Teachers are at the end of their rope.

[GGG]

Originally Posted by Slava

Well, I've seen this a few times and I'll just point out the obvious issue. For an individual to match this, they're saving 20% of their income. So yes, it's possible, but a very small percentage is going to make the sacrifices along the way necessary. It's not just 20% when times are good for them, it's 20% through thick and thin, and increasing along with their salary.

And let me say, I don't begrudge teachers (or other public servants, or anyone else) their pensions. It's the deal they've signed up for. If people think teachers have such a sweet deal, go be a teacher! It gets tiresome to hear about how easy everyone else has it, how anyone can do anyone else's job and how other people get paid too much for whatever they do.

I think we (as a society/province/municipality, etc.) have a real issue with the DB pensions though. They're not affordable. With "us" covering that longevity risk for people and those people continuing to live longer it's extremely difficult. But again, I don't begrudge individual teachers for having that deal.

You hit the nail on the head. The reason everyone doesn’t have a similar pension to teachers is they are unwilling to save at the rate teachers do in good times and bad. Ignoring the matching component what % of people are even hitting 12.5% of their money post CPP.

Also if people want a teachers pension so badly why aren’t they advocating for CPP to be expanded to cover a greater portion of income? It’s forced savings, it’s employer matched, it runs on very similar actuarial rates.

[Ashartus]

Originally Posted by Harry Lime

You are one of the few that seem to be taking an active role in supporting the learning process for you kid, and that's becoming a rare thing.

I think that's one of the biggest challenges children have in school. I lost count of how many times my wife tells me she talked to the parents of a kid who is struggling with reading, asking them to read together at home, and the response invariably seems to be "I don't have time for that."

[Russic]

Originally Posted by Ashartus

I think that's one of the biggest challenges children have in school. I lost count of how many times my wife tells me she talked to the parents of a kid who is struggling with reading, asking them to read together at home, and the response invariably seems to be "I don't have time for that."

Which then stands to reason they won't have time for the much harder tasks of math in the later grades (I pick math because much like reading it builds on itself year over year). Once homework kicks up around grade 7-9 and the kid begins to verbally shut down and lie/forget about what they need to do? It's over.

My wife obviously teaches older kids than yours, and her stories are essentially the same. She gets parents freaking out over high school placement because their kids need to be in <whatever class> to get into university, and she has to find a diplomatic way of saying "your kid can't multiply or write a sentence... there's a few things to address before thinking about university."

[Dynamic]

Originally Posted by Ashartus

I think that's one of the biggest challenges children have in school. I lost count of how many times my wife tells me she talked to the parents of a kid who is struggling with reading, asking them to read together at home, and the response invariably seems to be "I don't have time for that."

Sometimes parents don't have time to be fully involved as they would like. I'm a single dad and with a full time job/house to maintain, I just don't have the bandwidth to do what I am being asked to do. Field trip supervision, school council, volunteering at events......I get requests to help out all the time. I just can't. 20-30 years ago most of my friends in school had one parent at home that was able to do all the things requested. Today, when I go pick up my kids from school about half the people there for pick-up are grandparents because the parents are at work. Teachers and administrators need to understand and understand quick that it is not because parents don't care, its because we are being stretched thin in almost every other way.

[Slava]

Originally Posted by GGG

You hit the nail on the head. The reason everyone doesn’t have a similar pension to teachers is they are unwilling to save at the rate teachers do in good times and bad. Ignoring the matching component what % of people are even hitting 12.5% of their money post CPP.

Also if people want a teachers pension so badly why aren’t they advocating for CPP to be expanded to cover a greater portion of income? It’s forced savings, it’s employer matched, it runs on very similar actuarial rates.

CPP is being expanded and you have a lot of people who think it's a tax grab. Clearly that's an uninformed view, but there you have it.

And again...the thing with the DB pension isn't just "increase your savings and you can do it". That's a chunk. But there's also an employer matched portion which is enormous in this equation and you can't just magically create that aside from your own money.

And critically, you have the government taking the longevity risk. That's not insignificant here, and an individual has very few options to match that. Basically, they can buy an annuity. In practice an annuity matches a DB pension, but that brings up the element people most dislike about them. There's nothing for your heirs. So, say you have a $2m RRSP account today and you're 65 years old. You buy an annuity and it's going to pay you for the rest of your life and your spouses life. Awesome, because there's no longevity risk and you can't outlive this. You've transferred that risk to the insurer. But, when the second person dies, that's it. People hate that...they saved for their entire working career and want that retirement income, and also want to leave it to their kids. I would suggest very few people are (A) going to save 20% of their income to match the pension contributions and (B) if they do save it are going to be comfortable with spending that on an annuity when they retire, for that very reason.

I haven't looked at data, and that's purely anecdotal from my practice. Of course, that's why people come to me...so they can try to have their cake and eat it to!

[Maritime Q-Scout]

I can empathize with finding the time.

I go to all my son's school activities (concerts/plays/events) as well as birthday parties. I also sit on the school's advisory counsel which is basically one meeting a month. However, I'm lucky that I'm somewhat flexible with work, and my wife and I both kind of roll with the scheduling punches.

With regard to the "I don't have time to read to my kids" (noting this isn't the busy single parent not having time to attend field trips), I'd say it doesn't take much. For us, reading a story is part of the bedtime routine. PJ's, brush your teeth, pick out a book, it takes at most 5 minutes to read the story. My son does really well academically, and I chalk that up to reading the story every night (can't be his dad's genes, I'm an idiot, how else do you explain being a Nova Scotian Flames fan?)

[Sliver]

Originally Posted by Russic

Just wanted to clarify my statement on burnout... burnout isn't so much a factor of how hard you work but rather how bad of a fit you find yourself in. I know people that work harder than teachers and are having an absolute blast in life.

I don't know if you've ever hung out with a tween that gives you attitude all day long, but hanging out with about 20 of them who do it every day for months at a time will wear on you. To believe that would never get aggravating is misguided imo. The time off is awesome, but it's nowhere near compensation for dealing with insufferable children with hyphenated first names all day every day.

What this thread seems to be missing is an appreciation for human variation. Phrases get tossed around like "teachers are x" without realizing there is no single entity known as "teachers." Some fit in their jobs perfectly and you never ever hear from them, and some exist in an active panic most of the time.

Generally, whenever this comes up on CP the anecdotal stories get out of control. If I were to play that game, I'd mention private-sector buddies of mine who don't get as much vacation but make twice as much and go to Vegas every other month. From my perspective, their jobs are preferable in nearly every way to teachers, but then my perspective is extremely narrow.

This is the best argument I have ever read in favour of giving teachers everything they ask for and more.

[opendoor]

Originally Posted by Slava

I think we (as a society/province/municipality, etc.) have a real issue with the DB pensions though. They're not affordable. With "us" covering that longevity risk for people and those people continuing to live longer it's extremely difficult. But again, I don't begrudge individual teachers for having that deal.

Originally Posted by CliffFletcher

They’re beyond ‘difficult’ - they’re untenable. Given the demographics of teachers (female, educated, healthy), a teacher starting today is expected to live to 90. The former head of the Ontario Teachers Pension Fund himself has commented that a system where members draw a pension for longer than they paid into is not viable in the long term. Especially in an aging society where the return on investment in the fund will be lower than the return in earlier high-growth decades.

The only question at this point is whether we’ll see painful but deliberate recalibrations of public pensions (some combination of paying more for longer / retiring later / receiving less), or if we’ll just ride this train to collapse and political crisis.

But it's not really an issue in jurisdictions that actually handle these things responsibly. So sure, in Alberta where for 4-5 decades, the government opted to not actually contribute any money for future payouts, and where teachers were allowed to only contribute 3-4% of their pay, yeah there's an issue. So by penny pinching for almost half a century, the provincial government created a liability that they're responsible for, just like if they took out a bunch of debt to fund something.

But most places have more foresight than that. BC's teacher pension plan (and I believe all public pension plans) currently has a pretty significant funding surplus, even though it's subject to the exact same demographic issues that are apparently "untenable" for DB pension plans. And every 3 years they have to go through actuarial valuations and any underfunding has to be addressed immediately, so if that happens then contribution rates are nominally increased and the problem is averted.

[Slava]

Originally Posted by opendoor

But it's not really an issue in jurisdictions that actually handle these things responsibly. So sure, in Alberta where for 4-5 decades, the government opted to not actually contribute any money for future payouts, and where teachers were allowed to only contribute 3-4% of their pay, yeah there's an issue. So by penny pinching for almost half a century, the provincial government created a liability that they're responsible for, just like if they took out a bunch of debt to fund something.

But most places have more foresight than that. BC's teacher pension plan (and I believe all public pension plans) currently has a pretty significant funding surplus, even though it's subject to the exact same demographic issues that are apparently "untenable" for DB pension plans. And every 3 years they have to go through actuarial valuations and any underfunding has to be addressed immediately, so if that happens then contribution rates are nominally increased and the problem is averted.

Well there are a lot of levers and I'm no actuary! But the truth is the higher rates also mean a higher discount rate for these plans, which in turn allows more pension plans to be in surplus territory. There's a reason that DB pans are declining around the world though; they're costly and the sponsor takes on a lot of risk.

[opendoor]

Originally Posted by Slava

CPP is being expanded and you have a lot of people who think it's a tax grab. Clearly that's an uninformed view, but there you have it.

And again...the thing with the DB pension isn't just "increase your savings and you can do it". That's a chunk. But there's also an employer matched portion which is enormous in this equation and you can't just magically create that aside from your own money.

And critically, you have the government taking the longevity risk. That's not insignificant here, and an individual has very few options to match that. Basically, they can buy an annuity. In practice an annuity matches a DB pension, but that brings up the element people most dislike about them. There's nothing for your heirs. So, say you have a $2m RRSP account today and you're 65 years old. You buy an annuity and it's going to pay you for the rest of your life and your spouses life. Awesome, because there's no longevity risk and you can't outlive this. You've transferred that risk to the insurer. But, when the second person dies, that's it. People hate that...they saved for their entire working career and want that retirement income, and also want to leave it to their kids. I would suggest very few people are (A) going to save 20% of their income to match the pension contributions and (B) if they do save it are going to be comfortable with spending that on an annuity when they retire, for that very reason.

I haven't looked at data, and that's purely anecdotal from my practice. Of course, that's why people come to me...so they can try to have their cake and eat it to!

You're basically just agreeing with GGG; people could have a similar pension-like experience, but they don't like the downsides of it (having to divert that much money, risk of early death and not being able to pass it on, etc.).

As for employer contributions, yeah, that helps. But a decent chunk of the contributions are also going to fund prior underfunding, so the contributor isn't necessarily benefiting from that directly. Whereas if you save your own money, it's yours.

Just to put some numbers to this, if a 25 year old making $55K in 1993 started contributing 11% of their gross salary and continued that through their career up to now when they're making $100K, they would have about $1.1M if they had invested in a 70/30 mix of Large Cap US and US Bonds. So without a dollar of employer contributions, they could buy an annuity that covered about 50% of their working salary and still have $150K left over to get them to when they can collect OAS and CPP, which would bring them up to the 65-70% range.

And that's not just an artifact of the 2009-2020 bull market; if you backtest that same portfolio with the same assumptions (with the salary/contributions reduced commensurately by the inflation rate) in the 1973-2003 or 1983-2013 periods, you end up in about the same place.

[Russic]

Originally Posted by Dynamic

Sometimes parents don't have time to be fully involved as they would like. I'm a single dad and with a full time job/house to maintain, I just don't have the bandwidth to do what I am being asked to do. Field trip supervision, school council, volunteering at events......I get requests to help out all the time. I just can't. 20-30 years ago most of my friends in school had one parent at home that was able to do all the things requested. Today, when I go pick up my kids from school about half the people there for pick-up are grandparents because the parents are at work. Teachers and administrators need to understand and understand quick that it is not because parents don't care, its because we are being stretched thin in almost every other way.

I'm willing to bet most teachers understand, or at least the ones with kids do. They do the parent/teacher interviews where the parents fly in like bats out of hell from their second job, or try to mediate a fight because the couple is mid-divorce. They're aware that for most kids, one-on-one attention isn't reasonable.

You're totally right that in days past, a stay-at-home parent was more common than it is today, and the world hasn't really adjusted to a reality where divorce is more common or both spouses work beyond full time. I don't know what the answer is, but it certainly seems like things aren't exactly getting better.

[Slava]

Originally Posted by opendoor

You're basically just agreeing with GGG; people could have a similar pension-like experience, but they don't like the downsides of it (having to divert that much money, risk of early death and not being able to pass it on, etc.).

As for employer contributions, yeah, that helps. But a decent chunk of the contributions are also going to fund prior underfunding, so the contributor isn't necessarily benefiting from that directly. Whereas if you save your own money, it's yours.

Just to put some numbers to this, if a 25 year old making $55K in 1993 started contributing 11% of their gross salary and continued that through their career up to now when they're making $100K, they would have about $1.1M if they had invested in a 70/30 mix of Large Cap US and US Bonds. So without a dollar of employer contributions, they could buy an annuity that covered about 50% of their working salary and still have $150K left over to get them to when they can collect OAS and CPP, which would bring them up to the 65-70% range.

And that's not just an artifact of the 2009-2020 bull market; if you backtest that same portfolio with the same assumptions (with the salary/contributions reduced commensurately by the inflation rate) in the 1973-2003 or 1983-2013 periods, you end up in about the same place.

Of course I'm basically agreeing because it's math!

But you can't just discount a 10% match either. That's a significant amount of money, and to just think that people are going to be able to save that is questionable at best.

And yeah, there are solutions. It's what I do for a living, so I'm not suggesting that this can't be done. I'm just presenting the rationale for why people aren't likely going that route on their own. Annuities are just not that palatable once you have built up those savings.

I question people at 25 making $55k in 1993, but it's not a big deal. I think that almost regardless of the income a 25 year old makes, the odds of them being willing and able to save 20% of that is pretty unlikely. Saving 10% is a goal for most people, but saving 20% is a stretch to say the least.

[opendoor]

Originally Posted by Slava

Of course I'm basically agreeing because it's math!

But you can't just discount a 10% match either. That's a significant amount of money, and to just think that people are going to be able to save that is questionable at best.

And yeah, there are solutions. It's what I do for a living, so I'm not suggesting that this can't be done. I'm just presenting the rationale for why people aren't likely going that route on their own. Annuities are just not that palatable once you have built up those savings.

I question people at 25 making $55k in 1993, but it's not a big deal. I think that almost regardless of the income a 25 year old makes, the odds of them being willing and able to save 20% of that is pretty unlikely. Saving 10% is a goal for most people, but saving 20% is a stretch to say the least.

But like I said, you wouldn't have needed to save 20% or have any kind of employer matching. The numbers are based on saving 11%, which is about what teachers contribute now.

And yeah, $55K is generous. I went with that because the backtesting relies on inflation-adjusted contributions, so I just reduced the salary by inflation as well. But even if the contributions are reduced to account for lower early career earnings (which would put them at about 8-9% contributions in the later years), it doesn't change things all that much; it still ends up over $1M.

And the same largely holds true over other periods assuming you invest 9-11% of income over the period (numbers assume salary was equivalent to $100K today):

1975-2005: $1.4M in today's dollars; enough to cover ~65% of pre-retirement income

1980-2010: $1M in today's dollars; enough to cover ~45% of pre-retirement income

1985-2015: $1.2M in today's dollars; enough to cover ~55% of pre-retirement income


So over the last 50 years, it would have been relatively simple for anyone to set themselves up for 50% of their pre-retirement income if they were able to save the amount that teachers are currently required to contribute to their pension plan.

[Slava]

Originally Posted by opendoor

But like I said, you wouldn't have needed to save 20% or have any kind of employer matching. The numbers are based on saving 11%, which is about what teachers contribute now.

And yeah, $55K is generous. I went with that because the backtesting relies on inflation-adjusted contributions, so I just reduced the salary by inflation as well. But even if the contributions are reduced to account for lower early career earnings (which would put them at about 8-9% contributions in the later years), it doesn't change things all that much; it still ends up over $1M.

And the same largely holds true over other periods assuming you invest 9-11% of income over the period (numbers assume salary was equivalent to $100K today):

1975-2005: $1.4M in today's dollars; enough to cover ~65% of pre-retirement income

1980-2010: $1M in today's dollars; enough to cover ~45% of pre-retirement income

1985-2015: $1.2M in today's dollars; enough to cover ~55% of pre-retirement income


So over the last 50 years, it would have been relatively simple for anyone to set themselves up for 50% of their pre-retirement income if they were able to save the amount that teachers are currently required to contribute to their pension plan.

Yeah and for most people the rule of thumb is ~10% for long-term savings, so that's not surprising. Like I say, the point of this thread is discussing teachers who are at the end of their rope though...which is why we were talking about 20%.

Retirement planning in general for people is a different ballgame.

[bizaro86]

Originally Posted by Slava

Yeah and for most people the rule of thumb is ~10% for long-term savings, so that's not surprising. Like I say, the point of this thread is discussing teachers who are at the end of their rope though...which is why we were talking about 20%.

Retirement planning in general for people is a different ballgame.

One of the reasons teachers put in that much, is that just like CPP there are a few older generations who put in not nearly enough. So every current teacher is paying for her own pension plus a chunk of the pension of those who went before.

[TheIronMaiden]

Originally Posted by Ashartus

I think that's one of the biggest challenges children have in school. I lost count of how many times my wife tells me she talked to the parents of a kid who is struggling with reading, asking them to read together at home, and the response invariably seems to be "I don't have time for that."

It's more than that. So many parents aren't giving their kids emotional support either. Teachers, at least in elementary have to do as much social work as teaching.

[Locke]

Originally Posted by CliffFletcher

They’re beyond ‘difficult’ - they’re untenable. Given the demographics of teachers (female, educated, healthy), a teacher starting today is expected to live to 90. The former head of the Ontario Teachers Pension Fund himself has commented that a system where members draw a pension for longer than they paid into is not viable in the long term. Especially in an aging society where the return on investment in the fund will be lower than the return in earlier high-growth decades.

The only question at this point is whether we’ll see painful but deliberate recalibrations of public pensions (some combination of paying more for longer / retiring later / receiving less), or if we’ll just ride this train to collapse and political crisis.

See: France.

[GGG]

Originally Posted by Slava

Yeah and for most people the rule of thumb is ~10% for long-term savings, so that's not surprising. Like I say, the point of this thread is discussing teachers who are at the end of their rope though...which is why we were talking about 20%.

Retirement planning in general for people is a different ballgame.

I guess my comment around the matching is that the public’s perception of the difference between a typical professional working in an office with a 3-9% match and potentially other incentives/benefits vs the teachers plan with a 9.5% employeer match is drastically overblown.

And second

Many people don’t want to have the TPP as their pension plan as evidenced by the opposition to CPP increases which is a greater than 100% employer matched defined benefit pension.

[Ashartus]

Originally Posted by Dynamic

Sometimes parents don't have time to be fully involved as they would like. I'm a single dad and with a full time job/house to maintain, I just don't have the bandwidth to do what I am being asked to do. Field trip supervision, school council, volunteering at events......I get requests to help out all the time. I just can't. 20-30 years ago most of my friends in school had one parent at home that was able to do all the things requested. Today, when I go pick up my kids from school about half the people there for pick-up are grandparents because the parents are at work. Teachers and administrators need to understand and understand quick that it is not because parents don't care, its because we are being stretched thin in almost every other way.

I agree you can't do everything, especially as a single parent. The field trip supervision, school council, volunteering are all "nice to have." Unless you have the time to spare and a desire to do it, leave those to parents with more time. Spending 15 minutes a day reading with your kids is way more important.

[Fuzz]

Originally Posted by Sliver

This is the best argument I have ever read in favour of giving teachers everything they ask for and more.

Their should be a naming tax. Dumb names pay higher school fees.