A pension is a promise. The promise of a secure retirement after a lifetime of hard work. But the people who govern your pension – members of the OMERS Sponsors Board – are threatening to break that promise by making sweeping changes to your OMERS pension plan.

Earlier this year OMERS undertook a Comprehensive Plan Review and put some big changes on the table.

Visit OurOMERS.ca and send a letter to OMERS board members urging them to vote NO to changes that will strip benefits away from workers.

What is OMERS proposing?

  1. Ending early retirement provisions

    Now: If your Normal Retirement Age (NRA) is 65, you are able to retire and collect full pension benefits as early as age 55 once you have worked 30 years or when your age and years of service add up to 90.

    Change: You will not be entitled to retire with your full pension until age 60 without facing serious benefit penalties.

    The further you are away from age 55 when the changes take effect, the more drastic the impact and the longer you will have to work to avoid them.

  2. Reduced benefits

    Now: The amount of your pension is calculated by multiplying your years of service by an accrual rate of 1.325% for salaries up to $55,300 (the current Year's Maximum Pensionable Earnings – YMPE) and 2% on wages above that amount.

    Change: The base salary will be increased by 14% – so now you would have to earn $63,042 before your pension accrues at 2%.

  3. Eliminating guaranteed indexing

    Now: Your pension is indexed so it doesn't lose ground against inflation. As inflation goes up, so do your benefits.

    Change: Eliminating guaranteed indexing after 2025 and moving to ‘conditional indexing’ – meaning your pension won't increase automatically with inflation after 2025.

    This one benefit reduction will put your retirement income security at risk as you watch your retirement income lose ground against inflation every year; years when you should be enjoying the benefits of a lifetime of hard work and the contributions you made to building a secure retirement.

OMERS Myth Busters

CIPP has received many inquiries about the OMERS Comprehensive Plan Review. We want to insure our members recieve accurate, fact-based information so over the upcoming weeks we will be addressing frequently asked questions and common misconceptions with regards to the proposed OMERS plan changes through our Myth Busters web series.

MYTH 1: “We need to eliminate guaranteed indexing to make sure the plan remains sustainable.”

REALITY: Today, your pension is indexed so it doesn't lose ground against inflation. As inflation goes up – so do your benefits. If OMERS gets its way, the pension plan would have to meet specific conditions – to be decided down the road – before your pension is indexed.

They claim they need to do this to protect the health of the plan. This is not true.

Remember 2008, the biggest economic crash since the Great Depression? OMERS, like every other pension, took a big hit. But it bounced back and fully recovered. It exceeded all of its goals, all while providing members with guaranteed indexing.

As of December 2017, OMERS was funded at 100.6%. The OMERS pension plan is in an excellent financial position — much better than 2008.

OMERS can afford to guarantee the value of your pension against inflation.

MYTH 2: “I can still retire at 55.”

REALITY: Yes, you are still able to retire at anytime however ending the early retirement provision would mean that you will not be entitled to retire with your full pension until age 60 without facing serious benefit penalties.

Take the example of a member who is planning to retire on December 31, 2022 when the member reaches their 30 years' service. Under the proposed changes, the member will now have to work an additional 5 years (until 2027 at age 60) to retire with full benefits.

If they stick to their current plan to retire at 55 in 2022 – the years between age 55 and 65 will be subject to a penalty that will reduce their benefit for those years by 50% (5% for each year short of the NRA). That's a huge reduction and lot of money the member won't have to ensure their financial security in retirement.

The further you are away from age 55 when the changes take effect, the more drastic the impact and the longer you will have to work to avoid them.

MYTH 3: “Conditional indexing won't have a major impact.”

REALITY: OMERS' plan to take away guaranteed indexing and replace it with conditional indexing will significantly reduce your benefits.

Instead of the value of your pension keeping up with inflation, OMERS is going to make indexing ‘conditional’ on the plan meeting certain conditions. They haven't revealed what those conditions are yet – but in their online webinar they float the idea of having the plan funded to 105% as a potential condition for indexing.

The fact is, OMERS hasn't been funded to 105% since 2002. So, if that condition was already in place now, and you retired in 2003 you would have never had your pension indexed to inflation – and probably wouldn't for years to come. Without indexing, today you would be receiving $16,474 less per year than you would with indexing and would have lost $118,226 overall*. That's a huge impact!

For those of us who are counting on the promise of our pension for our retirement, conditional indexing means less security, and reduced benefits.

Tell OMERS conditional indexing will have a significant impact on you and your family. Go to OurOMERS.ca.

* based on a best 5-year average income of $90,000 and 35 years of service.

MYTH 4: “OMERS is only proposing big changes because they're worried about your retirement security.”

REALITY: This is really about saving your employer money.

OMERS isn't alone in this campaign to change your pension, they've got a helpful partner in your employer – MEPCO (Municipal Employer Pension Center of Ontario), a non-profit corporation solely funded by AMO (the Association of Municipalities of Ontario). MEPCO's only reason for existing is to deliver employers' interests to OMERS. Its website says their function is to advise OMERS, in part by:

  • Providing advice, tools, professional actuarial and legal advice on plan design, funding, growth and other matters.
  • Analyzing the impact of pension issues on municipal employers.
  • Developing OMERS Specified Plan Change (SPC) proposals.

You may have noticed that OMERS and MEPCO are spending a lot of resources and putting out a lot of information to justify the cuts to your pension. Have you also noticed that they're saying the same things, almost verbatim?

It's not a coincidence, they have a shared interest in keeping your pensions lower to save themselves money.

So basically, your employer has set up an entire organization, funded by your tax dollars, to influence OMERS' management of your pension.

The changes OMERS is trying to make are not about making the plan more secure to protect your future. It's to save your employer money.

Tell OMERS to keep their promise to you of a secure pension, go to OurOMERS.ca