The OMERS Sponsors Corporation is currently conducting a review of the OMERS pensionplan benefits structure with a view to ensuring that the plan remains sustainable and affordableinto the future. The “OMERS Comprehensive Plan Review” is to be completed in 2018 and the purpose, as stated by the OMERS Sponsors Corporation, is to:
model the Plan’s long-term financial health;
- explore the full suite of possible risk mitigation and management strategies available to us; and
- fully assess what members, employers and sponsors really want and need from the OMERS Plan – today and in the future.
CUPE Ontario has started a social media campaign designed to discourage the OMERS Sponsors Corporation board members from considering certain changes to the pension plan, in particular the use of conditional indexation. We believe that this campaign is premature and prefer to wait to see the outcome of the Comprehensive Plan Review before deciding if a response is required.
We ask OPFFA members not to participate in any lobby campaigns regarding the OMERS Comprehensive Plan Review at this time and to wait for further information. We are well represented on the OMERS SC Board that is responsible for Plan Design. Frank Ramagnano, the President of the Toronto Professional Fire Fighters Association, is the Co-Chair of the OMERS SC Board and the longest serving Employee Representative. He has kept the OPFFA Board informed, we have been attending the various OMERS meetings on this matter, and our Pension Chair ChrisVarcoe has been engaged.
The OPFFA has also met with the Police Association of Ontario, as we have worked quite well together on the pension file. We do not see that changing and they agree with the review of the plan to establish whether we need to reinforce the plan in order to continue to provide meaningful benefits for members for generations to come.
Under the terms of its formal mandate, the Sponsors Corporation (SC) has an obligation to regularly assess the financial health of the OMERS Plans and to propose changes as appropriate. As clearly articulated on the SC website (www.omerssc.com), the SC is “solely responsible for determining benefit levels and contribution rates for the Plans.”
The Comprehensive Plan Review is a simple manifestation of this essential mandate. Given the lingering funding challenges, the SC Board has been working over the past number of years to assess ways to manage the Plan’s future financial health – while recognizing the differing needs and expectations of various stakeholders, including members. This robust and ongoing analysis culminated in 2016 with the proposed development of Modified Inflation Indexing (MI2), an innovative approach to conditional indexing that would give the SC greater flexibility to manage future funding risks. It was a proposal that was raised by our representative. Board members wanted to view all aspects of the proposal, which resulted in the review.
In September 2017, the SC retained an independent actuarial adviser to conduct a comprehensive assessment of the OMERS Plan – using advanced systems and software applications – to model, on a stochastic basis, the projected implications of various potential plan changes under a range of evolving economic and financial circumstances. Their robust modelling clearly confirms that, given the outlined challenges, there is a strong likelihood that the cost of the existing Plan design will increase beyond current levels – and well beyond under certain scenarios. Put another way, future OMERS members could end up paying more for less if adjustments aren’t made.
It is also important to note that changes to benefits can only be made to the service period accumulate after the change. We are getting called from members close to retirement enquiring if they need to alter their retirement date. Changes would impact them the least as they have earned all the benefits to date.
Again, it appears that the Plan, while performing well in the short term, needs to be protected against challenges that will likely occur in the future. The OPFFA does not foreclose the idea of restructuring the benefit promise in order to ensure the long-term health of the plan. We would have great difficulty, however, supporting measures that were not designed to only impact members to the degree necessary to protect the plan. Any possibility of reduction in benefit levels must be integrated into a broader strategy that ensures that benefits are returned at the earliest opportunity and a well-performing plan has, as its first priority, the repayment of benefits to those members who sacrificed in the short term. In addition, changes must be structured in a way that distributes the responsibility for protecting the plan across all sponsors, equitably.
As always, if you have any questions or concerns, please feel free to contact me directly.
Ontario Professional Fire Fighters Association