10/23/2013

At today’s CRST Symposium, MEPCO held a special session to explore what OMERS is doing to make sure that the Plan is healthy and sustainable for municipal employers and employees.

Employers and employees have a shared interest in making sure that the OMERS Pension Plan is affordable now and dependable for future generations. OMERS faces challenges. Contribution rates are at all-time high and yet the Plan has a deficit of almost $10 billion.

Today the Municipal Employer Pension Centre of Ontario (MEPCO) held a special session.  

A leading pension expert identified some of the challenges facing OMERS and many other public sector plans. Pension plans across Canada must address:

  • Lower investment returns
  • Capital markets that are becoming more volatile
  • Demographic changes such as people living longer and retiring earlier.
OMERS is not unique in the challenges that it faces. However, OMERS is somewhat unique in its response to these challenges. In Ontario, most other large public sector plans have introduced some measures to address plan sustainability. British Columbia, Alberta, Quebec, New Brunswick, Nova Scotia and Alberta have introduced, or are developing, pension reform legislation that will affect their public sector pension plans.

OMERS has a strategy to eliminate the deficit over the next 10 to 15 years. For its strategy to work, benefits cannot increase and demographic assumptions must stay the same. The Plan must also earn investment returns of at least 6.5 per cent per year. Today’s presentation made it clear that investment return targets and demographic assumptions are far from guaranteed.

How will OMERS make sure that its Pension Plan is healthy and sustainable over the long term? What if demographic assumptions do change? What if investment returns are not realized?

Next week’s WatchFile will include the slides and audio from this morning’s presentation. We recommend it to all municipalities.