Once again, the annual OMERS Specified Plan Change (SPC) Process failed to produce the necessary two thirds Sponsors Corporation (SC) Board support for approval of employer sponsor plan benefit changes to provide greater OMERS Plan sustainability and affordability. The SC Board considered eight proposals by plan sponsors at its June 25th meeting and approved just one proposal that results in a 0.1% reduction in the NRA 60 contribution rates, based on a 2012 SC Board approved methodology for allocating overall contributions. There is no change to the NRA 65 contribution rates.

Two new employer sponsored proposals included a Reduction to Indexing by reducing increases in pensions due to CPI increases to 70% for increases up to 2.25% and an Indexing Suspension for five years (2017 to 2021). Two employer sponsored proposals brought forward from previous years included a Pension Accrual Change to 1.85% (on earnings over the YMPE) from 2% in the pension formula multiplier and Early Retirement Reductions for pensions accrued after December 31, 2016, if retirement is more than five years before the normal retirement age. These proposals demonstrate: 1) consistent employer sponsor efforts to achieve plan deficit reduction as early as possible; 2) managing the risk of contribution rate increases, beyond the current blended rate of 21.3%; and 3) beginning to address future impact of fewer new plan members supporting a larger proportion of retired members.

Employee sponsors resubmitted a proposal to move paramedic employees to NRA 60 benefits on a negotiated basis, which could result in higher costs for municipal employers with their own ambulance services. A similar proposal to move police civilians to NRA 60 benefits was withdrawn. Wellington County submitted an earlier proposal, subsequently advanced by an employer sponsor that would require employees to pay contributions on earnings paid by the employer when the employee returns to work in a rehabilitation program, with the employer matching those contributions. None of the SPC proposals
were referred to arbitration.

Given the 88% funded status of the OMERS Plan and that the 2013 OMERS investment returns did not meet the minimum net return target of 6.5%, a clear and immediate path to OMERS Plan sustainability is critical. MEPCO/AMO and other employer sponsors remain disappointed that the SC Board cannot support reasonable temporary, prospective benefit changes, such as those implemented by other Ontario jointly sponsored public  pension plans like Teachers and HOOPP that have led to greater plan sustainability. The SC Board is currently reviewing the Primary Plan Statement of Plan Design Objectives (Funding Strategy) to better link plan sustainability considerations to the annual SPC Process. MEPCO will continue its advocacy for significant actions to secure affordability  and protection from contribution rate increases that adversely impact employer budgets
and employee paychecks.

All of the 2014 proposals are summarized below:

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. 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.

Indexing Suspended for Five Years (AMO, EDA)
This proposal would suspend indexing between 2017 to 2021. 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. This change would be effective no later than January 1, 2017.

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. The effective date of this change
would be January 1, 2016.

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: 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); 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, NRA 60 Paramedics (CUPE, OPSEU); NRA 60 Police Civilians (PAO)[withdrawn], 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.