Gain a better understanding of how your Plan has evolved over the years by consulting these archived plan changes.
Following the process and protocol detailed in By-Law #12, the 2010 SC decisions (to either amend, withdraw, approve, reject or move to mediation/arbitration) about the 10 Final Specified Plan Change (SPC) proposals tabled by SC Members for formal consideration at board meetings held in March and April were made in May and June.
Stakeholders were kept informed throughout the process via the SC website and further detail was provided on both the SC and OAC websites and in newsletters once the final decisions had been made. Plan changes were filed with and accepted by the regulators and came into effect January 1, 2011.
Posted September 9, 2010
The SC confirmed contribution increase allocations for 2011; salary examples and more detail are available in the current OMERS newsletter. Rates for 2012 and 2013 will be determined next year, after review of the contribution rate study.
Posted July 14, 2010
The SC received actuarial advice regarding acceptable methods of allocating the contribution increases recently approved for 2011-2013. The Board has not yet reached a final decision and the issue will be reconsidered at the next SC meeting on August 24. The SC also agreed to completion of a contribution rate study in 2011.
Posted July 5, 2010
At SC meetings held on June 21 and 22, the remaining Specified Plan Change proposals were considered. SPC#09-10(b) received more than the required 2/3 majority, thereby approving the following temporary changes to support the funded status of the OMERS Primary Plan:
The changes were undertaken as a temporary strategy to support the funded security of the OMERS Primary Plan. OMERS Primary Plan had a funding shortfall of $1.5 billion at December 31, 2009.
The deficit is expected to increase over the next four years as nearly $5 billion of net losses, mostly from the 2008 global market downturn, are recognized on the balance sheet.
"The SC has a responsibility to manage surpluses and deficits through benefit and contribution rate changes," said Co-Chair Marianne Love. "The changes the SC has approved are the result of careful consideration of the options for addressing the growing deficit."
"The OMERS SC will continue to carefully monitor the Primary Plan's funded status, and to make any decisions on changes through our annual planning cycle," said Co-Chair Brian O'Keefe.
Contribution rates for both active members and employers will increase in 2011 through 2013, as follows:
Once the rates are finalized for 2011-2013, OMERS will inform all Plan members and employers, and provide examples of how the increases will affect their contributions.
Starting in 2013, these changes will only affect members who terminate employment prior to being eligible for early retirement – i.e., members who terminate before age 55 (normal retirement age 65) or 50 (normal retirement age 60). These changes will not affect any benefits based on service accrued before 2013. OMERS is developing member case examples and cost analyses, and will provide increased detail on these changes and their impact via this website and in our fall newsletters.
The SC has also committed to taking the following future actions:
View full text of SPC#09-10(b) 3-Year Multi-Dimensional Approach #2 [43.0 KB]
The proposal to Rescind the Cap on Contributory Earnings was amended [SPC#02-10(a)] to "DEFER Implementation of the Earnings Cap"; neither it nor any of the other proposals received the required 2/3 majority to pass, nor did any move to arbitration. One proposal was withdrawn by the proponent (SPC#10-10) and referred back to committee for further research.
Tabled Apr 20
Amended Jun 8
Last Posted Jun 9
DECISION June 22 - CARRIED
SPC #09-10(b)
3-Year Multi-Dimensional Approach #2
Tabled Mar 23
Amended May 20/28
Last Posted May 28
DECISION June 22 - FAILED
(Did not receive 2/3 majority)
SPC #01-10(b)
3-Year Multi-Dimensional Approach #1
Tabled Mar 23/Posted Mar 25
Amended June 22
SPC #02-10(a)
Rescind Cap on Contributory Earnings
SPC #03-10
NRA 60 - Police Civilians
Tabled Apr 20/Posted Apr 22
SPC #04-10
NRA 60 - Paramedics
Amended May 20/Posted May 27
DECISION May 25 - FAILED
SPC #05-10(a)
RCA - Structural Deficit Management
SPC #06-10
Contribution Increase 1% File 2009
SPC #07-10
Contributions During Reduced Hours
Amended May 20
Last Posted May 27
SPC #08-10(a)
5-Year Multi-Dimensional Approach
Last Posted Apr 22
June 22-Withdrawn by Proponent
SPC #10-10
RCA Contribution Increase
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On February 19, the SC formally received the December 31, 2008 actuarial valuation report from OMERS staff and independent actuaries. The 2008 valuation showed the Plan was in deficit.
In March, projection valuations and various scenarios were presented by the actuaries. As per the new timeline, SC Members were able to begin tabling proposals for specified plan changes at the meetings of March 31 and April 22, followed by a period (May 1 – May 14) allowing for amendments and refinements to the proposals. The gathering of technical information and opinions from the OMERS Pension Group and actuaries was well under way and continued as the SC meets to deliberated over the proposals. There were two meetings at which decisions could be made about the proposals — May 25 and June 22.
The proposals are listed in the order they were first tabled:
At its June 22, 2009 meeting, the SC voted on the above Specified Plan Changes. Of the seven proposals, two were approved by the required 2/3 majority vote, subject to approval of the amending Plan language. They are:
4. Cap the Level of Incentive Pay included in Contributory Earnings at 150%.
7. File the December 31, 2008 Valuation and increase Contribution Rates by an average of 0.15% (with actual increases ranging from 0.1%-0.3%) per side, effective January 1, 2010.
For additional details on these changes, please see the 2009 Specified Plan Changes Announcement.
Motions to send the inflation indexing (2.) and Paramedics NRA 60(3.) proposals to mediation/arbitration were not approved.
SC Members proposed the following Specified Plan Changes at meetings held in April, May and June of 2008. Details on the process and timelines may be seen at 2008 Timelines for Specified Plan Changes.
The first four proposals for Specified Plan Changes were not approved due to lack of a 2.3 affirmative majority vote.
The remaining two proposals were considered at the July 3 SC meeting. Issue #5, the Cap on the Level of Incentive Pay, did not receive the required 2/3 affirmative majority vote to go forward.
Contribution Rates for 2009 were unanimously agreed upon.
A motion to send the Paramedics NRA 60 proposal to mediation/arbitration did not receive the required majority of 10 weighted votes.
The SC filed four plan changes with the regulators in the fall of 2007 as By-Law #7 and By-Law #8; FSCO registered the changes in February and May of 2008. The following information reflects the first year of Specified Plan Changes by the SC.
More Stable Inflation Protection Among Key Amendments to the OMERS Pension Plan
A decision by the SC provided a more stable annual increase to OMERS pensions. The SC also made three additional plan changes related to contribution rate decisions, pension transfer values, and shortened life expectancy. Two proposed changes relating to the normal retirement age of paramedics, and a cap on contributory earnings, did not go forward.
Approved Plan Changes
Inflation Indexing Methodology: Inflation protection is a powerful feature of the OMERS pension, protecting the value of future benefits for members and retirees. Each year, OMERS increases all pensions by 100% of the Canadian Consumer Price Index (CPI).
In the past, OMERS increased pensions by the September-over-September CPI increase. This method provided 100% inflation protection over the long term – but in the short-term it has led to some volatility in the annual increases.
Over the previous two years, the amount of the increase ranged from 3.36% in 2006 to a much lower amount of 0.7% in 2007. OMERS heard from retired members about their concern regarding this issue.
In a decision that would be applied to the January 1, 2008 increase, the SC approved a different method that took into account the monthly average of the Canadian Consumer Price Index (CPI) for a 12-month period ending in October. This figure was compared to the average of the previous 12-month period, and OMERS planned to increase pensions by the percentage difference. This smoothed approach was intended to result in a more stable and less volatile annual increase.
Effective January 1, 2008, OMERS inflation adjustment was to be 1.99%. As always, OMERS planned to advise retired members of the amount in advance of their January increase, and provide customized statements showing the actual increase for each retired member.
The new inflation increase method aligned with the way the Canada Pension Plan increases pensions. Many retirees would also be receiving CPP benefits and would see annual increases consistent between OMERS and CPP.
The new method and the old method both delivered 100% inflation protection over the long term. The new method was intended to provide that benefit in a more stable manner. OMERS inflation protection protects all pensions including normal and early retirement pensions, survivor, deferred and disability pensions.
Authority of SC to change contribution rates: Previously, the OMERS Administration Corporation (AC) had the right to make contribution rate changes. This right was set out in the old OMERS Regulation, and carried over into the updated Plan Text, the legal document that now governs pension administration. This provision would be deleted from the Plan Text – essentially affirming that the Sponsors Corporation makes ultimate decisions on contribution rates, as set out in the OMERS Act, 2006.
Pension transfer values: This plan amendment confirmed an OMERS administrative practice regarding pension transfer values. OMERS has transfer agreements with many other pension plans, allowing members to transfer their benefits. The amendment affirmed that the member is not entitled to any excess amount if there is a difference between the transfer value and commuted value (unless specified by the transfer agreement). This ensured consistency and fairness in the way transfers were administered.
Shortened life expectancy: This plan amendment allowed a “deemed termination” to occur in the case of an employed OMERS member who applied for a shortened life expectancy (SLE) benefit. Previously, OMERS could not pay the benefit until the member had officially ceased employment. Under the change, OMERS deemed that a termination had occurred for pension purposes and could pay the SLE benefit. By deeming termination of employment for pension purposes, a member could continue to be employed and could be entitled to other types of employment benefits, such as medical benefits. The SLE benefit allowed members who had a shortened life expectancy (e.g. a terminal illness) the option to receive a lump-sum payment of their OMERS benefit.
The four plan amendments outlined above were filed with the Financial Services Commission of Ontario and the Canada Revenue Agency for registration.
Plan Changes Not Approved
Plan changes must receive a majority (two-thirds) vote of the Sponsors Corporation. Two additional proposed changes were not approved by the SC and would not be going forward. The first was regarding the normal retirement age of paramedics. This age would remain at 65 in the OMERS plan. The second was regarding a cap on contributory earnings. The proposal was to create a mechanism for employers to cap a member’s total pensionable earnings, for example at 150% of salary. Bonus earnings over that amount would not be pensionable. These two plan changes could be revisited by the SC in future.
Protocol for plan changes: The SC established a protocol for proposing changes to the OMERS pension plans. Proposed plan changes would be considered by the SC according to this protocol, and in compliance with SC by-laws.