OMERS Annual Results & Plan Risk Assessment
Earlier this year, OMERS released its 2022 annual results as part of the 2022 Annual Report, with a net investment return of 4.2%, representing $4.9 billion of net investment income. This is good news given global conditions. However, the Plan’s funded status dropped slightly to 95%.
The OMERS Plan – like many peer pension plans – has matured, meaning there are almost as many retired members receiving pensions as there are active members who are making contributions. OMERS has a plan to return to full funding by 2025, but factors such as inflation, global conflict, and climate change will continue to impact markets. MEPCO will continue to provide its best advice to OMERS and has confidence in OMERS’ ability to meet the Plan’s challenges.
OMERS Plan Risk Assessment
Recently, the OMERS Sponsors Corporation (SC) began to consult with sponsors and stakeholders as part of a plan risk assessment. The OMERS SC reflects the joint sponsorship model of equal representation of employer and employee interests. AMO and MEPCO believe it is responsible for OMERS to review the risks and challenges to meeting its goal of a sustainable, affordable, and meaningful defined benefit pension plan. Carefully considering the risks enables OMERS to have the right strategies in place to be successful in fulfilling its pension promise for current and future plan members.
AMO and MEPCO are aware of a campaign that has mischaracterized these consultations as plans to cut pension benefits – this is simply not true. First, it is important that municipal employers and employees are assured that pension benefits, once earned, cannot be cut. Second, these consultations have not concluded, and no decisions have been made by the OMERS SC regarding Plan changes.
MEPCO is participating in these consultations emphasizing municipal employers’ continued support for an OMERS defined benefit pension plan which is sustainable and affordable for both employers and employees and provides meaningful retirement benefits.
MEPCO believes that the path to long-term plan sustainability lies with flexible tools and policy levers – tools like shared risk indexing. MEPCO is also encouraging the SC to carefully consider the principle of intergenerational fairness in its deliberations.
MEPCO will continue to share the municipal employer perspective in further discussions on the plan risk assessment and will communicate on the outcome of these consultations.
AMO and MEPCO recognize the importance of the jointly sponsored model of governance where key decisions, including plan design and contribution rates, are shared equally by those representing the interests of employers and employees, and where all parties are committed to the long-term success of the OMERS Plan.
MEPCO Board Update
MEPCO’s Board of Directors met three times in 2023: in February, March and May. Highlights of MEPCO’s work this year include:
- Presentation on the OMERS 2022 Annual Results by: Blake Hutcheson, OMERS President & CEO, Jonathan Simmons, OMERS Chief Financial and Strategy Officer, Celine Chiovitti, OMERS Executive Vice President and Head of Pensions, and Laurie Hutchinson, CEO, OMERS Sponsors Corporation.
- Peter Hume, a long-standing member of the MEPCO Board, who most recently served as MEPCO Board Chair, ended his term in March. As a former City of Ottawa Councillor and AMO President, Mr. Hume provided valuable insight to MEPCO and AMO over the years. We join the Board in thanking him for his years of service.
- Lynn Dollin was appointed as MEPCO Board Chair. Ms. Dollin is currently serving as Mayor at the Town of Innisfil and previously served as AMO President from 2016-2018.
- The Board approved the appointments of Janice Baker, Jamie McGarvey, and Laura Newman to the MEPCO Board. Their bios and experience will be posted on the MEPCO website in the coming weeks.
- Presentation and discussion on AMO’s Workforce Development Project, which has close connections to MEPCO’s work. AMO staff will provide regular updates to MEPCO on this project given the MEPCO Board’s significant expertise in municipal administration, human resources, and compensation and benefits.