Update on provincial government policy affecting faculty receiving salary and pension

The provincial government is in the process of implementing worrisome policy changes that are likely to impact faculty compensation for senior YUFA members receiving their pensions. Some changes are in legislative process (Bill 100, the 2019 budget implementation bill, is currently in third reading in the Ontario Legislature). Other changes, including new regulations arising from this legislation, are at various stages of discussion.

In this communication, we elaborate our understanding of the Ford government’s proposed legislative changes that concern faculty working past the age of 71 and discuss their implications. (We have discussed other aspects of the Ford government’s policy toward universities elsewhere: here, here, here and here).

Bill 100 (pages 113-17) contains the changes that are already in legislative process. The current draft of the bill states that “The Minister may make regulations governing the reduction, limitation and alteration of compensation due to an individual with respect to whom the following conditions are met: …The individual is employed or otherwise engaged by a post-secondary institution [and] …The individual has …started to receive a pension under a pension plan, or …exercised their entitlement to a transfer in accordance with section 42 of the Pension Benefits Act with respect to a pension or a deferred pension payable under a pension plan” (section 42 refers to transferring an amount equal to the commuted value of the former member’s deferred pension).

Although Bill 100 does not mention a particular age, it is relevant to any member who is planning to work after collecting their pension. For York faculty, this means someone who is 71 or older, or planning to work beyond that age. Federal legislation requires you to start collecting your pension in December of the year in which you turn age 71. Note that Bill 100 does not say that employees of a post-secondary institution will have their salary reduced to a certain level. It says that future government regulation may reduce such compensation. In other words, the legislation permits the government to make regulations governing these matters, but the legislation itself does not make those changes.

In more detail, Bill 100 states that regulations under this legislation may “...establish and govern procedures, rules and methods that a post-secondary institution shall use to reduce, including reducing to zero, limit or alter the amount, form or timing of compensation…; provide that the regulations prevail over any collective agreement, contract of employment or any other contract, including any collective agreement, contract of employment or other contract that existed before the regulation was made… [and] require a post-secondary institution to do or refrain from doing anything relating to or arising from the reduction, limitation or alteration of the compensation.”

In other words, the government plans to introduce future regulations that will specify how much compensation shall be reduced when a member starts to receive their pension, including, potentially, reducing salary to zero, in spite of minimum wage legislation. These regulations may override existing collective agreements and restrict new collective agreements, and prevent the University administration from taking any action that will annul the reduction in faculty compensation. Another clause stipulates the envisaged over-ride of the Employment Standards Act and the Labour Relations Act. Again, Bill 100 enables such regulation but does not yet establish it.

The Minister for Training, Colleges and Universities has said that the intent of the legislation is to end “double-dipping,” suggesting that working faculty should not be permitted to collect their pensions and full salary at the same time. One interpretation might be that an individual’s total income from pension and salary could only equal the amount of salary earned before they began to receive their pension. York faculty who reach 71 while working would have to relinquish the amount of their salary equalling the amount of their pension.

OCUFA Executive Director Michael Conlon provides an example: assume your salary at age 70 is $150K and your pension after age 71 is $75 K. If you do not retire and want to keep working full time, your total salary would be reduced from $150K to $75K. Other media interpretations have gone much further, speculating about the reduction of salary to zero when pension payments commence. Again, these are speculations about the possible form of future regulation, and they are not yet established in the current legislative process.

The rhetorical and political context for these policy changes is particularly disquieting. The framing by the government of faculty working full-time past 71 (the age when one is required by federal law to collect pension) as “double dipping” portrays aging faculty as selfishly bilking the public purse instead of receiving compensation that is appropriate to their expertise, skills, experience, and profession.

Crucially, it is also a misrepresentation to suggest that Ontario taxpayers pay for our faculty pensions when we retire. Pensions are monetary contributions set aside monthly as part of our collectively bargained compensation package, as you know from viewing your pay slip. Those accumulated contributions and plan earnings provide the basis for our pensions, whether we take them before or after the age of 71. The deferred earnings that accumulate have a specific “commuted value”, which one is entitled to receive in many circumstances. For example, if an employee left their job and took another position, their pension account and the moneys it has accumulated would go with them. Furthermore, the University actually saves money with respect to an employee who reaches the age of 71 because it no longer makes pension contributions as part of that faculty member’s compensation.

OCUFA reports (page 3) on a consultation held by the Ministry of Training, Colleges and Universities on February 12 on “employee renewal”, in which YUFA officers participated. The consultation narrowed its focus onto faculty members who continue to work full-time and simultaneously collect a pension. OCUFA’s summary reports the following: 

Under the guise of faculty renewal, the budget includes legislation that targets the rights of senior faculty and interferes with university collective agreements. The budget makes a preposterous claim, without any supporting data, that the higher average retirement age is the reason the hiring of junior faculty members is limited…

[The focus on faculty working full-time and collecting a pension] …is an alarming development, as it infringes on collective agreement and bargaining rights and could result in discrimination based on an individual’s age. Further, this ignores and distracts from the real challenges facing the postsecondary sector, including systemic underfunding, an alarming shift towards precarious academic positions, and the absence of an effective faculty renewal strategy.

Mandatory retirement was eliminated in Ontario in 2006 as a step towards ending age discrimination in employment, and senior faculty are invaluable to the strength of collegial governance at their institutions. We believe that a real faculty renewal strategy must ensure that retiring faculty members are replaced with full-time, tenure-stream faculty.

OCUFA is seeking a legal opinion on the proposed policy changes, which are fraught with potential rights infringement such as equal pay for equal work, protection against age discrimination, and the right to collective bargaining. It is safe to assume that the government expects one or more court challenges to the legislation. Apart from the obvious legal questions, it is important that faculty associations and universities address the problematic framing of “double dipping”, the misleading arguments about “faculty renewal”—since there is no assurance that a retired faculty will be replaced by a new tenure track appointment—and public misperceptions about the real challenges universities face together with the rights of university employees.

YUFA has discussed the proposed new pension-related salary restrictions for active members aged 71 and over with the Employer through the Joint Committee on the Administration of the Agreement (JCOAA). The Employer expects that there will be a transition period for the new regulations. YUFA has asked the Employer to communicate proactively with members and, in particular, with the 81 YUFA members who would be immediately affected by the new limitation on faculty compensation. YUFA will continue to follow these issues closely and keep members informed of developments.

If you have any questions about these matters or your own retirement, please email [email protected].