BUILDING TOMORROW

We Are OMERS

A jointly sponsored, defined benefit,pension planTooltipwith over 1,000 participating employers ranging from large cities to local agencies and more than 600,000 active, deferred and retired members. Our members include union and non-union employees of municipalities, school boards, local boards, transit systems, electrical utilities, emergency services and children’s aid societies across Ontario. OMERS teams work in Toronto, London, New York, Amsterdam, Luxembourg, Singapore, Sydney and other major cities across North America and Europe – serving members and employers and originating and managing a diversified portfolio of high-quality investments in bonds, public and private credit, public and private equity, infrastructure and real estate. The benefits OMERS provides are funded equally from active members’ and their employers’contributions,Tooltipcombined with investment income. We expect that the majority of future benefit payments for today’s active members will be funded by investment returns. OMERS actively seeks out opportunities to engage with decision-makers to advocate for the advantages of the jointly sponsored, defined benefit pension model.

The benefits of being an OMERS member

As a defined benefit pension plan, OMERS provides retirement income for life, based on earnings and years of service. Valuable features of the Plan include:

• Security of regular monthly income;

• A professionally invested portfolio;

• Additional benefits that include inflation protection, a bridge benefit, survivor and disability benefits.

For more information on the benefits of being an OMERS member, please visit the Members section.

2023 Highlights

This Annual Report is addressed to our members, employers, sponsors, unions, associations, employees, and the many others who are interested in OMERS 2023 performance and in our progress in making OMERS a sustainable, affordable and meaningful defined benefit pension plan.

Introduction

For more than 60 years, OMERS has been proud to provide secure lifetime defined benefit pensions to members who serve our communities across Ontario.

We entered 2023 following two years of high market volatility in the aftermath of the COVID-19 pandemic during which our OMERS team delivered what would emerge, in hindsight, to be industry-leading results. These returns have helped the Plan absorb the negative impact of decades high inflation on our liabilities, buffering our members from volatility.

Net assets at December 31, 2023, were $128.6 billion, up from $124.2 billion in 2022, and the Plan reported a smoothed funded status of 97%, up from 95% last year.

Looking back, OMERS has earned a 10-year average annual return of 7.3%, achieving our long-term benchmark and adding $66.4 billion to the Plan.

We are confident in our ability to generate long-term returns that will build up the Plan’s assets, given the high quality of our investment portfolio and the strategies that underpin it. The outlook for future returns has brightened due to the better interest rate environment and due to active shifts in our asset mix.

While we continue to work to ensure that the Plan is sustainable, affordable and meaningful for generations to come, our global team has also been focused on advancing our sustainable investing priorities, ensuring that our members were served exceptionally well, and continuing to provide a workplace that would attract and retain the high-calibre team who are charged with delivering on their mandates in service of more than 600,000 members.

Our portfolio is strategically invested in markets around the world to take advantage of opportunities to earn returns that will pay pensions for generations to come, and some members have asked about our investments in our home country. While our team and our perspective are global, we are deeply proud of our Canadian roots and we have dedicated part of this report to the investments we have here.

Approximately one quarter of our investments are in Canada, and research on the Ontario economy confirms that our investment activities here, combined with the impact of pension benefits and our operations, contribute $13.7 billion in provincial GDP. We look forward to exploring further investment opportunities that align with our strategy as they arise.

We thank OMERS members and employers for the confidence they continue to bestow on us. As we did in 2023, we will work hard every day to earn their trust and deliver a pension plan that is sustainable, affordable and meaningful.

There are five key highlights for the year, with more details to follow below.

1. Investment performance - In 2023, OMERS earned a net return of 4.6%. Performance diverged between public assets, which had a strong year, and private investments, which were held back by the increased cost of debt, increased operating costs anticipated and slower economic growth, all of which are affecting private market investors worldwide.

2. Plan funding and the conclusion of Plan risk assessment - The funded status of the Plan has improved significantly in the last decade. The SC Board concluded a review of long-term Plan sustainability in 2023. No sustainability-related changes to benefits or contribution rates were made. The Board confirmed the need to continue strengthening the Plan’s funding and building reserves as the Plan matures.

3. Launch of the OMERS Climate Action Plan - We launched our Climate Action Plan (CAP), outlining our overall approach and the actions we are taking to manage risk and realize opportunities toward achieving net zero carbon emissions in our portfolio and operations by 2050.

4. Exceptionally strong member service - Member service satisfaction is a record-high 96%, even as we welcomed almost 45,000 new, non-full-time members into the Plan, and modernized a number of key processes.

5. Better than best-in-class employee pride and engagement - OMERS employees are deeply committed to serving our members and proud of the work they do on members’ behalf.

Investment Performance

Over the past 10 years, OMERS has averaged an annual investment return of 7.3%, net of expenses. These returns met the average of their annual benchmarks and exceeded the 7% return expectation outlined in our 2023 Board-approved Statement of Investment Policies and Procedures.

Returns in 2023 reflected a major divergence between the performance of public and private assets. Public equities and fixed income had a strong year in an environment where stock market indices rose significantly, and fixed income assets benefitted from higher interest rates. Returns from private asset strategies were held back by the increased cost of debt, increased operating costs, and anticipated slower economic growth, all of which are affecting private market investors worldwide.

In that context, OMERS investments earned a 2023 return of 4.6%, net of expenses, or $5.6 billion in net investment income. Public equities, credit and bond investments earned 9.0% collectively for the year, and infrastructure, private equity and real estate together earned 1.2% for 2023. Foreign currency movements also detracted from our return by about 1.2%, as the U.S. dollar weakened relative to the Canadian dollar.

Weaker returns from private equity and real estate were the primary reason that OMERS annual return of 4.6% did not meet our benchmark of 7.0%, established at the beginning of the year.

Further discussion on Plan performance can be found in the Management’s Discussion & Analysis (MD&A) section of the Annual Report.

In August of 2023, OMERS approved a new long-term strategic target asset mix to ensure that our portfolio remains well-suited to capture the opportunities created by the shift to a higher interest rate environment. This new target asset mix includes greater allocations to fixed income investments and is expected to deliver similar returns as in the past, but with lower volatility.

We continue to be confident in our ability to generate long-term returns that will build up the Plan’s assets, given the high quality of our investment portfolio and the strategies that underpin it.

Plan Funding

The OMERS Plan is the collective responsibility of the Sponsors Corporation (SC) and Administration Corporation (AC). Our joint and overriding objective is to ensure the Plan is sustainable, affordable and meaningful over the long term.

In 2023, the Primary Plan’s smoothed funded ratio improved by 2%, and is measured at 97%, using the same discount rate we have used since 2021.

Over the past two years, the Plan has absorbed the negative impact of decades-high inflation, which arose in the aftermath of the COVID-19 pandemic. This high inflation boosted the present value of future pension payments by over $5 billion. In 2023, the smoothed funded ratio returned to the level we maintained from 2019 to 2021, before the inflation-induced dip of 2022.

The fair value funded ratio declined to 94%, compared to 95% last year, because this year our assets grew at a lower rate than our liabilities. Refer to the MD&A for a full explanation.

Plan Funded Ratio

A Proud Canadian Investor

From our earliest investments to our most recent, Canada has provided attractive opportunities to invest our members’ savings. At the end of 2023, OMERS had more than $34 billion invested in Canadian assets.

OMERS maintains several significant investments in Canada’s infrastructure. A select few in 2023 include:

• Beanfield Technologies, a 100% fibre infrastructure network servicing the enterprise, commercial and residential sectors, primarily in Toronto, Vancouver and Montreal.

• Bruce Power, which provides 30% of Ontario’s energy and is OMERS single largest investment.

• LifeLabs, providing laboratory testing services primarily in B.C. and Ontario to help healthcare providers diagnose, treat, monitor and prevent disease.

• Porter, a Canadian airline headquartered at Billy Bishop Toronto City Airport on the Toronto Islands.

• Teranet, the exclusive provider of systemically important electronic property search and registration services under long-term concessions in Ontario and Manitoba.

We have invested in a portfolio of 70+ startup businesses, supporting entrepreneurs and innovative companies that are harnessing the power of technology to improve the lives of Canadians.

OMERS Ventures was the first pension plan early-stage direct investor in technology start-ups when we set up the program in 2011.

This is not a full list of our Canadian assets. For more on the investments held across the OMERS portfolio, please visit the Investing section of the OMERS website.

A Growing Impact in Supporting Ontario’s Economy and Communities

OMERS activities help to generate $13.7 billion of GDP annually in Ontario (about 1.5% of the economy). $8.7 billion of this economic contribution is generated by retirees spending their pension payments and an additional approximate $5 billion comes from OMERS investments and operations in the province. Across key indicators, OMERS contribution to Ontario’s economy and communities has increased since 2020.

OMERS activity impacts one in every 11 Ontario households.

Investing Sustainably

We believe investing sustainably enables us to generate returns and protect value for our members over the long term. Companies that adapt to changing dynamics of sustainability are anticipated to perform better, particularly over the long term.

OMERS has a three-pillared approach to sustainable investing:

As an active, long-term investor, we work to understand how our investment activities affect the environmental, social and governance (ESG) systems that, in turn, provide a stable foundation for our portfolio.

Taking Action on Climate

Climate change is one of the defining issues of our time. In 2021, OMERS made a commitment to achieve net-zero greenhouse gas emissions by 2050, building on an earlier commitment to reduce our portfolio’s intensity by 20% before 2025, using 2019 levels as a base. In 2023, we set a further goal to achieve a 50% reduction by 2030.

We are pleased to report a 52% carbon reduction, thereby currently surpassing our 2030 goal.

In 2023, we published a Climate Action Plan (CAP), which sets out in more detail our approach to achieving net-zero greenhouse gas emissions by 2050.

The CAP can be found here, and further information on OMERS investing businesses and their sustainable investing progress can be found in the MD&A section of the full Annual Report.

We are an active voice on important investment industry initiatives and align our actions with relevant global best practices. In 2023, OMERS participated in national and global initiatives and alliances that enable us both to contribute to the conversation and to learn from the experiences of others. Notable examples include collaborating with our peers at the Investor Leadership Network to expand investors’ toolkits on climate and diversity, and speaking at COP28, a climate change conference hosted by the United Nations to advance climate action. In addition to being a founding member of Climate Engagement Canada, we bolstered our engagement strategy by joining Climate Action 100+. We also added our advocacy voice in key policy conversations this year focusing on sustainability disclosure standards via the International Sustainability Standards Board (ISSB) and board diversity practices with the Canadian Securities Administrators.

On broader ESG matters, we updated our Inclusion and Diversity Statement to highlight OMERS commitment to advancing the principles of Indigenous Reconciliation as set forth in Call to Action 92 of the Truth and Reconciliation Commission of Canada.

Serving Members

OMERS members recognized our commitment to service excellence by awarding us an all-time-high member service satisfaction rate of 96% in 2023. We are committed to keeping our standards high and continuing to modernize our service.

Across Canada, there are now more people over the age of 65 than under the age of 14, and by 2030, one in six people will be over the age of 60 worldwide. These numbers reinforce our purpose at OMERS, where members are at the core of everything we do and where we are committed to being a trusted partner for them, from hire to retire – and beyond. We have a multi-generational and diverse membership. Our oldest member is 108 years old; our youngest member is 14. Our Plan provides value to those members, their employers, our sponsors, associations and unions. It provides an important direct benefit through pension payments, and multiple economic and social benefits to individuals and communities across Ontario.

In 2023, OMERS implemented a Plan change passed in 2020 that provided non-full-time employees the option to join the Plan. This resulted in us welcoming almost 45,000 new non full-time employees who chose this option. This speaks to the importance that employees place on having a workplace pension, and we thank these members and their employers for the confidence they have shown in us.

Modernizing Our Service

• We improved the user experience of myOMERS, while strengthening its security through multi-factor authentication and enabling more 24/7 self-service functionality to provide members with greater convenience.

• We are finding new ways to interact with members – which now includes our webinars, in-person regional sessions, member experience contact centre, live chat and secure communications.

• We improved our Employer Support services, including the ability for employers to schedule a call with a pension administration expert, and made it easier for them to transact with us through our employer platform, e-access.

Meeting you where you live – President’s Roadshow

2023 marked the third year of the President’s Roadshow, which brings together OMERS leaders and members from diverse employers across the province. This year, we sat down with representatives from a First Nation, school boards, municipalities, fire services, a family and child services organization and a performing arts group.

We sincerely thank the members and employers who participated for their time and for sharing their thoughts with us. We look forward to meeting with more members in 2024!

Committed to Service Excellence

An Employer of Choice

OMERS employees have made it clear that they are committed to their work and are proud of what they do based on results from our annual survey.

We strive to provide an environment where employees – connected by our values of inclusion, integrity, humility and excellence – have a sense of belonging, are able to make an impact, and feel empowered to bring new ideas, fresh thinking and differing perspectives forward to build an even stronger workforce and culture.

Our work is grounded in delivering our People Strategy with a focus on inclusion and diversity, growth and development, and wellness.

Our ability to attract and retain top-tier talent is crucial in our ability to achieve the ambitious strategic goals that we have set on behalf of our members.

Recognized as a Leading Employer, Internally and Externally

We appreciate that others have recognized the progress we have made towards being a leading employer, and have earned numerous accolades and awards in 2023.

Our Global Employee Experience Survey responses tell us that we are on the right track, reporting an overall engagement score of 82% (4% points above best-in-class) and a 93% participation rate (compared to best-in-class of 80%).

Interested in learning more?

Please see the Careers page for more information on our culture and our team.

A Commitment to Community, with 'One Good Thing'

OMERS members dedicate their careers to Ontario’s communities. In the spirit of their public service, OMERS employees globally dedicate time and resources over the course of the year volunteering and supporting great causes. In December, one of our most popular initiatives is a month-long campaign where we ask ourselves, “What if each of us did just One Good Thing?” From bake sales to clothing drives, fundraisers to blood donations, the results made the end of the year a bit warmer for everyone.

Creating space for important conversations

Every year, OMERS hosts a powerful speakers’ event featuring employees sharing stories and experiences that challenge, provoke and entertain. Among this year’s topics were race and inclusion, truth and reconciliation, AI and the force of technology and the battle against imposter syndrome.

Focus on Women In Leadership

In 2023, we continued to deliver our very successful Women in Leadership program, an award-winning, intensive experiential initiative for top talent. Since introducing it in 2020, we have had 59 women graduate from the program. 90% of their people leaders surveyed have assessed the participants as better ready for their next promotion; and 51% have been promoted during or shortly after the program.

Women at OMERS

Executive Updates