The Board received further technical information related to the annual actuarial valuation for the Primary Plan and RCA. Various scenarios and analyses were discussed as they relate to the projected funded status of the OMERS Pension Plans. This information assists the SC in managing the long-term health and sustainability of the Plan.
For the RCA, the annual update of the allocation threshold was presented and discussed.
(The RCA 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 of such plans. The earnings level at which contributions are made to either the Primary Plan or the RCA [the ‘allocation threshold’] will vary each year based on the actuary’s projections, within a certain corridor, to ensure that the RCA maintains a fund of sufficient size that it would not be expected to be fully depleted for at least 20 years.)
Plan Change Decisions
Under its new decision-making process the SC considers whether there is a need for benefit or contribution rate changes based on the Funding Management Strategy it adopted in 2014. The Funding Management Strategy outlines how benefits and contributions will be modified as the OMERS Primary Plan (the Plan) cycles through periods of deficit and surplus.
Although actuarial valuation shows that the Primary Plan is currently in the Deficit Management zone of the Funding Management Strategy, there is no requirement to make changes to the Plan. The SC has decided not to consider changes this year. The measures introduced in 2010 remain sufficient to manage the financial health of the Plan.
Beyond managing the financial health of the Plan, there are other reasons to change and evolve benefits, such as pension legislation developments or minor administrative matters. In 2014, the SC received related input from stakeholders and received a report from the PDC on those plan change requests. The SC decided to defer its decisions on these plan changes until 2016. In the meantime, the SC directed PDC to continue to review the various related considerations.
The annual valuation of the OMERS Primary Pension Plan must be filed with the regulators every three years, and may be filed more frequently. The SC decided to file the December 31, 2014 actuarial valuations with the regulators in respect of the Primary and Supplemental Plans.
Budget & Expense Management
The SC continued to explore practical alternatives for establishing permanent funding arrangements given that any unused grant funds would be returned shortly (see February 19