10/10/2012

Municipalities should apply a broad understanding of pension issues when they negotiate collective agreements or make long-term financial plans.

Recently, a citizen’s group called, “Fair Pensions for All” has been working to draw media and public attention to the rising costs of the public sector pensions, including the Ontario Municipal Employees Retirement System (OMERS) Pension Plan.  As of December 31, 2011, the OMERS funding deficit stood at $7.3 billion. 
Recently, a citizen’s group called, “Fair Pensions for All” has been working to draw media and public attention to the rising costs of the public sector pensions, including the Ontario Municipal Employees Retirement System (OMERS) Pension Plan. As of December 31, 2011, the OMERS funding deficit stood at $7.3 billion.

Reducing OMERS’ deficit is in the best interest of municipal employees, employers and taxpayers alike.  In addition to making sure that the OMERS Plan is fair, we have to make sure that it is sustainable for the long term.

To achieve fairness and stability, municipal leaders need to understand how the OMERS Plan is governed, what tools are available to influence decision making, and how individual Councils can help to advance taxpayer interests. 

What Your Council Can Do

First of all, it is important to recognize that individual municipal councils, like individual employees, have almost no opportunity to directly influence decisions that are made by OMERS.

AMO created the Municipal Employer Pension Centre of Ontario (MEPCO), which provides an opportunity for municipalities to pool resources, secure top notch pension expertise, and represent municipal interests with a strong common voice. Unions have done this for quite some time.

All municipalities that contribute to the OMERS Pension Plan are encouraged to take advantage of MEPCO’s educational resources, learn about how OMERS is governed, stay on top of pension matters, and support MEPCO’s work through voluntary contributions.

Municipalities should apply a broad understanding of pension issues when they negotiate collective agreements or make long-term financial plans.

From time to time, MEPCO may advise municipalities to speak out on key concerns. For example, the Province has been urged to reform the interest arbitration process and to grant municipalities better tools to control benefit increases.

Finally, volunteering to fund MEPCO is one of the few concrete steps that individual municipalities can take to ensure that the OMERS Pension Plan is fair and sustainable for employees, employers and taxpayers.

Governance of OMERS

Under provincial legislation, OMERS is governed by two corporations. The Sponsors Corporation oversees the design of the Plan, including changes to benefits and contribution rates. Representation is based on the jointly sponsored model with contributions split equally between employers and members; and plan decisions are made on the basis of a two-thirds majority vote as set out in legislation.

The Administration Corporation manages the Plan’s day to day operations, including its investment strategy, plan valuation and pension benefit administration.

AMO’s Role within the Governance of OMERS

AMO has two representatives on the Sponsors Corporation and two representatives on the Administration Corporation. These four representatives serve as the voice of municipal employers.  They do their best with their votes to ensure that decisions about the Plan are in the best interest of municipal employers, the overall health of the Pension Plan, and taxpayers.

The Municipal Employer Pension Centre of Ontario (MEPCO)

In 2008, AMO created the Municipal Employer Pension Centre of Ontario (MEPCO) to help ensure that AMO’s representatives on the Administration and Sponsors Corporations can draw on professional advice and expertise.  MEPCO is supported by Ontario municipalities on a voluntary basis. This is particularly important when one considers that there are about 900 different employer groups within OMERS, vis-à-vis a small number of large, well-funded and well-organized unions.

MEPCO has built a track record of advancing well thought-out, actuarially sound perspectives on OMERS matters – and AMO’s representatives within OMERS are using it to make sure that municipal perspectives are understood when decisions are made that affect the OMERS plan and the pension fund’s management.

Further Information

OMERS matters are complex. Both AMO and MEPCO are working to keep municipal councils as informed as possible. On MEPCO, you will find a Municipal Toolkit with basic OMERS and MEPCO information, a summary of the 2012 major pension issues and a Glossary of Terms. In addition, information is shared regularly through the AMO Watch File, Breaking News Alerts and conference workshops.