Re: I voted for the DB plan and here's why

[Tamon Stephen <tamon@sfu.ca>]

Hi Karen,

That's a very interesting comparison.  If you or others have more details on the differences between the two plans, I would interested to learn more.
The 13% seems very harsh.  Does that push it past the limit for pre-tax so that some of it is coming out after tax?  Is there a risk we might end up at 13%?

Looking at the TPP Website, it seems like they are getting some things that we aren't.  For instance the 2.07% cap to the cost-of-living adjustment is gone:

https://college.pensionsbc.ca/cost-of-living-adjustments
https://tpp.pensionsbc.ca/web/teachers/cost-of-living-adjustments

So if inflation returns, BCCPP may sink while TPP floats.  Is this risk enough to account for the difference in contribution rates?
In any case, interesting information, thank you!

Best regards,

Tamon
________________________________________
From: Karen Ruckman
Sent: November 26, 2018 12:49 PM
To: Tamon Stephen; Carla Graebner; 'academic-discussion@sfu.ca'
Subject: Re: I voted for the DB plan and here's why

Hello all,


Speaking of rates of contributions at different institutions. My husband is a high school teacher in Coquitlam and has a pension plan very similar to the proposed BCCCP (2%*years of service*top salary averaged over 5 years). Just for kicks, I calculated what proportion of his income he is forced to contribute to his pension. We were shocked to realize it was almost 13%! We never paid attention to it before because investing in the pension wasn't a choice. Once its out of your hands, you don't even look at it as your income anymore. Maybe someday we will get there with our contributions to the BCCCP, if it is approved. That said, I am entirely sympathetic to the many reasons why some faculty may need immediate income for other purposes. Your vote is your own.


I would point out one thing that, as far as I know, has not been mentioned before. Although it is difficult to know what an altruistic vote would be for future faculty members not currently able to vote, I would point out that the BCCCP will give the incentive to some people to retire than they would have with the DC plan. This would, thus, free up positions earlier for future hires in a difficult market. We had 300 applicants for an Assistant Prof position in my department last year!


Karen Ruckman

Associate Professor, Strategy

Beedie School of Business

________________________________
From: Tamon Stephen <tamon@sfu.ca>
Sent: November 26, 2018 12:29 PM
To: Carla Graebner; 'academic-discussion@sfu.ca'
Subject: Re: I voted for the DB plan and here's why

Hi Carla and others,

Thanks for further interesting posts.  It's great to hear that many people are contributing to their RRSP's despite the various challenges we have in living in Vancouver.  More power to you.

About the public service and people not leaving, DB plans do have the unfortunate side effect of punishing mobility, they are certainly best for people who work 30+ years at the same place.

About Ontario ... if only we could have Ottawa's housing market without giving up the mountains and the sea and mild climate.  My friends in Ottawa may be mild amused to find that I am not forced to put as much into my pension as they are, but they are scandalized by the price of housing here.

I think it worthwhile to check out some of the DB plans in Ontario.  I looked at 3 just now, starting with Carleton.  None of them matches BCCPP's 10.15% forced contribution rate.  So our friends in Ontario may still be laughing uncomfortably at us next year.  (We'll still have Doug Ford to hold over them.)  Interestingly, all 3 have a reduced contribution rate for people with lower incomes, which would be a great thing for BCCPP to consider (not that we'll have any influence over it).

Carleton: 4.37% below YMPE*, 6% above: <http://cuasa.ca/member-resources/career-information/benefits-information/>
U of T: 6.8% before YMPE, 8.4% above: <http://pension.hrandequity.utoronto.ca/#about> (Big jumps noted in 2012-13 due to a delayed 2008 effect??)
Waterloo: 6.26% before YMPE, 8.95% between YMPE and 2xYMPE, 9.95% above that: <https://uwaterloo.ca/human-resources/support-employees/pension/joining-plan#contributions>

For the first two, I had to browse the linked handbooks.  p. 34 for Carleton, p. 19 (numbered 13) for U of T.

Best regards,

Tamon

* YMPE = Yearly Maximum Pensionable Earnings, a number set annual by the government which also affects your CPP contributions.  Details here: <https://www.canada.ca/en/revenue-agency/services/tax/registered-plans-administrators/pspa/mp-rrsp-dpsp-tfsa-limits-ympe.html>.  It's $57,400 for 2019.  As I understand it, the percentages are all pre-tax figures.

________________________________________
From: Carla Graebner <cgraebne@sfu.ca>
Sent: November 26, 2018 11:33 AM
To: 'academic-discussion@sfu.ca'
Subject: I voted for the DB plan and here's why

Hello,

As soon as the survey went live, I voted yes—without hesitation.

Prior to coming to SFU, I worked for the Public Service which, as you may know, has a Defined Benefit pension. There is a singular reason why people don’t leave the public service and why many are attracted to it: the Defined Benefit pension. When I was hired at SFU, I was told we “had a very good pension” which was not really true. It would not have prevented me from joining the SFU community but would have made think a little harder about my decision. I have colleagues who have retired from the public service at age 58 who receive as a pension an amount very close to my current salary. Many of our academic colleagues in Ontario also enjoy being part of a Defined Benefit plan—which they will not bargain away.  I had a conversation recently with a former instructor of mine from Carleton and who, like me, was actively involved in his association. We discussed retirement benefits and when I told him about ours, he laughed (a little uncomfortably, I thought) and suggested I get a position at a different university. He’s quite comfortably retired now, not at all worried about his finances, while my partner jokingly suggests I do what I can to join the ‘cat-food avoidance plan.’

Carla

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Carla Graebner
Librarian for Research Data Services and Government Information
W.A.C. Bennett Library, Simon Fraser University
8888 University Drive, Burnaby, B.C. V5A 1S6 Canada
Email: cgraebne@sfu.ca
Tel: 778.782.6881
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