changes to ATC pension plan for new hires

[phiflyer]

So it seems that after Jan 1, 2014, new ATC employees will be enrolled in a considerably different pension plan than the current one.

Basically the new plan: A) does not have the option of retiring early with a full pension, and B) it shifts much of the responsibility and risk of investing for retirement onto each individual.

(See http://www.catca.ca/assets/images/pdf/F ... ndBB11.pdf for a detailed PDF.)

Any thoughts on this from current or prospective controllers?

[Parth]

There's a significant difference between the two. The new plan is nowhere near as good as the old.

Does it make the job suck? Oh god no. The benefits are still great. The pay is great. The freedom is great. This shouldn't deter you one bit from applying or continuing in the process. It just isn't as sweet a deal as it was a month ago.

[HeadingAltitudeSpeed]

A) does not have the option of retiring early with a full pension, and

Not quite. All depends on what you mean by a full pension. Yes there is still an early retirement option for an unreduced pension (not the same as plan A) at age 55 and 30 years service. The legacy plan is age 50 and 25. Neither is a "Full pension", assuming a full pension is the maximum benefit of 35 years service.

B) it shifts much of the responsibility and risk of investing for retirement onto each individual.

(See http://www.catca.ca/assets/images/pdf/F ... ndBB11.pdf for a detailed PDF.)

Again perhaps a bit misleading. The plan B offers a benefit with zero contributions from the employee. You could retire with the maximum benefit and zero investment. This would not be as much as the other plan, but you also wouldn't have be contributing almost 10% into the plan. So yes some responsibility for investing but also a significant return for zero investment.

Not advocating anything, just clarifying a few things.

[invertedattitude]

A) does not have the option of retiring early with a full pension, and

Not quite. All depends on what you mean by a full pension. Yes there is still an early retirement option for an unreduced pension (not the same as plan A) at age 55 and 30 years service. The legacy plan is age 50 and 25. Neither is a "Full pension", assuming a full pension is the maximum benefit of 35 years service.

B) it shifts much of the responsibility and risk of investing for retirement onto each individual.

(See http://www.catca.ca/assets/images/pdf/F ... ndBB11.pdf for a detailed PDF.)

Again perhaps a bit misleading. The plan B offers a benefit with zero contributions from the employee. You could retire with the maximum benefit and zero investment. This would not be as much as the other plan, but you also wouldn't have be contributing almost 10% into the plan. So yes some responsibility for investing but also a significant return for zero investment.

Not advocating anything, just clarifying a few things.

When you say "not as much as the other plan"

You should add, not even nearly close, in any way shape or form as the legacy plan.

I

[robshelle]

So a new member will receive a pension that is only 55% compared to a legacy member, but also might not receive any Cost of Living increases after retirement. Increases are automatic for us, but will be at the discretion of the (I'm not sure who) pension plan. After 20 years of retirement, that could end up being very significant.
I've been pissed off about this 2 tiered pension plan because it splits us up, and 15 years from now, when I am getting close to retirement and the majority of the new members are feeling like second class citizens, what might they then vote on to our pension plan. Also, this a permanent fix to a paper problem. Our going concern for the pension plan is at 102%, which means that it is in good shape to meet all future liabilities, it is the solvency rate, which is at 79% which is screwing us, and I don't see for the life of me how NAVCANADA, as a monopoly, nonprofit service provider of such an essential service, could go belly up and shut down overnight!

My 2 bits.

Robbie Benusic
CYEG tower

[invertedattitude]

.

[cgzro]

High tech pensions all went the same way 10+ years ago. Basically you are on your own in most jobs these days so NAV CANADA is not doing anything unusual.

[invertedattitude]

High tech pensions all went the same way 10+ years ago. Basically you are on your own in most jobs these days so NAV CANADA is not doing anything unusual.

Absolutely despise this answer, there was no reason to.

[MikeAndHike]

If I may ask, what would this new pension look like for the average vfr controller after 30 years? I know there are variables but if you averaged everything out, what kind of pension are we talking about?

[hydro]

If I may ask, what would this new pension look like for the average vfr controller after 30 years? I know there are variables but if you averaged everything out, what kind of pension are we talking about?

30 years * (1.1% per year) = 33% of the avg last 5 years pensionable salary. So if the tower controller tops out at 105k, then your pension is 35k a year.

It's non contributory, so in theory you should put that extra ~9.5 % in RRSPs. That closes the gap significantly (compared to the legacy plan) on retirement.

However, you may, or may not get inflation increases. If the plan is underfunded you may get partial, or no increases. Over a 20-30 year period that can be very significant. The effect of limited to nil inflation raises can't be understated when it comes to the difference in the two plans.

[MikeAndHike]

Thanks Hydro. That makes for a very large change in living arrangements, quality of life, upon retiring. Important than to make sure you are topping up those rrsp's then.

[sigmet77]

Inverted, if you work for NAV CANADA ask for the pension presentation, or if one is in your area go see it. After seeing a 3 hour presentation I can say there is no way a company can maintain the defined benefit pension plan without significantly increases what it charges it's customers. If you are a CATCA or ATSAC member as your rep about it as both of those Locals got the presentation.

[invertedattitude]

.

[HeadingAltitudeSpeed]

Any economist will tell you that interest rates have 0% chance of staying this low for an extended period of time.

Instead of listening to their pension "presentation" perhaps you should do the research yourself. I've done both.

All of this while they go around boasting they haven't raised rates in 10 years? Come on, you seriously cannot be that gullible?

And that very argument was presented by Mr Stanford during negotiations. On the flip side, you may want to read the article in the Globe and Mail today about the pension liabilities Chicago is facing and the impact they are having.

I bet 20 years ago people said a major US city couldn't go bankrupt....

[AlbertaBoy]

I'm on the "B" plan by choice. Ya, it was a bit risky, but it freed up close to 10% of my income for me to invest as I choose. As soon as I made the switch I started dumping 15% of my income into somewhat carefully selected mutuals and ETFs (low MER etc. . .). Keep that up for the next 20 years or so and I should have a fairly solid cushion underneath me.

That being said, the new plan puts a big chunk of the responsibility on the shoulders of the employee to plan for his own retirement. Considering the propensity of my co-workers to live cheque to cheque and be seemingly broke all the time, its not exactly an environment that encourages wise investing.

Now, if you want to find out how to lose $5000 in Vegas or on a football game, or how to blow a grand or so on booze in a night, these are the guys for the job. Most of my coworkers would finance a pair of shoes if they had the opportunity. . .

My advice is just standard "be prepared for the future" advice. Invest wisely and don't borrow money for anything that won't make you money. . .

Plan B isn't all bad. . . it just sucks for the lazy and irresponsible. And it was a huge change around here. I just look at it like free money from the company. . .

[cyeg66]

^we get the same impression about your co-workers, too.

[khedrei]

The above post hits so close to home. I work for the railway and this person described my average co worker to a "T". Everyone I work with makes 120k plus and have been for the last 20 + years and they are all broke and still can't afford to retire with a full pension so they are sticking around.

We do still have our DB pension plan, for now at least. The company has not asked for it yet. Although they are "for profit" and do make a fortune of money and are also a monopoly and won't be disappearing anytime in my lifetime so maybe they can sustain it easier than NAV CANADA.

That all being said, I am still trying to get an ATC job and wouldn't hesitate for a second to jump ship from the garbage job I currently work. The quality of life and working conditions would trump the pension. If you live conservatively and don't blow your money you should have no issue. Some people will never learn though.