2010 Plan Changes

DECISIONS

Posted August 25, 2010

Temporary contribution increase allocations for 2011 were confirmed by the SC and can be viewed on our Home Page; salary examples will be posted shortly.  Rates for 2012 and 2013 will be determined next year, after review of the contribution rate study.

Posted July 14, 2010

Posted July 5, 2010

• A three-year contribution rate increase for both members and employers, beginning in 2011, following the filing of the 2009 Primary Plan actuarial valuation with regulators this year.
• Changes to the calculation of benefits members receive if they terminate employment before they’re eligible for an early retirement pension. (This only affects benefits based on service earned after 2012.)
• OMERS pension formula, inflation protection in retirement, survivor benefits and disability benefits are not affected.

Multi-dimensional Approach to Funding Deficit

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.”

Temporary Contribution Rate Increases

Contribution rates for both active members and employers will increase in 2011 through 2013, as follows:

• 2011 – effective with the first, full pay in 2011, contribution rates will increase, on average, by 1% per side (employee/employer) as a percentage of a member’s earnings.
• 2012 – effective with the first, full pay in 2012, contribution rates will increase, on average, by an additional 1% per side (employee/employer).
• 2013 – effective with the first, full pay in 2013, contribution rates will increase, on average, by an additional 0.9% per side (employee/employer).

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.

Temporary Benefit Calculation Changes

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.

Other OMERS SC Plan Decisions

The SC has also committed to taking the following future actions:

• to elect not to provide “grow-in” rights (optional for plans like OMERS, under Ontario Bill 236), which increase the costs of benefits provided to certain terminating members; and
• to develop and document protocols and guidelines for future Plan decision-making.

For full text of SPC#09-10(b), see below

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.

PROCESS & MILESTONES                                                              

Last Updated July 5, 2010

Every January, the Sponsors Corporation begins a new cycle for considering specified plan change proposals, as described in By-Law #12 and in the Protocol for Specified Changes. The 2010 Specified Plan Change Timeline provides a visual explanation of the five steps which may be required before a plan change is approved by the SC.   This year's milestones will be noted in bold below and updated regularly.

Step 1:  Concept & Evaluation - for further details click here

Step 2:  Tabling/Formal Proposal

Step 3:  Proposal/Final Diligence

Step 4:  Decisions

Deliberations and final decisions are made at SC meetings held between May 14 and July 1.   A 2/3 majority vote is required for approval; a simple majority vote may send an unsuccessful proposal to mediation/arbitration.  At the meeting of May 25, the SC voted on SPC #05-10(a) (RCA - Structural Deficit Management) and SPC #07-10 (Contributions During Reduced Hours).  Neither proposal received the requisite 2/3 majority.