FAUW responds to MTCU proposal to reduce salary of faculty members collecting pensions

FAUW sent a written submission to the Ontario Ministry of Training, Colleges and Universities (MTCU) on July 31 regarding proposed MTCU regulations that would reduce the salary of university sector employees who are collecting a pension.

Key points

• The proposed changes discriminate on the basis of age.
• The net savings to either the University or the province are not clearly established.
• Many scholars over age 71 provide more funding and jobs through their research programs than would be freed up by their retirement.
• Because university faculty start their careers later, they cannot be compared against other sectors on the basis of retirement age.
• The regulations would disproportionately disadvantage women and members of other equity-seeking groups whose career advancement is often further delayed.
• The Progressive Conservative Party of Ontario has a higher percentage of sitting MPPs age 71 or older than the University of Waterloo has of faculty age 71 or older.

Thank you to the many members who provided feedback on this issue and shaped our response, included in full below.

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FAUW’s response to the MTCU’s discussion paper on ‘Postsecondary Education Sustainability and Renewal’

Thank you to the MTCU for reaching out to all stakeholders on this issue. We appreciated the opportunity on June 24 to meet directly with the deputy minister and ministry staff. The postsecondary education sector is complex and highly variable, and we hope that this model of direct consultation continues into the future on all issues involving the sector.

The Faculty Association of the University of Waterloo (FAUW) represents nearly 1,400 faculty at the University of Waterloo (effectively all faculty with at least one-year contracts) and is one of only three university faculty associations in the province that is not unionized.

We concur with OCUFA’s official response to this consultation: creating salary regulations that force universities to discriminate on the basis of age would be a serious mistake. We would also like to add our own thoughts about how such regulations would negatively impact the uniquely innovative and entrepreneurial environment at the University of Waterloo.

The proposed changes discriminate on the basis of age

At the University of Waterloo, our policies do not permit employees to voluntarily collect a full-time salary and pension at the same time, so this issue is not perceived as a problem. However, the small proportion of our faculty members over age 71 (just over one per cent) do not have a choice about whether to collect their pensions as they are forced to do so by a federal income tax rule.

At Waterloo, the proposed new provincial regulations would create a problem where one does not currently exist by discriminating against faculty over age 71 on the basis of age.

The proposed new provincial regulations would create a problem where one does not currently exist.

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Delayed entry into the workforce

Financial considerations play a large role in individuals’ decisions about when to retire. Because of their extended training, university faculty normally start their careers much later than others in the public and private sectors. This delayed entry to the workforce means that many faculty need to work longer to amass adequate pensions.

Entry level professorial positions require at least eight to ten years of postsecondary education, increasingly augmented by additional years of postdoctoral research or contract teaching. According to 2016 Statistics Canada data (as analyzed in this University Affairs article):

• Only 0.5% of academic staff were age 29 or younger (when mandatory retirement was phased out in 2006, it was still very low at 0.8%)
• The average age of a person graduating with a PhD in Canada is 35
• The median age for an entry level assistant professor position is 39

Female faculty who have children often get an even later start to their careers and/or have interruptions in their progression that impact their ability to retire. Consider Professor Shannon Dea’s story:

Shannon Dea waited until her daughter was in full-time elementary school before she herself started graduate school. She finished both her master’s and PhD first in her cohorts and started her first tenure-stream position immediately after finishing her PhD. However, by then, she was 38 years old. Now 50, she has just finished paying off her student loans and has only 12 years of pensionable earnings behind her. In order to be eligible for a full pension, she would need to retire at age 83. She plans to retire well before then, but needs to work past 65 in order to have enough retirement income to live on. Introducing regulations that impose wage penalties post-65 would unfairly disadvantage academic mothers like Professor Dea.

Comparing the postsecondary education sector against other sectors

The above analysis highlights a flaw in the MTCU discussion paper, which compares university faculty with Ontario nurses and teachers who are able to enter the workforce after two to six years of training. Because university faculty start their careers later, they cannot be compared against other sectors on the basis of retirement age. Given the extended investment that our society makes in training university faculty, they should at least contribute as many years of service as teachers and nurses, and this naturally leads to later retirement ages.

We also observe that most universities have not developed the same kinds of strong incentives to encourage retirement that have been put in place for other members of the broader public sector. For example, the University of Waterloo pension plan provides for an unreduced pension only at age 62, while Ontario nurses and public servants can retire with an unreduced pension as early as age 55.

In choosing not to incentivize early retirement to the levels available to nurses or teachers, the University of Waterloo recognizes that individuals need to make plans based on their unique financial situations and that senior faculty bring significant benefits, many of which translate directly into economic benefits for universities and for the Province of Ontario.

Losing key talent and experience

The majority of older faculty at the University of Waterloo are actively contributing and valuable members of the university community and the broader scholarly community. The experience and expertise they bring to the institution and to the province are considerable. Several are very distinguished scholars who provide invaluable services to the community and industry. At least two of our faculty members over age 71 are Fellows of the Royal Society of Canada. Others are top level administrators whose leadership is vital to the flourishing of the institution.

The proposed regulations would force excellent and productive scholars out of the University of Waterloo, including the following individuals:

• Ian Munro (72, Cheriton School of Computer Science) is University Professor and one of ~30 Tier 1 Canada Research Chairs at the University of Waterloo. His chair has been renewed twice and is scheduled to last for almost four more years. He is a Fellow of the Royal Society of Canada, a Fellow of the Association for Computing Machinery, and a recipient of Computer Science Canada’s Lifetime Achievement Award. He has published 250 refereed conference and journal publications in his lifetime, 25 of these in the last three years. Eight junior highly qualified personnel depend on the research funds he brings in for their positions.
  The MTCU discussion document suggests that senior people must retire to make room for junior people. Professor Munro’s case shows that, on the contrary, many senior professors actively create and sustain positions for junior colleagues. He was required by federal policy to begin collecting his university pension last December. Neither he nor his team members should be penalized and their careers put at risk because of an income tax rule over which they have no control.
• Peter Huck (over age 71, Department of Civil and Environmental Engineering) is an NSERC Industrial Research Chair in Water Treatment. Currently there are only eight of these research chairs at Waterloo. He is a Fellow of the Canadian Academy of Engineering and his career total of refereed publications is 207, plus 12 books/book chapters. In the last four years he has 60 publications and presentations, and has graduated 15 Masters and PhD students. As of September this year, nine junior highly qualified personnel will depend on his funding. His team’s research is supported by financial contributions from external partners that are matched by NSERC, for a total of $3.5 million for the period 2018-2022. They currently have 17 partners, primarily municipal water utilities.
  In 2017, Professor Huck postponed his planned retirement to lead a renewal of the Industrial Research Chair for five more years. If Professor Huck retires before the chairship ends, NSERC has advised that it would be wound down. In that case, the University of Waterloo would not receive much of the already-committed NSERC funding of $970,000 for the period 2020-2022, and the matching partner funding would be in jeopardy as well, thereby leading to the termination of several skilled employees, and reducing future employment and graduate students.  
• Shai Ben-David (68 years old, Cheriton School of Computer Science) came to the University of Waterloo in 2004 at the age of 53 from the Technion – Israel Institute of Technology. His career achievements are numerous. In 2015, at age 64, he published Understanding Machine Learning: From Theory to Algorithms, which has become a standard textbook for courses around the world. His “Foundations of Machine Learning” YouTube channel has more than 50,000 subscribers.
  Last year, he won the best paper award in the NeurIPS 2018 conference (out of ~5000 submissions), and this year one of his papers was featured on the cover of Nature, one of the most influential scientific journals in the world. The lack of mandatory retirement played a significant role in Waterloo’s ability to recruit and retain Professor Ben-David, who chose Waterloo over an offer from another international university. More recently, he has turned down offers from other prestigious institutions and companies.

When it comes to productivity and excellence beyond age 70, the university sector is no different from government. Take, for example, the Right Honourable David Johnston: after serving as President of the University of Waterloo until age 69, he was appointed Governor General of Canada, a role that he held until age 76. The Progressive Conservative Party of Ontario has several sitting MPPs who are age 71 or older (a higher percentage than faculty age 71 or older at the University of Waterloo). Perhaps the Ministry should consult directly with these MPPs on this issue.

Replacing senior faculty with junior faculty may not generate the expected cost savings.

Economic impacts of senior faculty on the university and the Province

Within universities, replacing senior faculty with junior faculty may not generate expected cost savings, especially in the longer term:

• Faculty recruitment and hiring processes are rigorous and expensive, and those costs are not currently factored into the government’s thinking about renewal;
• The established research programs, reputations and strong publication records of senior faculty are key to recruiting and funding top quality students, and strengthening the performance of Ontario universities in international rankings;
• In some particular academic fields, members report that salary inversion has resulted in junior colleagues receiving salaries higher than those of senior colleagues;
• Faculty retiring later generally saves universities money on pension costs when the pension plan is of the defined benefit type (which is the case for most universities). When a person covered by a defined benefit plan works for a year longer, they receive one less year of pension. At older ages, this pension savings is greater than the cumulative cost of the larger annual pension entitlement the individual earned from their additional year of service. We do not believe any of the cost-saving estimates the government has seen take this factor into account.

Under the proposed regulations, sought-after senior scholars will leave Ontario.

Looking outwards, the University of Waterloo has a massive economic impact on the Region of Waterloo and the Province of Ontario (see the University’s 2013 economic impact study) and this is a direct result of the University’s approach to recruiting and retaining top faculty, no matter their age.

Besides forcing out faculty over age 71, the proposed new regulations would create incentives for late career scholars to pre-emptively leave Ontario for job markets where there are no such regulations. Several high performing faculty reported to us that they chose Waterloo over competing offers from non-Ontario universities in part because there was no mandatory retirement. Under the proposed regulations, sought-after senior scholars will leave Ontario.

Summary

In summary, introducing regulations to cap pension-plus-salary for university employees would be incredibly counter-productive at the University of Waterloo. Not only would they degrade entrepreneurship and economic development in our Region, they have the potential to disproportionately disadvantage women and members of other equity-seeking groups who start and/or advance their careers later in life.

It is clear to us that administering new regulations would be difficult and could introduce severe inequities. The local cost savings at the University of Waterloo, not to mention the net savings to Ontario taxpayers under any new regulations, are not at all clear and would not be worth the problems and unintended consequences that such regulations would likely create.    

The proposed MTCU regulations to cap pension-plus-salary for university employees disproportionately disadvantage women and members of other equity-seeking groups who start and/or advance their careers later in life—and the net savings to Ontario taxpayers aren’t at all clear.

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Universities flourish when they are independent, self-governing, and empowered to attract the very best national and international talent. The elimination of mandatory retirement has allowed our sector to attract and retain fantastic researchers who have helped bring Ontario to its current level of international recognition. We are competing against the rest of Canada, the United States, and the world to attract the very best students and faculty, who in turn contribute to make our local society a competing force in this global information and technology era.

Again, thank you for consulting FAUW.

Sincerely,

Bryan Tolson, PhD
President, Faculty Association of the University of Waterloo
Associate Professor, Department of Civil and Environmental Engineering
University of Waterloo