Bicameral Board is supported however improvements needed.

The Report on the Ontario Municipal Employees Retirement System (OMERS) Governance Review 2012, prepared by independent Reviewer Tony Dean has been released by the Ministry of Municipal Affairs and Housing (MMAH).  The report outlines the Reviewer’s approach/principles, observations and a set of recommendations directed to the owners and operators of the pension plan on specific actions to make it stronger.   

As required by legislation, the Review looked at the effectiveness and efficiency of: 1) the OMERS governance model in representing employer, member and retiree interests and accountability; 2) decision-making by the Sponsors Corporation; and 3) the fairness of the governance model and OMERS financial stability. 

Through some 26 meetings with sponsors and stakeholders and an assessment of 26 submissions, the Reviewer identified three key themes and areas for improvement, particularly greater cooperation and collaboration:  

(a) the need for aligned, efficient and transparent decision-making processes with clear accountability structures (strategic planning, plan growth, membership growth, plan changes and plan funding); 
(b) fairness in the operation of the OMERS Administration and Sponsors Corporation Boards (communications and representation); and 
(c) the presence of high-level expertise and capacity on the Administration Corporation Board (appointments process).  

Reviewer’s Recommendations: 
Dean concluded that the best solutions to OMERS governance issues will be based on the consensus of plan owners and stakeholders and that the current OMERS Act provides both OMERS Boards with the latitude to act on the following recommendations:

(a) Aligned And Efficient Decision-Making Processes With Clear Accountability Structures 

Recommendation 1:  The AC and SC Boards should move toward adopting one OMERS strategic plan.

Recommendation 2:  Given that SC and AC Boards have approved principles and process agreements on plan growth, plan changes and actuarial valuations and assumptions, developed  between the Chairs and the Reviewer, the Boards should identify executive accountability for implementing these protocols, with quarterly reports on progress and outcomes.

(b) Fairness In Representation On Both Boards

Recommendation 3:  The SC Board should continue to review the process for selecting chairs or co-chairs to ensure that board members have confidence that equitable decisions are being made and that AMO and CUPE consider, from time to time, supporting representatives from other sponsor organizations for co-chair positions.

Recommendation 4:  The AC and SC Boards should develop a comprehensive communications strategy for improved sponsor and stakeholder relations as an organizational priority, reach out proactively to stakeholders and  create an advisory committee or alternative engagement forum, in collaboration with representatives of unaffiliated members, small unions and retiree groups not represented on the Boards, to enable feedback from representatives on issues affecting the operation of the OMERS Plan.  

Recommendation 5:  Associations representing unaffiliated members should work together to find an equitable method for choosing advisory committee/forum representatives and for working together on pension issues.

(c) High-Level Expertise And Capacity On The Administration Board

Recommendation 6:  The AC and SC Boards should work collaboratively on a fast track plan to improve the capacity of the AC Board, with a majority of members with demonstrated experience/skills in governance, investments, risk management, law, accounting, human resources, strategic planning and government relations.

Specific mechanisms are recommended to move towards a higher capacity AC Board including an implementation plan, a capacity matrix aligned with Board skills, an assessment of current Board capacity relative to the matrix and a transition plan to accelerate Board appointments to address capacity gaps.

Recommendation 7:  Priority should be given to a strong independent AC Board Chair, as a new Board position to be filled by the fall of 2013.  The new Chair should have specific leadership, public profile attributes and knowledge of finance and good governance.  Both OMERS Boards should be involved in the recruitment process, which should begin immediately.   

(d) Implementation Of The Recommendations

Recommendation 8:  The Boards with responsibility for specific recommendations should respond quickly and implementation should be a top priority for all OMERS officials, with completion within 12-18 months.  Special purpose joint Board meetings should be scheduled in the spring and fall of 2013 to assess progress and a written report on implementation of the recommendations should be submitted to the Minister of Municipal Affairs and Housing, within one year of the public release of the report. 

Our Next Steps:  
The Plan’s well-being is a shared interest of all sponsors and members (enrolled and retired) but it ultimately rests with the decisions of both OMERS Boards.

Underlining many of Dean’s recommendations is the need to develop a more collaborative and inclusive approach between the Boards themselves and a stronger relationship with OMERS membership.  

At AMO/MEPCO, we are committed to seeing the OMERS Boards work in partnership to implement the Reviewer’s governance improvements.  We strongly support an independent chair for the Administration Corporation and that it is a clear and timely priority.  How added expertise can be brought to that Board’s competency profile will be a matter for the MEPCO Board to consider.  MEPCO will be interested in seeing the OMERS work plans that fall from the Reviewer’s recommendations, and how progress is to be measured.  MEPCO will be looking to its representatives to move this forward. 
AMO/MEPCO remains committed to the sustainability and affordability of the OMERS plan for employers, members and for municipal taxpayers. 

The Municipal Employers Pension Centre of Ontario (MEPCO)
MEPCO is a not for profit corporation, created by AMO, to ensure that its employer representatives on the OMERS Sponsors Corporation and Administrative Corporation are informed, well resourced and supported by leading pension expertise. MEPCO can raise and manage funds, hire experts who will provide appropriate research and information, and share insights with others as needed.

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