Hey there, time traveller!

This article was published 7/10/2016 (1446 days ago), so information in it may no longer be current.

The cost of pensions for the province’s retiring teachers is increasingly having an impact on what’s left for classrooms, new schools and even property tax credits.

Nine per cent of the money the province pays for public education each year goes to teachers’ pensions — and those costs are climbing $7 million a year.

The province pays half the cost of teachers’ pensions, splitting the payouts with the contributions paid each year by working teachers.

That was $370 million this year split 50/50, says the annual report of the Teachers Retirement Allowance Fund, which forecasts the annual payout will be $650 million in 20 years — the province will be paying out another $7 million on average each year.

The Department of Education says pension payouts make up nine per cent of the $2.33 billion that the province pumps into public education each year, and unlike the K-12 funding formula, capital grants and tax credits, the province has no choice over how much it pays.

"It’s cause for concern," Education Minister Ian Wishart said in an interview Thursday.

"(The fund) is going to be faced with some real challenges. All pension obligations are a cause for concern," Wishart said.

"Education is a priority for our government," but costs for pensions are going up fast, he said.

The province also pays interest on money borrowed to cover off a portion of the plan’s growing unfunded liability — in 2007, the NDP borrowed $1.5 billion, and it added $100 million in September of 2015.

It all adds up to big dollars that are growing inexorably.

"The pension costs are going up; there are more pensioners out there," Manitoba Teachers’ Society president Norm Gould said Thursday. "We’re totally aware that as salaries increase, we contribute more."

The NDP simply paid the pension bill each year, increased operating grants at a rate equal to or above provincial growth and didn’t touch tax credits —in fact, some years they increased the credits.

The Pallister Conservatives say Manitoba has a spending problem and have vowed to reduce the provincial deficit. If mandatory costs are going up so quickly, the question is will the Tories continue to spend discretionary dollars the same way the NDP did.

Teachers are living far longer, and they’re retiring with much higher salaries.

At one time, there were 10 teachers working for every teacher drawing pension, but now the numbers are almost even, said the fund: 15,903 active teachers and 14,187 drawing pension.

Five years from now, there will be more teachers living out their retirement than there are teachers working in classrooms, said fund executive director Jeff Norton.

The Teachers Retirement Allowance Fund handles the investment of pension funds and provides information to all the parties involved but does not direct the government or the Manitoba Teachers’ Society on their financial decisions.

"For years, we’ve known that the ratio would be one to one," Gould said. That could be as early as next year, and pensioners could outnumber working teachers as early as 2019, he said.

Teachers have increased their pension contributions 0.5 per cent a year each of the last four years. "It’s more likely than not that another contribution increase would be prudent," of at least 0.8 per cent of a teacher’s salary, which the province is obliged to match, Norton said.

"That’s a reasonable statement," said Gould, who is vice-chairman of the fund’s board. "If we said a one per cent increase would be desirable, there would have to be a commitment on the part of government to do that."

Further contribution increases could be phased in at a portion annually over several years or all at one go, said Gould — which the province would have to match.

Under an agreement reached in 1963, the province, and not school divisions, pays the employer’s share of teachers’ pensions.

The province is on a pay-as-you-go basis, said Norton. In 2007, the NDP put $1.5 billion into the plan to cover future liabilities and ease the amount to be paid out each year, but made no further payments into the pension fund’s trust account until a year ago, when it invested a further $100 million.

"It was discretionary — there’s no legal obligation to do so," Norton said.

The average teacher is retiring at age 60, with the latest group of retirees forecast to draw their pension for 31 years. They’re forecast to receive pension for an average of more than four years longer than they worked, the fund reported.

The average retired teacher is 71 years old; 1,159 retired teachers or their beneficiaries are 85 or older, 18 are 100 or older and the oldest is 105.

Women make up 61 per cent of retirees, but that percentage will grow, with women now making up 70 per cent of the teacher workforce and a far higher percentage of students in faculties of education.

A typical teacher with 10 years’ experience will be paid in the low- to mid-$90,000 range when their current contracts expire in the summer of 2018.

Women are retiring with less service and lower pensions than men, reflecting years taken off to raise children.

Teachers who’ve retired can continue to draw their pension but still return to work as substitutes or on term contracts as long as they don’t teach more than 150 days in a school year — this current school year is 193 days, including 10 in-service and professional-development days.

nick.martin@freepress.mb.ca