Archived Plan Changes

Gain a better understanding of how your Plan has evolved over the years by consulting these archived plan changes.

In 2015 a new decision-making process came into effect.  Prior to that the annual decision-making process was centered around ‘Specified Plan Change Proposals’ (SPC Proposals) that were tabled by Board Members.  The tabled SPCs for each calendar year, and related decisions are provided below.


2016 - Plan Change Decisions

 

At its June Board meeting the SC made related decisions:

  • The SC agreed in principle to change the Additional Voluntary Contributions (AVC) program of the Primary Plan to allow members to retain their non-locked-in AVC funds in the Primarly Plan past the age of 71.  Currently, plan members are required to withdraw any AVC funds from the Primary Plan once they turn age 71.  The change will allow them to retain non-locked-in funds in the Primary Plan, subject to the minimum withdrawal requirements of the Income Tax Act.  The new option will be rolled out in the coming months. 
  • The SC agreed to change the contribution rates of the Supplemental Plan effective January 1, 2017.  Although there are currently no members in the Supplemental Plan, it is necessary to ensure the contribution rates reflect our current expectations about the future. 

        The contribution rates are noted as follows:

In addition, effective January 1, 2017 the “rebound costs” in the Primary Plan for the 2.33% accrual rate supplemental benefit will increase to 0.3% from 0.2% and 0.25% respectively for NRA 60 and NRA 65.  The rebound costs in the Primary Plan only apply to members of the Primary Plan who are participating in the Supplemental Plan with a 2.33% accrual rate.  Rebound costs are meant to ensure that the Primary Plan is not negatively impacted by participation in the Supplemental Plan.

As of December 31, 2015 there are no participants in the Supplemental Plan.

Click here for more about the Supplemental Plan. 

 

 

2015 - Funding Management Strategy

 

In 2015, the SC adopted its Funding Management Strategy, which outlines how benefits and contributions will be modified as the OMERS Primary Plan (the Plan) cycles through periods of funding deficit and surplus. The Funding Management Strategy and the related decision-making process provide stakeholders with a clear understanding of when Plan changes may be considered and why.

Although the Primary Plan is currently (at December 31, 2014) in the Deficit Management zone of the Funding Management Strategy, the funded status improved in 2014.  Under the Funding Management Strategy, there is no requirement to make changes to the Plan, and the SC has decided not to consider changes this year. As of December 31, 2014, the measures introduced in 2010 remain sufficient to manage the financial health of the Plan.

No Other Plan Changes were considered for decision in 2015.

 

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2014 Specified Plan Changes

DECISIONS

At its June 25th meeting, the OMERS Sponsors Corporation (SC) considered the eight Specified Plan Change (SPC) proposals that were tabled this year, and approved the proposed change in contribution rates.  Six of the SPC proposals did not receive the necessary 2/3s support of the SC Board and failed, and the NRA 60 – Police Civilians proposal was withdrawn by its proponent.  None of the SPC proposals were referred to arbitration.

Change in Contribution Rates

The newly approved contribution rates fully reflect the new methodology and result in a 0.1% reduction in the (Normal Retirement Age) NRA 60 contribution rates with no change to the NRA 65 contribution rates.

In 2012 the SC approved a methodology for allocating the overall contributions into the four rates (for each NRA and earnings above/below the CPP earnings limit).  As part of the approach, the SC approved interim contribution rates with a commitment to fully implement the new methodology by January 1, 2015.

The contribution rates effective January 1, 2015 are as follows:

 

NRA60

NRA 65

Below CPP Earnings Limit

9.2%

9.0%

Above CPP Earnings Limit

15.8%

14.6%

 

A description of the methodology for allocating contribution rates is available in our Statement of Plan Design Objectives and Strategy.

 

2014 Specified Plan Change Proposals

Action Dates

Number 

Proposal

Dates Posted

Tabled: April 22

Failed: June 25

SPC#14-01

Pension Accural Change to 1.85%

April 25

Tabled: April 22

Failed: June 25

SPC#14-02 

Early Retirement Reductions 

April 25

Tabled:  April 22

Failed:  June 25

SPC #14-03

Reduced Indexing

April 25 

Tabled:  April 22

Failed:  June 25

SPC #14-04

Indexing Suspended for 5 years

April 25

Tabled:  April 22

Failed:  June 25 

SPC #14-05

Disability Waiver

April 25

Tabled:  April 22

Failed:  June 25 

SPC #14-06 

NRA 60 Paramedics 

April 25

Tabled:  April 22

Approved:  June 25

SPC #14-07

Adjust Contribtuon     Rates  

April 25

Tabled:  April 22

Withdrawn: June 25 

SPC #14-08 

NRA 60 Police Civilians 

April 25

 

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2013 Specified Plan Changes

DECISIONS

At its June 25th Board meeting, following a review and analysis of available information, the SC voted on, but did not approve any of the five Specified Plan Change proposals. Contribution Rates

There are no changes to contribution rates or benefits out of the 2013 Specified Plan Change process.  In a decision made early in 2013, the SC agreed to file the 2012 Primary Plan Valuation and the 2012 Supplemental Plan Valuation.

Filing the valuations provides a level of certainty on the regulatory minimum contribution rates for calendar years, 2014, 2015 and 2016.  The current contribution rates meet those minimum requirements. 

2013 Specified Plan Change Proposals

Action Dates

Number 

Proposal

Dates Posted

Tabled March 20

Failed: June 25

SPC#01-13

NRA 60 - Police Civilians

March 22

Tabled April 17

Amended:  May 13

Failed: June 25

SPC#02(a)-13 

Reduce Indexing to 50% 

EXAMPLES

 

 

 

 

SPC#02(a)-13 Blacklined 

May 13

 

SPC#02-13

April 18

Tabled:  April 17

Failed:  June 25

SPC #03-13 

Delay Early Retirement

EXAMPLES

April 18 

Tabled:  April 17

Failed:  June 25

SPC #04-13 

Benefit Accrual Rate - 1.85%

EXAMPLES 

April 18

Tabled:  April 17

Failed:  June 25 

SPC #05-13

NRA 60 - Paramedics

April 18

     

 

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2012 Specified Plan Change Process

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

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.

 

2012 Specified Plan Change Proposals

Action Dates

 

Proposal

Dates
Posted

Tabled March 20

Amended:

April 26/May 4/

May 13/June 28

Approved June 28

SPC#01-12(c)

CAP ON CONTRIBUTORY EARNINGS
(formerly RCA - RESTRICTIONS)

SPC#01-12(c) Blacklined

July 3

SPC#01-12(b)

May 16

April 30

March 22

Tabled March 20

Amended May 12

Failed June 28

SPC#02-12(a) 

Delay Early Retirement

March 22/May 16

Tabled March 20

Amended May 12

Failed June 28

SPC#03-12(a)

Reduce Indexing to 50%

March 22/May 16

Tabled March 20

Amended May 12

Failed June 28

SPC#04-12(a)

Reduce Indexing to 70%

March 22/May 16

Tabled March 20

Failed June 28

SPC#05-12

NRA 60 - Police Cilivians

March 22

Tabled April 26

Ameded May 4
Withdrawn June 28

SPC#06-12(a) 

Contribution Rate Methodology - Capped Increases

April 30/May 7

Tabled April 26

Failed June 28

SPC#07-12 

NRA 60 - Paramedics

April 30

Tabled April 26

SPC#08-12

Withdrawn April 27

Tabled April 26

Withdrawn Jun 28

SPC#09-12 

Contribution Rate Methodology  - 1% Differential

April 30

Tabled April 26

Amended June 28

Approved June 28

SPC#10-12(b)

CONTRIBUTION RATE METHODOLOGY - FIXED DIFFERENTIAL

SPC #10-12 (b) Blacklined  

July 3

April 30

Tabled April 26
Failed June 28

SPC#11-12

Benefit Accrual Rate - 1.85%

April 30

Tabled April 26

Approved June 28 not as an SPC*

SPC#12-12

FILE 2011 VALUATIONS - PRIMARY & SUPPLEMENTAL

April 30

 

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2011 Specified Plan Change Process

DECISIONS

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

  • approved the 2012 Primary Plan contribution rates,
  • established a process for determining the 2013 contribution rates and
  • implemented a mechanism for future funding of the Retirement Compensation Arrangement (RCA). It also
  • approved the filing of the 2010 Primary Plan Valuation and the 2010 Supplemental Plan Valuation.
  • Additional, more detailed information is available in OMERS member and employer communications and on the OMERS website.
  • A Mediation/Arbitration decision regarding the Supplemental Plan contribution rates (and rebound costs associated with the Primary Plan) for Supplemental Plan members was received at the August 25th meeting of the SC. (Learn more about Supplemental Plan rates on the OMERS website.)

The following provides a high level overview of each approved Specified Plan Change and its impact.

Primary Plan Contribution Rates

This change sets the Primary Plan Contribution rates for 2012 and a process for determining the 2013 contribution rates.

Last year, the SC approved a multi-year phased approach to help address the deficit, which included increasing contribution rates by an average of 2.9% per side, over a three year period. The 2011 rates were established by adding 1% to each of the four groups (NRA 60 and 65, and earnings under and over the CPP earnings limit).

Based on a review of the contribution rate study and additional information received from the OMERS Administration Corporation, the SC determined, by a 2/3 majority vote, that the 2012 contribution rates will be as follows:

Primary Plan Contribution Rates

Rates per Side (Employee/Employer)
2012

Normal Retirement
Age 65 Members

On earnings < CPP earnings limit
8.3%
On earnings > CPP earnings limit
12.8%

Normal Retirement
Age 60 Members

On earnings < CPP earnings limit
9.4%
On earnings > CPP earnings limit
13.9%
CPP earnings limit in 2011 is $48,300; the limit in 2012 will be higher

 

The SC also agreed to conduct a further independent study to help guide the allocation of future contribution rates, including the identification of appropriate elements for a single OMERS pool. The 2013 contribution rates will be set following receipt of this study in 2012.

RCA Funding

This change is intended to address the funding of the Retirement Compensation Arrangement (RCA); it does not impact the benefits payable from the Primary Plan or the RCA nor the total contributions paid by members and employers.

The RCA is a separate arrangement that pays benefits over and above the maximum pension payable under the Primary Plan and it is currently funded on a modified pay as you go basis to minimize the tax inefficiencies. Balancing sustainability with tax inefficiency, the SC approved a change that would require an annual review of the RCA to ensure that, on an ongoing basis, the RCA maintains a fund of sufficient size that it would not be expected to be fully depleted for at least 20 years. To achieve this, the earnings level at which contributions are made to either the Primary Plan or the RCA will vary each year based on the actuary's projections (within a certain corridor).

Supplemental Plan Contribution Rates

This change will only affect members and employers who participate in the Supplemental Plan for Police, Firefighters and Paramedics. As of the date of the decision, there were no members in the Supplemental Plan.

The Supplemental Plan allows for the provision of additional, optional benefits to Police, Firefighters and/or Paramedics. Depending on the benefit being provided, affected employees and employers pay an additional contribution to both the Supplemental Plan AND to the Primary Plan (Rebound Costs).

Supplemental Plan Contribution Rates

Supplemental Plan Benefit Provisions

Supplemental Plan Costs
Rates per Side
(Employee/Employer)

Primary Plan Rebound Costs
Rates per Side
(Employee/Employer)

NRA 60
NRA 65
NRA 60
NRA 65
2.33% Accrual
2.15%
1.85%
0.20%
0.25%
80/85 Factor
0.45%
0.30%
None
None
*BAE 3
0.60%
0.50%
None
None
*BAE 4
0.35%
0.30%
None
None
*BAE 3/BAE 4 - best 3 or 4 years average earnings

 

File the 2010 Primary Plan Valuation and 2010 Supplemental Plan Valuation

The SC has agreed to file the 2010 Primary Plan Valuation and the 2010 Supplemental Plan Valuation.

 

2011 Specified Plan Change Proposals

Relevant Dates

 

Proposal

Dates
Posted

Amended/APPROVED
June 28

SPC#01-11(b)

RCA - Floating Earnings Threshold

May 4/16
June 30

Amended/APPROVED
June 28

SPC#07-11(a) 

Primary Plan/RCA - Contribution Rate Methodology

May 4
June 30

Amended May 9
FAILED May 26
MOVED TO Med/Arb
APPROVED Aug 25

SPC#06-11(a)

Supplemental Plan Contribution Rates & Rebound Costs

May 4/10/30
August 26

Amended May 10
Withdrawn June 28

SPC#02-11(a) 

RCA - Freeze Earnings Threshold

May 4/16
June 30

Amended May 13
Withdrawn June 28

SPC#03-11(a) 

RCA - Contribution Threshold 10:1

May 3/16
June 30

FAILED May 26

SPC#04-11 

NRA60 - Police Civilians

May 4/30

FAILED June 28

SPC#05-11

NRA60-Paramedics

May 4/30

 

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2010 Specified Plan Change Process

DECISIONS

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.

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.

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.

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:

  • 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."

"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.

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.

 

2010 Specified Plan Change Proposals 

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

DECISION June 22 - FAILED

(Did not receive 2/3 majority)

SPC #02-10(a)

Rescind Cap on Contributory Earnings

Tabled Mar 23/Posted Mar 25

DECISION June 22 - FAILED

(Did not receive 2/3 majority)

SPC #03-10

NRA 60 - Polic Civilians

Tabled Apr 20/Posted Apr 22

DECISION June 22 - FAILED

(Did not receive 2/3 majority)

SPC #04-10

NRA 60 - Paramedics

Tabled Apr 20

Amended May 20/Posted May 27

DECISION May 25 - FAILED

(Did not receive 2/3 majority)

SPC #05-10(a)

RCA - Structural Deficit Management

Tabled Apr 20/Posted Apr 22

DECISION June 22 - FAILED

(Did not receive 2/3 majority)

SPC #06-10

Contribution Increase 1% File 2009

Tabled Apr 20/Posted Apr 22

DECISION May 25 - FAILED

(Did not receive 2/3 majority)

SPC #07-10

Contributions During Reduced Hours

Tabled Apr 20

Amended May 20

Last Posted May 27

DECISION June 22 - FAILED

(Did not receive 2/3 majority)

SPC #08-10(a)

5-Year Multi Dimensional Approach

Tabled Apr 20

Last Posted Apr 22

June 22-Withdrawn by Proponent

SPC #10-10

RCA Contribution Increase

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2009 Specified Plan Change Process

 

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:

  1. Remove Early Retirement Subsidiesfor new members enrolling in the Plan after December 31, 2009 - remove any early retirement subsidies from the benefit entitlements of members who terminate prior to being eligible for early retirement.
    (Tabled by Bruce Stewart and Marianne Love on March 31, 2009)
  2. Reduce Inflation Indexingfor service accrued/earned after December 31, 2009 – reduce the 100% inflation indexing to 70%; if there is sufficient surplus available, ad hoc increases would be provided.
    (Tabled by Bruce Stewart and Marianne Love on March 31, 2009)
  3. Provide Paramedics with the right to Negotiate NRA 60 allow Paramedics to retire without penalty at age 60.
    (Tabled by Marnie Niemi, March 31, 2009)
  4. Cap the Level of Incentive Pay included in Contributory Earningsearnings for pension purposes will be capped at 150% of contributory earnings calculated before incentive pay.
    (Tabled by Garth Pierce, April 22/Amended May 11, 2009)
  5. 2.5% Increase in Contribution Rates (over 5 years) net of benefit reduction savings increase contribution rates by 0.5% per side (Employer/Employee) over a 5-year period, less any savings arising from benefit changes, until such time as the deficit is eliminated.
    (Tabled by Charlie Macaluso, April 22/Amended May 13, 2009)
  6. RCA Contribution Rate Increase increase NRA 60 rates from 12.8% to 14.4% and NRA 65 from 9.5% to 10.7%.
    (Tabled by Charlie Macaluso, April 22, 2009)
  7. 0.15% Increase in Contribution Ratesfile the December 31, 2008 Valuation and increase contribution rates by 0.15% per side until such time as the deficit is eliminated.
    (Tabled by Brian Cain, April 22/Amended May 10, 2009)

Decisions

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.

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2008 Specified Plan Change Process

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.

  1. Remove Immediate Vesting and replace with vesting after 24 months for members joining the Plan after Jan.1/2010.
  2. Remove Early Retirement Subsidies for deferred vested members joining the Plan after Jan. 1/2010.
  3. Provide Paramedics With the Right to Negotiate NRA 60.
  4. Change the Maximum Accrual of Pensionable Earnings from 81.33% to 70% for NRA 60 supplemental plans, effective July 1/2008.
  5. Place a Cap on the Level of Incentive Pay included in contributory earnings.
  6. Contribution Rates for 2009.

Decisions

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.

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2007 Specified Plan Change Process

 

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.

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