Hi Eugene,
>
> Thanks for the candid illustration of your
situation, it is interesting and informative. I
believe that there are a number of faculty in
similar circumstances - for instance, Lucas
Herrenbrueck mentioned student loans recently,
as have others earlier in the discussion. Given
the housing market here, I think the overall
picture you paint is gradually becoming the norm
here, especially with respect to not putting
additional money towards retirement.
>
> However, I disagree with your overall take
on it. Your take is that someone should to be
forcing you to save. You don't seem to consider
that you may actually be making very good
decisions with your money. I think among
faculty, very few of us are extravagant. Even
where we have expensive tastes, honestly, we
barely have the time to act on them. Many of us
are spending most of our income on basic stuff
since housing here takes so much of it.
>
> Let's say you vote NO and let yourself keep
the 10% of salary for 2019-2020. Say that's
$7000 after taxes. What would you do with it?
For example, you could use some of it to take a
modest vacation with your family. Fix up one or
two things around the home. But the kid one
thing that they don't really need. Pay a
babysitter and go out for a nice dinner. Travel
to a regional meeting you might not have gone to
(if your grants won't cover it). And maybe put
the rest to paying off some of your debts
early. Or the RRSP. All of these would be good
things to do. What about the $7100 in 2020-21?
And the $7200 in 2021-22? Etc.?
>
> What if you save it until you are 70?
Well, you can take the same vacation. Your
arthritis may limit your hikes. You can send
your kid a postcard. I think for a lot of us,
what we do at 50 is going to be significantly
more important than what we do at 70. Should
you donate to stop climate change in 2020 or
2040? In very many cases tough decisions
younger faculty are making against saving are
actually *great* decisions. The problem is that
people who talk up retirement (financial
advisors are the biggest culprits, though all DB
marketing suffers from this) try to shame them
or frighten them with a fear of "running out of
money" at 92.
>
> Well, maybe. But you are already preparing
for 92 by buying your townhouse. If you can get
your mortgage and other debts payed off, you can
probably live quite cheaply, especially once
your kid is no longer dependent. Say that by 70
you are a retired empty nester with your house
paid off. What expenses are going to force you
to cash out and move to Abbotsford? Likely CPP
and OAS will continue to exist in some form.
(Indeed, if you do well in retirement, OAS gets
clawed back - this starts at around $76,000
right now - so high regular pension payments may
turn out to be less effective than you might
expect. This is the kind of detail where expert
advice may help, though you can also look into
it on your own.)
>
> Health care of course is a worry, but note
that for instance assisted living in BC for
non-rich people charges a percentage of
after-tax income: <https://www2.gov.bc.ca/gov/content/health/accessing-health-care/home-community-care/care-options-and-cost/assisted-living>.
So you may as well have run through your money
at that point. In short, it may actually be a
great idea to spend now while our health is
good, our families are young and our careers are
bright, and try to cut back in our 70's, 80's
and 90's (assuming we are lucky enough to make
it there).
>
>
> Several of the things you write also apply
to me. I'm mortgaged and don't have an
accountant or a financial advisor. I don't
think I can beat the markets, and wouldn't
expect a financial planner to do so either. I'm
also somewhat distrustful of state pension funds
... but, here is where I start to lose you ...
BCCPP _is_ a state pension fund. So I don't
understand why you want to invest in it, and
especially why you feel comfortable forcing me
to invest in it.
>
> Overall, BCCPP smooths out some risks
(stock crash) while being more exposed to others
(inflation, presumably one of the reasons SFU
fled DB in the 1970's). Note that interest
rates are going up, and the
cost-of-living-adjustment for BCCPP is capped at
2.07%. Between BCCPP and CPP, I personally have
more trust in CPP to at least hold its current
value. (Note the recent post that CPP is
_increasing_ its contribution and payout rates.
Interesting news, I had missed that.) That's
partly from spending some time trying to figure
out what BCCPP is and how it can be held
accountable. It is unclear. I have the feeling
that we may as well be asking ICBC to run our
pensions. My sense is also that BCCPP is easier
damage if and when we get our own Rob Ford here
- college teachers are an inviting target
politically, while CPP is hard to reduce since
it affects _all_ seniors.
>
> A few technical comments:
>> Mandatory pre-tax savings are much more
beneficial to one’s future than voluntary
post-tax savings.
>
> Mandatory vs. non-mandatory is mostly
distinct from pre-tax and post-tax. I like
pre-tax and hate mandatory.
>
>> Junior colleagues would benefit from
learning from my experience and finding a way to
squirrel away the 10%, even though I know how
very very hard it is here in Vancouver. In the
long run, they’d be glad to have had the
decision taken out of their hands each month and
to see the financial benefits down the line.
>
> I don't understand what you are saying
here. You don't learn much by having things
taken out of your hands. (Active learning and
all that.) Honestly, I think that an underrated
fringe benefit of the Sun Life setup is that it
encourages us to explore investments in a fairly
limited environment. There's some value in
doing that early on, as you may eventually want
to become more active. If you don't want to
learn anything at all, then the suggested course
of action is just to put it in the SFU Balanced
Fund, which should provide similar investment
returns to what is happening inside BCCPP. No
neurons need to fire.
>
>> much improved health benefits
>
> Yes, this is an important point, but I
believe it should be addressed in another way.
I do think it would be a good think if we could
trade say 1% of salary to get people hired after
2001 the same benefits options as those hired
before. I suppose by now some people who were
mid-career hires after 2001 may already be
retiring, especially if they have health
issues? I think that a fair solution to the
medical issue should involve extending benefits
not just to current employees, but also to this
currently small group of retired employees.
(Has there been any discussion of this?
Thoughts from SFUFA?)
>
> Have a great weekend all,
>
> Tamon
> ________________________________________
> From: Eugene McCann <emccann@sfu.ca>
> Sent: November 23, 2018 8:03 PM
> To: academic-discussion@sfu.ca
> Subject: Re: pension plan
>
> Dear all,
>
> I have been reading this discussion with
interest … the sort of bemused fascination one
might have when encountering a context very
different from one's own. That is to say that I
don’t see myself in much of what’s been
discussed. Let me tell you a bit about myself,
then, as someone who supports the move to the
Defined Benefit plan.
>
> I am just under 50. I make massively more
money than my working class parents ever did.
My income is nowhere near the high end of
incomes at SFU. I ‘own’ a townhouse (I rent it
from a bank, actually, but I do accrue equity in
the process). I came to Vancouver in 2003, so
the market was already insane and my mortgage
debt reflects that. My income is the only large
or stable/predictable one in my household. I
have a child (with all the joys and expenses
that entails). My household is still saddled
with significant student loan debt from the US.
>
> We have not, and will not, benefit from any
significant intergenerational wealth transfer
(inheritance or ‘family money’). We have never
‘maxed out’ our RRSP limit. Indeed, we have
almost never contributed any money to RRSPs
because we never have available funds. We do
not have a tax accountant. We do not have a
financial advisor (not for a want of trying, in
the latter regard, but everyone we’ve tried to
engage has either seemed marginally competent,
unaffordable, or uninterested in working with
us, given our (relatively) paltry resources.)
>
> I do not trust my ability, as an
individual, to manage, benefit from, ‘play,’ or
‘beat’ the financial markets, even with the help
of a competent financial planner. I do not
trust the idea that state pension funds will be
available in any robust way by the time I
retire.
>
> I also do not trust myself to make
decisions like squirrelling away 10% of my
salary for retirement. But I fully believe that
I should do this and I wish I had been doing it
for years. But, as a songwriter once said, “If
wishes were fast trains to Texas … how I'd
ride.” I always found other things that needed
the money in expensive Vancouver. If only
somehow I had been forced to (as opposed to have
to make a rational choice to) squirrel that
money away each month. If only there were a way
that that sort of external discipline could be
engrained in my retirement plan.
>
> So, that’s me. And here’s what I believe:
>
> - I am not saving enough for retirement.
>
> - Mandatory pre-tax savings are much more
beneficial to one’s future than voluntary
post-tax savings.
>
> - Junior colleagues would benefit from
learning from my experience and finding a way to
squirrel away the 10%, even though I know how
very very hard it is here in Vancouver. In the
long run, they’d be glad to have had the
decision taken out of their hands each month and
to see the financial benefits down the line.
>
> - While I have some equity in real estate,
to cash out and use that to live I will need to
leave Vancouver when I retire and head to a town
I will probably hate living in.
>
> -The Defined Benefit Plan is a massive boon
to someone like me because it provides me with
what seems to be a reasonable and predictable
retirement (not to mention what seem to be much
improved health benefits).
>
> Maybe others on this list will see
themselves in the description of me that I have
provided above. Or, maybe I’m unique. Either
way, that’s me. And I am voting for a switch to
the Defined Benefit plan.
>
> Best,
> Eugene McCann
> Geography
> PS as this is a ‘personal testimony,’ if
you like, I am not up for debating the ins and
outs of it. I am throwing it out here in case
it resonates with others. I offer it as another
reference point for discussion. If others want
to point out mistakes in my reasoning, that’s
fine. Indeed, I’ll read them and, no doubt,
learn. But please forgive me when I don’t
respond.
>
>
> On Nov 23, 2018, at 5:17 PM, Steve Whitmore
<whitmore@sfu.ca<mailto:whitmore@sfu.ca>>
wrote:
>
> Thank you, Lucas, for adding a bit of
levity to a complex and potentially divisive
discussion.
>
> I am now glad that I never had kids (a
couple hundred 1st year students every year is,
no doubt, an equivalent penance for my sins).
>
> NB. When housing started to get out of
control in the lower mainland, the SFU
administration had the foresight to provide
housing (at 20% below market value) for
faculty/staff (i.e., the Verdant complex). I
suggest that the Community Trust consider
expanding that policy when they undertake future
developments.
>
> Cheers,
>
> Steve Whitmore
>
> From: Lucas Herrenbrueck [mailto:herrenbrueck@sfu.ca]
> Sent: November 23, 2018 4:58 PM
> To:
academic-discussion@sfu.ca<mailto:academic-discussion@sfu.ca>
> Subject: Re: pension plan
>
> On the other hand, having "too much
retirement income" doesn't mean you have to
spend it. You can still give the remainder to
your kids and/or charity. A big plus: your kids
will have an interest in you living longer if
they benefit from your pension. Whereas if every
year you're alive you draw on their future
bequest...
>
> Well, I couldn't resist saying the above
but as a young faculty I am definitely aware of
the constraints of present living. I spent my
first 2+ years at SFU paying back high-interest
college loans, and I would not have appreciated
the extra 10% in pension contributions. Stands
to reason that in the future more and more new
faculty will start with debt. If you're 50 and
started your SFU career debt-free, please
consider this. And if we do move to the pension
plan, maybe some other way to help new faculty
can be found.
--
Nilima Nigam
Professor
Dept. of Mathematics
Simon Fraser University
|