1. Managing Funding Pressures OMERS Primary Pension Plan
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Managing Funding Pressures OMERS Primary Pension Plan
OMHRA
April 2010

2. “OMERS” An Overview OMERS Governance Bodies
OMERS Plan serves 390,000 active and retired members; 921 employers and has over $40B in net investment assets.
Province passed legislation in 2006 divesting it as the Plan sponsor and established a dual governance structure. Province identified initial sponsor representatives to both Corporations’ Board of Directors.
“OMERS”
An Overview
Association of Municipalities
of Ontario (AMO)
AMO was mandated to represent municipal OMERS employers and other sponsors for example are CUPE, Firefighters, Police, OPSEU. All municipal governments are not OMERS employers; those that are represent almost 50% of total active members in the Plan.
In 2008, AMO directed the creation of a separate corporation (MEPCO) to be its voice on pension matters and to support AMO’s representatives to the OMERS governance bodies.
AMO/MEPCO
Appointees to OMERS
OMERS Sponsors Corporation (SC)
Responsible for plan design, determination of changes to benefits and contribution rates, reserve policy and appointment protocol for both OMERS Boards.
Seven Employer and Employee Representatives from the Plan’s major sponsor groups with weighted voting.
Municipal Employer
Pension Centre of Ontario
(MEPCO)
MEPCO undertakes research and analysis on pension matters from review of legislation, ideas for funding strategy, develops proposals for Plan changes and reviews other sponsors’ proposals in order to provide advice to its OMERS representatives on impacts to municipal employers. It requires leading pension expertise, legal counsel and qualified representatives.
MEPCO Board has a broad range of competencies including pension industry. It is funded entirely by municipal employer voluntary contributions. It updates members and issues an annual report.
Marianne Love
Bruce Stewart
OMERS Administration Corporation (AC)
Responsible for day to day administration of the pension plan, including investment strategy, valuation and pension benefit administration.
Seven Employer and Employee Representatives from the Plan’s major sponsor groups with equal voting.
Bill Aziz
Michael Power
January 2010

3. Investment and Funding
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Investment and Funding
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Investment Returns (total)
2008 – negative 15.3%
2009 – positive 10.6%
Funded Status
$279M deficit (99.4% funded)
$1,519M deficit (97.2% funded)
Deficit expected to grow significantly
Actuarial smoothing of 2008 losses over a period of time means $5B of deferred investment losses to be accounted for in the next four years
Smoothing cushions plan’s funding from volatile market conditions

4. Towers Watson Projections
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Towers Watson Projections

5. Towers Watson Projections
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Towers Watson Projections
A Funding Target of 3% to 4% per side over the next few years is required

6. Addressing Pension Deficits
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Addressing Pension Deficits
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Superior investment returns
Current assumption is 6.5%
Investment strategy OAC responsibility
Increase contributions and/or change benefits
SC review of possible contribution and/or benefit changes

7. Specified Plan Change Timeline
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January
March
April
May
June
July
August
February
SC Member
SC Member
Valuation Receipt
±March 1
Stakeholder
May 1
May 14
July 1
1. Concept &
Evaluation
Tabling/
Formal Proposal 3. 4. 5.
Arbitration/
Mediation
Decision
Proposal/Final Diligence

8. 2010 Specified Plan Changes
3 Proposals tabled at March SC meeting
3-year managed approach to balanced funding (contribution increases and benefit changes)
Rescind the cap on contributory earnings
NRA 60 for Police Civilians
Proposals tabled at April SC meeting
Decisions in May and June –

9. Moving Forward
Continue to review plan valuation and projections
Determine action needed to address deficit
Develop an Objectives Statement
Partner with OAC on pension reform and growth initiatives

10. Managing Funding Pressures OMERS Primary Pension Plan
DRAFT
DRAFT
Managing Funding Pressures OMERS Primary Pension Plan
OMHRA
April 2010