OMERS Net Assets Surpass $60 Billion

March 20, 2013
Strong cash generation and continuing "AAA" credit rating mark solid 2012 for OMERS and progress against our strategic goals. The OMERS Plan generated a positive investment return of 10% in 2012, and net assets grew to $60.8 billion – rising by $5.7 billion in 2012 and by over $17 billion since the 2008 global credit crisis.

"OMERS had a strong year in 2012. The $5.7 billion increase in our net assets demonstrates the strength and robustness of OMERS business model with the capacity to generate growing investment cash yields and more than ample liquidity to withstand market shocks under stressed financial conditions," said Michael Nobrega, OMERS President and CEO.

Progress Against Strategic Goals

In 2003, OMERS adopted its current strategic plan including an investment strategy designed to provide balance between public and private market assets and to generate long-term, stable cash flows while maintaining liquidity. The strategy has evolved to incorporate avenues for the growth of Plan assets and a "direct drive" ownership model providing OMERS with greater control of its investments at a lower cost.

One of the key drivers of the strategic plan is OMERS asset mix. OMERS ended the year with 60% of its assets in the public markets and 40% in private market assets, compared with 82% public and 18% private before the new strategy was implemented nine years ago. Our long-term goal is to achieve a mix of approximately 53% public and 47% private market investments. A second key driver is the strategic priority to directly own and actively manage investments rather than retaining external fund managers. OMERS ended the year with 88% of the portfolio now managed in-house, up from 70% at the end of 2008. The long-term goal is to reach 95% of the portfolio managed internally.

Funding Deficit

Annually, the Plan makes a projection regarding its ability to pay pensions over the long-term. At the end of 2012, the Plan’s funding deficit peaked at $9.9 billion, versus $7.3 billion a year earlier. Like many other pension plans, the funding deficit reflects the delayed, full impact of the 2008 global financial crisis.

In 2010, OMERS implemented a plan aimed at eliminating the deficit over time through measures that included a contribution increase phased in over three years, a benefit reduction impacting members who leave their employer before they’re eligible to retire, and an investment program targeted to generate an annual net investment return of at least 6.5%.

"The deficit is based on a long-term projection going out several decades and in no way reflects our ability to pay pensions in the short term. OMERS has achieved solid investment returns with an annual average 8.9% return in the four years since the financial crisis. Sustained returns at this level could bring the Plan back to fully funded status earlier than anticipated," said Patrick Crowley, OMERS Chief Financial Officer.
More details of OMERS financial results are in OMERS In Focus.