Pension plans have to consider very long-term outcomes when planning. Someone starting their first day of work today may still be collecting a pension seventy or more years into the future. The most important job of the people who run any pension plan is to ensure the money will be there to make those future pension payments.
The OMERS Sponsors Corporation (SC) and the OMERS Administration Corporation (AC) govern the OMERS pension plan. The members of the Sponsors Corporation are responsible for decisions regarding Plan contributions and benefits, and for appointing the members of the OMERS Administration Corporation. The members of the OMERS Administration Corporation act as the trustees of the pension fund. They make the investment decisions and pay the members’ pensions. The boards have equal union and employer representation, and OSSTF/FEESO appoints a representative to each one.
In early 2018, the OMERS SC board began an extensive review of the Plan with a view to ensuring the Plan will remain in place and will be able to pay pensions to Plan members for decades to come. A few highlights from the review include;
- Despite recent gains, the OMERS Plan remains financially vulnerable to longer-term pressures beyond our immediate control
- Extensive modelling shows that the cost of the Plan will continue to increase steadily over time, and substantially under some potential circumstances
- Possible Plan options are being considered to help stabilize Plan costs, reduce long-term funding risk, and introduce an important level of equity across generations
- Changes, if any, are unlikely to take effect before January 1, 2021
- No impact on pension benefits accrued (earned) before the effective date of any change
- No impact on current retirees or members who retire before the effective date
OSSTF/FEESO members should be encouraged by the work of the SC board in closely examining all aspects of the OMERS pension plan and carefully considering any proposed changes that result. This is what good governance practice looks like. Keeping the board decision-making process at arm’s length from the internal politics of individual sponsors is a key supporting principle of good governance. Politicizing the process is not only a very bad idea for the Plan, it is also unnecessary. No changes can be made to the Plan unless at least two thirds of the board members agree to the change. OMERS is a jointly sponsored pension plan, and the union and employer Sponsors appoint the board members. A majority of both the employer and union representatives on the board must support any Plan change for it to pass.
The best thing members and Sponsors can do to support the Plan is to make certain that good people are appointed to the SC and AC boards, then get out of their way and let them do their job.