Elimination of Mandatory Retirement

1
Elimination of Mandatory Retirement

• Simon Fraser University
• September 24, 2004
• Dr. Peter P. Mercer
• Faculty of Law
• The University of Western Ontario

2
Mandatory Retirement in Canada Human Rights
Legislation

• 
  No limitation Only via Collective Agreement
  or Pension Plan No discrimination 18
• Alberta
  X
• British Columb1a X
• Manitoba
  X
  
  
• New Brunswick
  X
• Nova Scotia
  X
• Newfoundland X
• Ontario X
• P.E.I.
  X
• Quebec
  
  
  X
• Saskatchewan X
• Territories
  X
• Federally regulated
  X
• Federal civil service
  
  
  X
• Note Mandatory retirement permitted in all
  jurisdictions where age deemed to be a bona fide
  occupational requirement

3
Introduction the Legislative and Judicial
Backdrop

• McKinney v. University of Guelph (1991), 76
  D.L.R. (4th) 545 (S.C.C.)
• University activities not covered by Charter of
  Rights and Freedoms
• If they did, would violate s. 15(1) but be saved
  as reasonable limits s.1
• Limitation to age 65 under OHRC also saved by
  reasonable limits s.1
• Judgment based on societal expectations of
  retiring at age 65
• Recent Decisions
• S.C.C. asked to reconsider McKinney by B.C.C.A.
  in GVRD case (2002)
• Recent accommodation of disability jurisprudence
  requires taking into account individual
  circumstances in establishing workplace standard
• Even if mandatory retirement policy allowed by
  law there is danger that not allowing individual
  employee to stay on when other valuable ones are
  exceptionally retained will look like dismissal
  rather than application of policy

4
Bill 68 An Act to amend the provision of
certain Actsrespecting the age of retirement

• Tabled May 29, 2003 by previous Ont. government
  first reading only
• Strongly supported at the time by opposition
  Liberal party who have announced intention to
  re-introduce legislation
• Re-defined age for purposes of discrimination
  in employment to 18 under the Ontario Human
  Rights Code
• Mandatory retirement still permitted under
  collective agreement in effect on May 29, 2003
  but not under any extension of such collective
  agreement
• Note Attempting to argue blanket BFOR difficult
  because must show
• undue hardship of accommodation
  requires individual assessment
• Implications - Revisions to age-based
  provisions in benefit plans
• - Increased need for
  accommodation
• - Greater emphasis on
  monitoring performance

5
Overview

• What do we know?
• Experiences in the United States
• Experiences in Canada
• Faculty profiles in Canada
• Factors affecting retirement
• Operational Implications
• Strategies

6
Forecasting retirements

• Retirement trends are tough to forecast even at
  a single institution, let alone nationally,
  because the decision to end a career is a highly
  personal one, based on a professor's finances,
  health, mental capacity, and desire to keep
  working. Other factors play a role, like whether
  the stock market is booming, and whether a
  college offers retirement bonuses. The Imminent
  Surge in Retirements Chronicle of Higher
  Education, March 17, 2000

7
What do we know?

• studies examining the fallout have found that the
  retirement rate of professors at 70 has
  plummeted. That's not a big problem now, because
  70-year-old professors are still relatively few
  in number, but experts believe that it could
  become one on some campuses as the average age of
  the faculty rises and the pool of scholars aged
  70 and over expands.
• The Imminent Surge in Retirements Chronicle of
  Higher Education, March 17, 2000

8
U.S. Experience Teachers Insurance Annuity
Association College Retirement Equity Fund
(TIAA-CREF)
TIAA-CREF Data, as referenced in Chronicle of
Higher Education, The Imminent Surge in
Retirements, March 17, 2000.
9
U.S. ExperienceAAUP Survey of Faculty
Retirement Policies
10
U.S. Experience - AAUP Study Is the Fraction of
Tenured Faculty Who Continue Full-Time
Employment After Age 69 Greater Now than It Was
Prior to the Elimination of Mandatory
Retirement? ( Reporting YES)
Source AAUP, Survey of Changes in Faculty
Retirement, 2000
11
U.S. Experience - AAUP Study

• Put simply, retirement of faculty provides both
  benefits and costs to academic institutions and
  each institution needs to decide how it should
  best to address the process.
• R.G. Ehrenberg, The Survey of Changes in
  Faculty Retirement Policies, AAUP, 2000.

12
U.S. Experience Ashenfelter Card, NBER Study

• Did the Elimination of Mandatory Retirement
  Affect Faculty Retirement Flows?
• 16,000 faculty over 50 years of age,
• 104 colleges/universities
• Combined payroll records and TIAA-CREF pension
  information
• National Bureau of Economic Research, Working
  Paper Series, 8378

13
Findings Ashenfelter Card

• Less than 10 of 70 year old faculty employed at
  age 72 in 1994
• Currently, (1999-2000) one-half of 70 year old
  faculty are still working two years later
• Ashenfelter Card, Did the Elimination of
  Mandatory Retirement Affect Faculty Retirment
  Flows? NBER Working Paper Series, p.2

14
Findings Ashenfelter Card

• U.S. colleges and universities will experience
  a rise in the number of older faculty over the
  coming years. The increase is likely to be larger
  at private research universities where a higher
  fraction has traditionally remained at work until
  age 70.
• Ashenfelter Card, Did the Elimination of
  Mandatory Retirement Affect Faculty Retirment
  Flows? NBER Working Paper Series, p.2

15
Findings Ashenfelter Card

• Other findings combined dataset
• Individuals with higher salaries or lower pension
  wealth are less likely to retire at any given
  age.
• Faculty members with a higher rank in the salary
  distribution of their home institution have lower
  retirement rates

16
Thoughts on the U.S. experience

• "the professors who stay on are usually the most
  driven, the most productive. Universities don't
  want these faculty to go away. They would just
  like them to stop getting paid."
• R. Ehrenberg, quoted in Chronicle of Higher
  Education, The Imminent Surge in Retirements,
  March 17, 2000.

17
Canadian situation
18
Changing age distribution of faculty
Source AUCC and Statistics Canada
19
Faculty age profile- small variance in the age
distributions by province
Source AUCC and Statistics Canada
20
age group distributions by province, fall 2001
Source AUCC and Statistics Canada
21
a growing trend towards earlier retirement
Source AUCC and Statistics Canada
22
Considerations

• Faculty nearing normal retirement just as
• Enrolment demand continues to increase
• Innovation agenda - research
• PhD supply problem
• Graduate enrolment
• Labour markets

See Council of Ontario Universities, Advancing
Ontarios Future Through Advanced Degrees, COU,
2003
23
In total, 30,000 to 40,000 new faculty will be
needed by 2011
Improvement
Enrolment
Replacement
Source Statistics Canada data and AUCC
projections
24
Universities need to increase their share of the
PhD market
Source Statistics Canada, Census
25
About one-third of PhDs who work full-time are
employed in academe however, the range is from
20 to 60 percent
One-quarter or less in the hard sciences to half
or more in business, the humanities and fine arts
26
The part-time faculty pool is not stocked with
all kinds of PhDs in waiting
Appointment status
Gender
Age
Highest degree obtained
Source Statistics Canada, Centre for Education
Statistics
27
More than 40 of faculty are 40 or older when
first hired by universities
28
Scanning for the future.

• Significant increase in the number of older
  faculty is on the horizon
• Pressure for continuing arrangements for some
• Need for older faculty in light of recruitment
  difficulties / constraints
• Significant increases in enrolment
• Innovation agenda research demands

29

• Institutional Issues Regarding the Abolition of
  Mandatory Retirement

30
Personal Factors affecting retirement

• Financial
• Health
• Desire to continue
• Working environment
• Engagement in research / teaching / service

31
Issues

• Planning
• Faculty renewal
• Salary policy
• Benefits policy
• Space, parking, access to facilities
• Academic support travel, computing etc.
• Legal Performance reviews
• Health and well-being

32
Issues - planning

• Adds to uncertainty
• Faculty replacement
• Bridging programs
• Costs
• Space requirements
• Curriculum renewal / change

33
Issues faculty renewal

• Timing of replacements
• Curriculum change
• Academic compensation costs
• Faculty diversity
• Gender
• Under-represented groups
• Discipline sub-fields

34
Issues salary policy

• Structure of the salary program
• Progress-through-the-Ranks PTR
• Merit - versus
• Salary caps by rank
• Cost of the salary program
• Economic increases
• PTR / Merit
• Administration of salary program

35
Issues benefits policy

• Benefits coverage for retirees
• Benefit costs
• Pensions (policy performance DC)
• Other benefits
• parking,
• space,
• academic support

36
Post-retirement benefitsProportion of
Institutions providing each type
(Doctoral/Masters)
Source AAUP, Survey of Changes in Faculty
Retirement, 2000
37
Legal Issues performance

• Terms and conditions of employment
• Appointment, promotion, tenure, leave policies
• Issues surrounding retirement and subsequent
  re-employment
• Workload
• Annual performance reviews

38
Issues health/well-being

• Aging individuals
• Increasing frequency of ill-health
• Long-term disability
• Short-term health leaves (sick leave)
• wellness programs

39
The Institutional Experience where Mandatory
Retirement has been Eliminated

• Alberta The University of Calgary (cf. The
  University of Alberta)
• Manitoba The University of Manitoba
• Quebec McGill University
• - Laval University
• - Quebec Universities as a group
• The experience regarding non-academic staff
• Statistics Canada 1998 Median age of retirement
  in
• Canada
  60.8
• Manitoba
  60.7
• Quebec
  58.4

40

• Institutional Strategies

41
Strategies

• How to optimize the situation for the institution
  and the individual?
• Realities
• Flexibility
• Planning Certainty
• Work environment
• Resuming employment after retirement

42
Strategies to encourage retirement

• Terminal leave programs
• buy added service (defined benefit)
• Lump-sum payment defined contributions
• Phased retirement
• Post-retirement benefits
• Health, LTD etc
• Parking, office space, support etc.

43
Early retirement programs

• window early retirement programs
• Versus
• on-going early retirement programs
• ___________________________________
• Phased retirement programs

44
Percentage of Institutions in Each Category that
Currently Have a Formal Phased Retirement
Program
Source AAUP, Survey of Changes in Faculty
Retirement, 2000
45
Strategies - to optimize faculty contributions

• Flexible employment arrangements
• Periods of reduced responsibility
• Flexible leave arrangements
• Consistent performance evaluation
• Alternative workload
• Retirement planning

46
Conclusions / Summary
Mandatory.