pacman007 wrote: ↑Tue Sep 20, 2022 7:42 am
Mind blown!
So to get a livable wage in yyz or yvr you either take a 20% pay cut to pay bills or don’t pay bills at all with the 2000 a month paycheck. I hate to say it but flair and lynx pay more and you don’t have to sacrifice 20% of your salary to live.
Ingenious scam by the company!
Notwithstanding that first year 737 FO wages are too low at WJ (and arguably at AC, Flair & Lynx), let's talk about how the WSP, very generally, works.
While it USED to be a share matching program, when the company was bought by Onex that was no longer possible. The current scheme is based on an arbitrated award that somewhat takes the old program into consideration while trying to fit to the reality that you can no longer actually buy shares in WestJet. I won't comment on whether the new program is 'as good' as the old program.
Pilots at WJ can opt to contribute UP to 20% of their salary into a number of different savings options: RRSP, TFSA, unsecured "WestJet Savings Plan" (essentially a loan to the company with set return rates) with the potential to select one, two or all three options. This is Optional and no one is required to contribute.
If someone decides to contribute the full 20%, it gets deducted off their paycheque. If they select the RRSP or TFSA option, the pilot's contribution goes directly into the type of savings account that they select (though I think it's quarterly and not monthly, I can't recall). There is a period where they are not able to withdraw it, but their contribution is always 'their' contribution regardless of what happens and you can see the amounts like any savings account you have. So while it doesn't get deposited into your chequing account, it does go into "your" account. For the RRSP / TFSA, twice a year, approximately a year after you've contributed, the Company will deposit their match into your savings account.
Now, when they do this, like most employer savings matching programs, this counts as a taxable benefit (i.e. income), so Pilots do have to pay tax on this amount as well. This isn't an employer's fault, that's the tax code. So unfortunately, the reality is that when you first start the program, at certain points in the year when you don't initially have access to your funds or the match, you're "taking home" 80% of your salary, but getting deducted tax on 120% of your salary. It should also be noted that if you contribute to a valid RRSP, a certain amount that you contribute to an RRSP is tax deductible, so you can maximize your Income Tax Return. But yes, your take home pay that you can access, when you first start at WJ and IF you participate in the optional program can be quite low.
Now that it's no longer a share matching program there are some very valid arguments that there shouldn't be an employee contribution portion. I'm not disagreeing with that at all. However, requiring an employee contribution is pretty standard for such savings plans for the vast majority of North American employers. And 20% is almost unheard of. My wife gets like 6% max. My financial planner was somewhat shocked that there was a company out there that matched 20%, most are 10% or lower. You are not 'sacrificing' 20% of your pay, you are simply moving it directly to a savings account. Prior to coming to WJ that's what I basically set up with my financial planner. My pay cheques were deposited on the 15th and 30th, and on the 16th and 1st, approximately 10% of my net pay was auto withdrawn and deposited into an investment account. Easy come, easy go. Best way to set up savings both for a rainy day and for retirement is to move your savings before you can touch it, so you don't miss it. I didn't "sacrifice" that money, I put it aside for savings. Aside from some market fluctuations, I still have all that money in savings/investments.
The other thing is that (perhaps a little less now that interest rates are going up), the 20% (or even 10%/15% at Swoop/Encore) still makes financial sense to do even if your take home pay is too low to pay all your bills. Getting a line of credit with an interest rate lower than 10% to cover the approximately 20% decrease in take home pay would still have you coming out ahead for total income than opting out of the match. Made sense before when the interest rates were really low, but less so now.
To be clear, I am not suggesting that the plans shouldn't be improved nor am I suggesting that current pay rates are sufficient and competitive. However, focusing ONLY on the decrease in take home pay on your pay cheque and not looking at your total income (including your savings) is not a prudent way to manage your expenses nor make decisions on which jobs to take.
