Eight Specified Plan Change Proposals (SPCs) filed by OMERS plan sponsor representatives in the 2014 OMERS SPC Process have been posted on the Sponsors Corporation (SC) website. Four of the proposals are new and three of these reflect continuing employer sponsor efforts to achieve plan sustainability through earlier deficit reduction and to help manage the risk of new contribution rate increases. Four proposals from earlier years that were not approved by the SC Board have also been tabled in the 2014 SPC process. Those tabled by employee sponsors would increase plan benefits, putting new pressure on blended contribution rates that stand at an historical high of 21.38 per cent.

New Proposals

SPC 14-03 –Reduced lndexing (OAPSB, AMO)
This proposal would slightly decrease indexing by reducing increases in pensions due to CPI increases to 70 per cent for increases up to 2.25 per cent. This is the level that CPI is assumed to increase in the future in the Plan Valuation. For the portion of an increase in CPI over 2.25 per cent to the current maximum of 6 per cent, pensions would continue to increase by 100 per cent of CPI. Resulting savings, which are projected to be $2 billion over ten years, would be used to eliminate the plan deficit by 2024, one year earlier than currently anticipated by OMERS. This proposed change would be effective as soon as possible, but no later than January 1, 2016 and does not affect pensions in pay prior to the effective date.

SPC 14-04 – Indexing Suspended for Five Years (AMO, EDA)
This proposal would suspend indexing between 2017 to 2021, reducing the plan deficit by about $4 billion. Increases in pensions in pay during this period due to CPI increases would continue but no indexing would be earned for employment during the five year window. If savings were to be applied to contribution rates and not the deficit, the amount of the cost reduction would be equal to a 3 per cent reduction in contribution rates during the five year period. This change would be effective no later than January 1, 2017.

SPC 14-05 – Disability Waiver (AMO, OACAS)
This proposal responds to concerns expressed by Wellington County regarding inequities in the workplace where disabled employees who return to paid work on a rehabilitation program are not required to make contributions (nor are the employers). The proposal requires that employees pay contributions on any earnings paid by the employer when the employee returns to work with the employer matching those contributions. Should the earnings be paid on a reduced basis, the waiver of contributions would continue to apply on the remainder of the earnings. The effective date of this change would be January 1, 2016.

SPC 14-07 – Adjust Contribution Rates (OAPSB, OPFFA)
The objective of this proposal is to adjust the 2015 contribution rates to be consistent with the allocation methodology that was agreed to by the SC in 2012, which included a transition measure to fully implement the methodology by 2015. The proposal would also amend the Primary Plan Statement of Plan Design Objectives and Strategy (SPDOS) to require a contribution rate study in 2015 and every three years thereafter.

Other Proposals

The four proposals recycled from earlier years include two which would reduce benefits to manage plan costs: SPC 14-01 – Pension Accrual Change to 1.85% from 2.0% in the pension formula multiplier with effective date of January 1, 2016 (EDA, AMO, City of Toronto); SPC 14-02 – Early Retirement Reductions for pensions accrued after December 31, 2016, if retirement is more than 5 years before NRA , with effective date January 1, 2017 (AMO, City of Toronto); and two proposals, SPC 14-06 – NRA 60 Paramedics (CUPE, OPSEU); SPC 14-08 – NRA 60 Police Civilians (PAO), which would move specific employees to NRA 60 benefits resulting in higher contribution rates for municipalities with their own police and ambulance services, with the effective date for both proposals being January 1, 2015.

SPC Process
SPC proponents can amend or withdraw a proposal up to May 14. Amendments after May 14 require a two thirds SC Board vote. The SC Board will meet with representatives of the unaffiliated groups (OMAA, AMCTO, OMHRA, MFOA, OASBO and COTAPSA) in early June to review and receive input on the SPCs. The earliest SC Board vote on the approval of the SPC proposals is late June.

Explanation, examples and updates for all SPCs tabled can be found at www.omerssc.com.