OMERS SC Approves Plan Changes for 2017
As one of its key mandates, the OMERS Sponsors Corporation (SC) works to ensure that the jointly-sponsored OMERS Pension Plans remain both affordable and sustainable. The over-riding goal is to protect the health and long-term viability of the Plans, while giving due consideration to the interests of stakeholders and other relevant circumstances.
Based on on the most recent Plan review, the SC Board approved three (3) subtle but important Plan changes on June 21, 2017. The changes are summarized below:
1) Commuted values and buy-backs
Members whose employment ends before they are eligible for an early retirement pension can elect (1) a deferred pension or (2) to receive their pension entitlement as a lump-sum payment (i.e., the commuted value). Currently, those members who do not choose the commuted value option immediately following their termination may do so at any time before they become eligible to start their pension. If a member takes the commuted value and later rejoins OMERS, the member can purchase (buy back) their pension entitlement in some circumstances.
To help streamline administration and ensure that some members don’t receive an unintended windfall, certain time restrictions will be imposed. Specifically:
a) Members who wish to receive a commuted value must elect to do so within six (6) months after terminating their employment (or by January 1, 2020, if later).
b) Members who rejoin the Plan will be required to wait at least five (5) years before buying back a period of eligible service for which they previously received a commuted value from OMERS. This change does not apply to current members, but will apply to members who join or rejoin OMERS after January 1, 2020.
2) Dual membership
A dual member is a person who is employed by more than one OMERS employer at the same time and therefore, has more than one membership in OMERS. Dual membership may also occur where a member works in two positions with the same employer.
Currently, a dual member who retires or terminates employment related to one OMERS membership, and decides to take a pension related to that membership, may take both pensions. The dual member may do so without leaving the second employer. In some cases, a dual member can collect an OMERS pension while continuing to earn a full income from an OMERS employer.
Under certain circumstances this provision would allow a member to receive their pension income while they continue to work in their primary jobs.
The approved change will prohibit a member from receiving a pension while continuing in full-time employment with an OMERS employer.
The change is effective January 1, 2020 and applies to members who have more than one employment position with one or more OMERS employer, where at least one of those positions is full-time. For purposes of this provision, a full-time employee is an employee employed on a continuous full-time basis as defined in the Primary Plan.
For clarify, the new provision would not apply to:
- dual members who only hold part-time (i.e., other than full-time) positions,
- the circumstance of a retired member who is re-hired, or
- a member currently in receipt of a pension who is also working.
3) Foreign service membership
In very limited circumstances, an OMERS employer may have employees who reside and work outside of Canada. While these employees participate in OMERS, complications can arise due to international tax rules.
Starting August 23, 2017, OMERS employers while have the option to suspend participation in OMERS for those employees who are employed outside of Canada. Employers who make such an election will determine the appropriate transition for their affected employees.
NRA 60 paramedics
The SC will consider one other plan change by the end of 2017. The Primary Plan allows an employer of police officers and firefighters to provide these employees with NRA 60 benefits. Under the current Plan terms, NRA 60 participation is not available to paramedics (who are not otherwise designated police officers or firefighters) – although such participation is permitted under the Income Tax Act. The proposed change would allow employers to provide NRA 60 benefits to paramedics (i.e., not just to the police and firefighter sectors).
Looking beyond 2017
The SC continues consultations related to modifying the indexing provisions of the Plan to enable greater risk sharing and enhanced intergenerational equity in the future. In addition, OMERS is currently undertaking a research project designed, in large part, to inform the SC’s review of eligibility requirements for non-full-time employees. As previously indicated, neither of these issues will reach decision-making in 2017, but they are expected to be decided in 2018.
For more information
For more information on the Plan changes – or the change process in general – please contact:
Paul Harrietha (email@example.com) at 416.814.6575 or Chris Vanden Haak (firstname.lastname@example.org) at 416.814.6562.