MEPCO Member Newsletter - August 2021

AMO and MEPCO have Confidence in OMERS Plan Governance and Administration

Last week, OMERS released its results for the first half of 2021. The results are very good, with a net return of 8.8% in the first six months of this year. That net investment income of $9.2 billion, over six months, brings the Fund’s value up to $114 billion. Over the twelve months ending June 30, 2021, the Plan earned a net investment return of 18.2%. The results demonstrate a significant improvement over the 2020 results which reflected a net loss of 2.7%. Please take a moment to review the information provided by the OMERS Administration Corporation (AC).

In 2020, AMO supported a number of Plan changes designed to address COVID-19 impacts on employers and employees, including: extending leave purchase deadlines; reducing or eliminating the 36-month employment requirement for purchases of periods of reduced pay; and allowing members to purchase credited service for periods of absence due to temporary layoff that were initiated in 2020 or 2021. Information about recent plan changes is available here.

These changes build on an important Plan change that comes into effect in 2023 to implement the concept of “shared risk indexing” in the event it is needed in the future to protect Plan financial sustainability. Accomplishing this important change was complex and sometimes controversial. It was approved by the Sponsors Corporation (SC) Board because at least two thirds of employer and union appointees on the SC Board believed it was essential for Plan sustainability, and to protect the interests of Plan members.

CUPE Ontario has publicly expressed its opposition to this change. CUPE Ontario is an important OMERS sponsor, accounting for more than 40% of active Plan members. AMO takes CUPE’s views very seriously, respects CUPE’s point of view, and enjoys an excellent working relationship with CUPE. In fact, in 2020, AMO and CUPE worked together to secure over $4 billion in federal and provincial financial assistance for municipalities to offset the cost impacts of COVID-19, and to protect critically important municipal services and jobs.

As Plan Sponsor, AMO’s Job is to Appoint Qualified Members to the OMERS Boards

AMO and MEPCO take their roles in OMERS governance very seriously. As a Plan sponsor, AMO’s job is to ensure it appoints highly qualified members to the OMERS Boards who are experts in governance, finance and pension administration. MEPCO’s work ensures that AMO appointees have access to the resources, intelligence, and analysis they need to fulfil their governance responsibilities in a way that is fully informed by the priorities, realities and aspirations of Ontario’s municipal employers. AMO and MEPCO do not have a role in guiding or scrutinizing OMERS AC’s investment decisions or strategies, nor should they.

That said, the MEPCO Board, and AMO staff, work closely with OMERS Board appointees, and with OMERS senior staff, to ensure the needs and expectations of municipal employers are front and center in the work of both the AC and SC Boards. That includes very frank discussions about Fund performance.

CUPE Ontario is currently calling for an independent review of OMERS’ multi-year investment performance. As noted above, AMO and MEPCO believe the role of Plan sponsors is to ensure the right people are serving on the OMERS SC and AC Boards, and that the expectations of Plan members and employers are clearly understood.

AMO and MEPCO Do Not Support the Call for an Independent Review

AMO and MEPCO have full confidence in both the AC and SC Boards to ensure the $114 billion OMERS Plan remains affordable, sustainable and meaningful in the decades ahead. Achieving that goal will be very challenging in the face of changing demographics, Plan maturity and market instability.

AMO and MEPCO are committed to working with all OMERS Plan sponsors to achieve that goal.