Past Policy Changes

June 25, 2024

The SC Board has completed its review of three policies related to Plan funding which support the long-term delivery of a sustainable, affordable and meaningful defined benefit pension plan. These policies provide guidance to the SC Board in making decisions for a diverse membership over time.

As a result of this review, the SC Board approved the following three policy updates at its meeting on June 25, 2024:

1. Funding Management Statement

Our Funding Management Statement provides non-binding policy guidance to the SC Board in making decisions regarding contribution rates and benefits based on the financial health of the Plan. This statement has been amended to:

• increase the focus on building reserves as the Plan matures, and

• provide greater flexibility to the SC Board to decide on the composition of any Plan changes it may decide to make in the future, including elimination of reference to a cap on contribution rates.

This policy change will not result in changes to current benefits or contributions. The updated version of this policy is available in the SC’s Governance Manual.

2. RCA Funding Mechanism Policy

OMERS provides a seamless pension promise that is funded through the OMERS Primary Pension Plan (Primary Plan) and the Retirement Compensation Arrangement for the Primary Pension Plan (RCA). The SC Board has reviewed the funding policy for the RCA which deals with the methodology used to allocate member and employer contributions between the Primary Plan and RCA.

The SC Board has confirmed that OMERS will continue to operate as a seamless plan, recognizing there needs to be sufficient assets in the RCA to pay the benefits allocated to this plan. The methodology for allocating contributions between the Primary Plan and RCA has been updated to enhance the sustainability of the RCA over the long-term. This new RCA Funding Mechanism Policy replaces By-law No. 24-01 and By-Law No. 28.

This policy change will not result in changes to current benefits or contributions. The updated version of this policy is available in the SC’s Governance Manual.

3. Contribution Rate Policy

The Contribution Rate Policy provides guidance to the SC Board in setting the contribution rates for the Plan. This is particularly important as OMERS has a very diverse membership. The SC Board has assessed its overall philosophy for setting contribution rates, including the consideration of two Plan change proposals received by the SC Board in 2020. As a result of this review, the SC Board adopted the following principles to guide the setting of individual contribution rates:

• The contribution rates above and below the YMPE should be proportional to the different value of benefits accruing above and below the YMPE.

• Differences between the contribution rates for the NRA groups should reflect only the difference in the value of pension benefits being accrued by each group resulting from differences between the NRA 65 and NRA 60 benefit provisions.

• Differences in the actuarial cost of benefits being accrued that are attributable to differences in the demographic profile of members and their expected future experience should be pooled across the entire OMERS membership, consistent with the concept of pooling that is characteristic of defined benefit pension plans.

The SC Board believes that this methodology strikes an appropriate balance amongst the principles of pooling, fairness across our diverse membership, transparency, value for money and limiting complexity. The principles have been documented in an updated Contribution Rate Policy. The updated version of this policy is available in the SC’s Governance Manual.

For more information on the most recent contribution rate study conducted by the SC Board, please see here.