TORONTO (February 24, 2012) -- OMERS, one of Canada’s largest pension plans, ended 2011 with an all-time high of $55.1 billion in net assets. Net assets of the Plan, which administers pensions and invests pension assets for almost 420,000 members, have increased by almost $12 billion since the 2008 global credit crisis.
“Our view of risk is shaped by prudent use of debt, stringent investment criteria and rigorous discipline in all our investment decisions. This view is in line with protecting capital and ensuring liquidity for our Plan members in turbulent market conditions. We are proud of our track record of solid investment returns, our triple ‘A’ credit rating, and our reputation as a responsible, long-term investor,” said Michael Nobrega, OMERS President and CEO.
Through its diversified, global asset base, the Plan generated a positive investment return of 3.17% in 2011, earning $1.7 billion and exceeding the performance benchmark by 65 basis points.
In achieving these results, OMERS had strong investment performance from its private market portfolio, which generated a return of 8.20%. The Plan’s public markets portfolio generated an investment return of negative 0.22%.
In 2011, OMERS also made strong progress towards achieving the goals and initiatives laid out in its Strategic Plan.
“I’d like to take this opportunity to commend employees from across our organization for their high level of engagement in their work. They are focused on delivering the quality service and stable investment results that enable us to deliver on the pension promise over the long term,” Mr. Nobrega said.
Asset Mix Strategy
OMERS 2011 investment performance demonstrated the efficacy of its diversified asset mix strategy in protecting the Plan against public market volatility. In the eight years since OMERS adopted a policy of shifting its asset mix more heavily into private market investments, the Plan has earned an annualized return of almost 7.5%, which includes the negative return for 2008.
Asset classes including real estate, infrastructure and private equity continue to deliver stable, consistent results and generate strong cash flows. The strength of its private market investments helped the Plan generate a positive investment return in 2011 despite the impact of difficult macroeconomic conditions, including the European sovereign debt crisis, on public equity markets around the world.
“Regarding the public markets, 2011 was truly a tale of two halves. The markets started the year strong, building on the momentum of 2009 and 2010. This changed dramatically in the latter half of the year where we saw daily market volatility reminiscent of the last recession,” said Mr. Nobrega.
Asset mix is a key driver of OMERS Strategic Plan. OMERS ended the year with 58% of its assets in the public markets and 42% in private assets, compared with 82% public and 18% private in 2003. The long-term goal is to achieve a mix of approximately 53% public and 47% private market investments.
The Plan's 2011 funding deficit was $7.3 billion versus $4.5 billion a year earlier.
“Like that of many other pension plans, OMERS funding deficit position primarily reflects the continuing impact of the 2008 global economic downturn and increasing actuarial liabilities due to plan demographic shifts,” said Patrick Crowley, OMERS Chief Financial Officer.
Based on our expected investment returns combined with temporary contribution increases and benefit reductions, we expect the Plan will return to surplus within 10 to 15 years.
In 2011, OMERS launched Additional Voluntary Contributions, a program allowing Plan members to invest their registered retirement savings in the OMERS Fund and receive the OMERS rate of return. This program has proved popular with members for many reasons including low management and administrative fees and the strong investment returns that are supported by OMERS investment expertise and diversified mix of public and private investments.
OMERS also continues to expand and improve its front-line , resulting in increasingly efficient, responsive and easy-to-use services and products for members and employers.
For 2012, OMERS was named Global Pension Fund of the Year, Canada for the third consecutive year by World Finance magazine. This award is based on excellence in member service, innovation, risk management and investment performance. OMERS was also named one of the country's best employers for the fourth year in a row on Aon Hewitt’s 2012 list of the 50 Best Employers in Canada.
For a more detailed breakdown of OMERS financial results, see the attached fact sheet.