Sightlines Issue #2

Protecting the Pension Promise

Updating you on the Comprehensive Plan Review

During his State of the Union address on January 11, 1962, President John F. Kennedy famously stated that “the time to repair the roof is when the sun is shining.” Following this wise lead, the Comprehensive Plan Review is our opportunity to assess both the viability and relevance of the OMERS Pension Plan during a welcome period of recovery and improved financial health.

Thanks in large part to a disciplined investment strategy, an extended bull market, and additional contributions from both members and employers, the financial health of the OMERS Plan continues to improve. Assuming all goes consistently well, the Plan is projected to be fully funded by 2025, if not sooner.

Despite this positive progress, there is a strong consensus that OMERS – like most major defined benefit (DB) pension plans globally – faces some very real longer-term challenges that warrant serious consideration. As outlined in the initial Sightlines bulletin, these realities include a steadily maturing plan; longer life expectancy; changing demographic and workplace trends; an increasingly uncertain economic environment; and recent regulatory and legislative developments, including Canada Pension Plan (CPP) enhancements.

We acknowledge that it is extremely difficult to accurately predict the future – the distant future in particular. But that is the essential challenge at OMERS: providing “guaranteed” benefits over a 100-year planning cycle, based on uncertain assumptions and events.

In this context, prudence dictates that the Board fully assess the Plan’s financial health – and consider how the emerging risks and realities can be managed strategically and in the best interest of Plan members (current and future). As Kennedy noted, it’s all about preparing for future rainy days – and providing a pension plan that is secure, stable, and affordable for both members and employers for generations to come.

Next:
A 100-year focus: Ensuring that OMERS remains sustainable for generations to come