Society of Christian Schools In BC

Employee Pensions: Why Are They So Important To School Boards, Teachers and Support Staff?

I remember the excitement I felt signing my first Christian school teaching contract as a keen, single, and not yet 22-year-old. My financial concerns at the time were whether or not my annual salary of $12,000 would allow me to pay off my student loans, cover my rent, keep my car on the road, save for a wedding, and afford a down payment and mortgage payments on a home I hoped to purchase some day. To be honest, I paid little to no attention to the pension benefits that were part of my "Compensation Package". After all, I was just beginning my career in Christian education and retirement was 40-plus years away. Workshops at teacher conventions on the CSI Pension Plan were for the "old" teachers on staff, those who had taught for at lest 10 to 15 years!

Time flies and I'm now completing my 33rd year in Christian education. My recent CSI Pension Plan statement informed me that I'm within 5 years of being eligible for early retirement benefits without being penalized. Somewhere along this journey in Christian education as teacher, principal, director, and now advisor to the SCSBC Compensation Committee, my perspective on the importance of pension plans has changed.

Participating in the right kind of pension plan is extremely important for both employers (school boards) and employees (teachers). Today, I'm incredibly thankful for insightful Christian school boards in both Ontario and BC that understood the importance of employee pension plans long before I ever did. When I moved from a Christian School in Ontario to British Columbia 31 years ago, I didn't realize the benefit of the portability of my pension plan. I sure do today! Because I could benefit from the prudent investment decisions of professional money managers that were supervised by a trained and competent Pension Board of Trustees rather than rely on my own limited financial insights, I worried less. Because my pension is a defined benefit plan rather than a defined contribution plan, I have the assurance of knowing the exact dollar amount I will receive upon my retirement for the remainder of my life, making it easier to decide when and by what means I should someday retire.

Since its inception, the vast majority of our SCSBC member schools have participated in the CSI Pension Plan (6%) program. However, there still remain a

small minority of member schools that participate in the CSI Pension Plan (4.5%) program. A few SCSBC schools have opted out of the CSI Pension Plan program altogether and alternatively provide a matching group or self-directed RRSP program for their employees instead. Even fewer schools provide no pension benefits for their employees whatsoever.

For 35-plus years SCSBC has held the position that matching contributions to a healthy pension plan program is an integral part of an employee's compensation. SCSBC schools' commitment to the CSI Canadian Pension Plan fits well with its long held notion of community. An individualistic view of employee pensions does not adequately address issues of pension portablity among schools, early retirement benefits, and the community nature of our Christian schools. SCSBC has always sought "to do collectively, what no one school could or should do individually." Continued participation in a national Christian school pension program spreads both the benefits and risks of the pension plan among a much larger pool of participants. Currently around 85% of CSI schools in Canada participate in the CSI pension program.

It's true, certain individual teachers may do better financially in a self-directed, locally administered RRSP program. Not all teachers will do better in a defined benefit group pension plan. Younger teachers who do not intend to be career teachers, and those who anticipate switching careers frequently, may be better off in a defined contribution plan. Teachers who enjoy closely managing their own pension funds may be able to do better than those within a group pension plan. Clearly there are benefits to both a defined benefit (CSI Pension Plan) and a defined contribution (RRSP program). The intent of this article in not to debate the merits of one program over another.

However, the economic turmoil of the past 18 months have seen a world-wide devaluation of all investments. The CSI Canadian Pension Plan has served our members well over the decades; but it is under stress as are all pension plans. Therefore, the CSI Board recently approved a new redesign for the CSI Pension Plan

- one which has taken both member schools and individual members' input into account and aims at managing the current funding shortfall while providing for future pension benefits.

The new pension plan design will be implemented on September 1, 2010. Before the new CSI Pension Plan design is implemented, each participating school (board and employees) will have to select a new plan level and take their selection into account when budgeting for 2010-11. In terms of making a choice between the different plan levels, it will be up to each individual school to find the right balance between contributions made and pension benefit received based on the requirements of its school community.

This past year the SCSBC Compensation Committee had to face a new reality that it has never had to consider before: the long term viability of an adequate pension return for its employees. Committee members have stated that the SCSBC 2010-11 Compensation Report has been a challenge to prepare. The global economic turmoil of the past 18 months has made it difficult to prepare last year and this year's report. Although the economies of the world appear to have stabilized and one sees some room for optimism, there has been an unforeseen world-wide devaluation of investments which form the basis of retirement planning and payout. Therefore, this year's SCSBC Compensation Report unlike other years, is giving added attention to pension benefits. Will your school do the same?