BC Teachers Take Pension Hit

The ivory tower is no safe haven from the economic downturn, as B.C. teachers and retirees are learning this winter.

Tens of thousands of educators are being told their pensions will no longer grow with the cost of living, and their payouts for medical care will be axed.

For faculty in the B.C. colleges and "teaching universities," the bad news came last month. The College Pension Plan announced on its website that in September it will stop paying for retirees' extended health and dental benefits. And as of January 2011, the plan will no longer increase pensions to keep pace with inflation.

Reaction was swift. Cindy Oliver, president of the Federation of Post-Secondary Educators, sent out a notice to all members, calling the decision "regrettable" and promising to seek "better outcomes than what has been drafted to date."

The B.C. Government and Service Employees' Union, also in the CPP, chimed in: BCGEU president Darryl Walker said, "The recent economic downturn has placed pressure on all investment income funds, and the union will need to be more creative to protect our members' interest."

How many are affected? According to the CPP 's newsletter After Work, 3,892 retired faculty are members of the plan (many with their spouses), plus 11,711 currently working faculty.

(This reporter, having retired as a teacher at Capilano College last year, is among those numbers. Paying out of pocket for the medical and dental costs no longer provided by my pension will cost our family about $2000 a year.)

A systemic problem

The problem extends to the rest of the system. According to Robert Clift, executive director of the Confederation of University Faculty Associations of B.C., retirees from UBC and UVic already pay 100 per cent of their health benefits. At SFU, retirees hired before September 1, 2001 pay half their benefits costs; those hired after that date pay for them all.

In the public elementary and secondary schools, the situation isn't quite as bad, but it may be getting there. On Jan. 28, the Pension Corporation communications branch sent a note to Teachers' Pension Plan employers, unions and associations. After assuring everyone that basic pensions are safe, the memo went on:

"The board cannot make the same promise for future cost-of-living adjustments and groups benefits because the funding arrangement for these benefits is different. Cost-of-living adjustments are paid from a separate account, the Inflation Adjustment Account (IAA), while retiree group benefits are paid from a portion of employer contributions to that account.

"The board cannot increase the money coming into the IAA. At the same time, funds in the IAA are shrinking because the ratio of active members to retirees is declining, health care costs are escalating and investment earnings have been reduced after the recent market downturn."

100,000 affected

Teachers' Pension Plan members include almost 26,000 retirees, 47,000 active teachers and over 11,000 members no longer employed as teachers but with money in the plan.

Combined with those affected by the College Pension Plan, that would mean about 100,000 British Columbians (plus spouses, partners, and dependents) are affected by changes in their present and future pensions. And that does not include those who teach at the traditional universities.

Dominique Roelants, a faculty member at Vancouver Island University in Nanaimo, is also the chair of the College Pensions Plan board. In an e-mail interview, he offered some insights into the problem:

Tyee: Did the CPP consider these changes after a specific incident or report?

Roelants: "We started considering these changes in the early part of 2008. Various factors such as the plan demographics and the low level of funding available for inflation indexing led us to the changes. The fall in investment returns did not cause us to make these changes."

What would be the likely total added yearly of EHB and dental to the 3,892 retired members and their spouses/partners?

"We don't know the cost of the plan yet. We are currently in negotiation to implement an insured post-retirement group benefits package that provides the best balance between benefits and rates and will notify the members of the terms and rates as soon as possible.

"We do know that there will be some differences. Insurance underwriters are not willing to assume the same levels of risk so there will be lower lifetime extended health coverage and there will be annual limits for dental coverage. There may also be other changes that will not have as much impact on coverage.

"These benefits have never been guaranteed. The fact is that because the current benefit levels are far higher than the other major public service plans and because of the demographic shifts in our plan, we would have had to reduce the benefit levels next year anyway.

"With respect to the total cost of benefits, in 2008, the subsidies paid by the College Pension Plan for the existing dental and EHB plans costs a total of $4.3 million."

Is the CPP negotiating with the College Pension Plan partners?

"The College Pension Board has discussed the issues with all four of the College Pension Plan partners (FPSE, BCGEU, PSEA, and the B.C. government). The Board does not have the authority to increase contributions to fund inflation adjustment or group health benefits, but the partners do. The partners may choose to negotiate about this matter...

"While the trustees hope that the bargaining parties agree to additional contributions to the IAA, there is no assurance that they will."

Does the CPP expect to see fewer faculty retirements in the next few years as a result of this decision?

"My personal belief is that the CPP decision will not significantly affect retirement rates. Having said that, it is possible the poor investment returns many of us have seen in our RRSPs will have an impact on retirement rates."

The bottom line: teachers from kindergarten to grad school, most of them now middle-aged, face a less secure retirement than they had imagined. They also face a strong incentive to keep working as long as they can. (In the colleges and teaching universities, mandatory retirement is at age 70.)

Which means younger teachers will have to wait longer for permanent full-time jobs.

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