At my daughter’s high school this semester, two of her four teachers have chosen to retire in the middle of the term, forcing the students to be handed to another teacher. The fact one of her other teachers is very pregnant means that by January she will have had seven teachers for four courses. Now I won’t blame the pregnant teacher for her timing because that isn’t something that cannot be easily planned. But for the two teachers who suddenly retired, I wonder about the contract we have with the teachers.
In Alberta, the teachers union (the Alberta Teachers Association) has negotiated a defined benefit pension plan with the government whereby teachers can received 70% of their pre-retirement income so long as they retire at either 65 or when their age plus years of service equals 85. The first one seems ok to me – but the second one seems overly generous and the cause of these mid-term retirements.
If a teacher started working at 25 and worked for 30 years, they would meet the age plus years of service threshold as soon as they turn 55. A teacher who started at 23 would have to work until 54 (31 years) to hit the threshold for retirement. This is what these teachers are doing. They hit the threshold age and they check out – even it is the middle of the term. There is no benefit to them to keep teaching and no penalty for hanging it up mid-term. We should revise the contract such that teachers cannot retire mid-term unless they also have medical issues. I might even make allowances for those who have reached federal pension age of 65 – but few teachers stay that long in any event.
In the private sector, there are no age-plus-years of service pensions. There never were. I have an RRSP with money piling up, and a TFSA I fund with post-tax monies – but the question of when I retire is entirely based on how much I can save and whether I think it is enough to live on in my post-working life. But teachers, and many other public sector workers are guaranteed a very healthy retirement income much earlier than those of us in the private sector.
If you look at the ATA’s pension numbers, their plan looks well funded today. However, they did increase contribution rates to overcome the losses in the stock market from 2007-09. Since 2009 the markets have been very good, but that is not sustainable. Therefore, I fear that these generous pensions will once again trigger financial problems for the taxpayers in the future. We should switch from defined benefit (which can only be guaranteed by the taxpayer) to defined contribution and individual accounts (which become the responsibility of the individual pension recipient) to manage. And we should let teachers retire when they think they have enough money and not during the school year.