2012 Specified Plan Changes

DECISIONS

This year, following a thorough review and analysis of available information, the SC

  • approved the 2013 contribution rates and established principles and a methodology for allocating contribution rates in the future,
  • approved a limit on the amount of contributory earnings, and
  • approved the filing of the 2011 Primary Plan Valuation and the 2011 Supplemental Plan Valuation.

For plan changes to become effective, by-laws detailing the amendments must be filed with, and accepted by, the regulators.       On August 23rd the SC Board approved By-Law #29 amending the Plan terms which is required to implement the 2012 approved Specified Plan Changes.  A high level overview of each approved Specified Plan Change follows for information purposes.

Detailed information, including salary examples are available on the OMERS website at www.omers.com;.

 Updated August 13/24, 2012

Posted July 3, 2012

Contribution Rates

The approved methodology for establishing future contribution rates received unanimous support and will be reflected in the Statement of Plan Design Objectives and Strategy.  Under the adopted approach NRA 60 members would pay the cost of their NRA 60 benefits and any cost difference due to the difference in assumed future salary increases (including the “3/6/9” service related salary increases).  Additional cost differences associated with experience and demographics are partially pooled and split between the two NRA groups, striking a balance amongst the principles which guided the deliberations: transparency, limited volatility, value for money, pooling, limited complexity, cost effectiveness and controllable versus uncontrollable experience.
 
As an interim measure the SC has approved the allocation for the 2013 contribution rates, as follows:

Contribution Rates for 2013 (per side)

Normal

Retirement Age 60

Normal

Retirement Age 65

Up to CPP earnings limit*

9.3%

9.0%
Over CPP earnings limit*

15.9%

14.6%

Blended Contributon rate

12.3%

10.3%
* The CPP earnings limit in 2012 is $50,100; the limit in 2013 will be higher

In the future, contributions will be allocated between the NRA 65 and NRA 60 groups by setting the differential in the blended contribution rates equal to the sum of the following:

• The additional cost associated with differences in the NRA 65 and NRA 60 benefits;

• The difference in cost associated with the difference in assumed future salary increases (including the "3/6/9" service related salary increases) used for the NRA 65 group versus that used for the NRA 60 group; and

• 50% of any remaining difference in the blended normal cost rates of the two groups which is not explained by the factors above.

The contribution rates above and below the CPP earnings limit will be determined on an actuarial equivalent basis (based on periodic contribution rate studies), for each of the NRA groups independently.

Deficit funding and surplus sharing will be split equally by using one deficit funding or surplus sharing rate for both NRA groups.

 

Cap on Contributory Earnings

Effective January 1, 2011, and based on a Specified Plan Change approved in 2009, the amount of incentive pay included in contributory earnings was limited to 50% of base pay.  In this current change, an additional constraint is imposed which limits total contributory earnings to seven times the CPP earnings limit, or roughly $350,000 for 2012.

The change will have effect from January 1, 2014 for members enrolling in OMERS on or after that date.  The change will have effect from January 1, 2016 for members enrolling prior to January 1, 2014. 

File the 2011 Primary Plan Valuation and 2011 Supplemental Plan Valuation

The SC decided to file the 2011 Primary Plan Valuation and the 2011 Supplemental Plan Valuation.

View further detail about the timing and outcomes of decisions on all eleven Specified Plan Change proposals considered by the SC in 2012.