The OMERS Administration Corporation (the “AC”) is a corporation without share capital under the Ontario Municipal Employees Retirement System Act, 2006 (the “OMERS Act”). The AC is the administrator of the primary pension plan as defined in the OMERS Act (the “OMERS Primary Pension Plan” or the “Plan”) and the Retirement Compensation Arrangement (“RCA”) associated with the Plan. The AC is responsible for investing the funds of the Plan and the RCA (the “Fund”), as defined in the OMERS Act, in accordance with the Pension Benefits Act (Ontario) (the “PBA”), the Income Tax Act (Canada) (the “Income Tax Act”), and the OMERS Act. Under the OMERS Act, the OMERS Sponsors Corporation (the “SC”) is the sponsor of the Plan and the RCA. The Ontario Municipal Employees Retirement System (“OMERS”) represents the combined retirement system comprised of the SC, the AC, the Plan and the RCA.
OMERS Primary Pension Plan
The OMERS Primary Pension Plan is a multi-employer pension plan, created in 1962 by an Act of the Ontario Legislature, whose members are mainly employees of Ontario municipalities, local boards, public utilities and non-teaching school board staff. Effective June 30, 2006, the Plan is governed by the OMERS Act and the benefit provisions and other terms of the Plan are set out in the Plan text.
The OMERS Primary Pension Plan is registered with the Financial Services Commission of Ontario and the Canada Revenue Agency. The Plan is registered under Registration #0345983.
a) Funding – The Plan is a contributory defined benefit pension plan funded by equal contributions from participating employers and members and by the investment earnings of the Plan assets. Contribution rates are set by the SC. The required contributions are identified through the actuarial valuation, and are determined in accordance with the OMERS Act, the Income Tax Act and the PBA, according to the actuarial needs of the Plan.
b) Pensions – The normal retirement age (“NRA”) is 65 years for all Plan members, except police officers and firefighters, who generally have a normal retirement age of 60 years. The normal retirement pension is calculated using a member’s years of credited service and the average annual earnings during the member’s highest sixty consecutive months of earnings. The Plan benefits are integrated with the Canada Pension Plan.
c) Death Benefits – Death benefits are available to a surviving spouse, eligible dependent children or designated beneficiary upon the death of a member or in some cases, a retired member. Depending upon eligibility requirements, the benefits may be paid in the form of a survivor pension, lump sum payment or both.
d) Withdrawals and Transfers from the Plan – Subject to lock-in provisions, a member that has terminated employment prior to eligibility to retire has the option to withdraw or transfer his/her benefits from the Plan to another retirement savings vehicle.
e) Escalation of Pensions – Pension benefits are increased for inflation through an annual adjustment equal to 100 per cent of the increase in the average Consumer Price Index (CPI) from the prior year. This is subject to a limit of six per cent in any one year. If the increase in the average CPI exceeds the six per cent limit, any excess is carried forward to future years.
f) Disability Pensions – A disability pension is available at any age to a member who becomes totally disabled as defined by the Plan. The pension is calculated using a member’s years of credited service and the average annual earnings during the member’s highest sixty months of consecutive earnings consistent with a standard pension. Disability pensions continue until normal retirement or until the member is able to return to work.
g) Income Taxes – The Plan is a Registered Pension Plan as defined in the Income Tax Act and as such is not subject to income taxes for contributions or investment income received. The operations of certain entities holding private equity, infrastructure or real estate investments may be taxable.
Retirement Compensation Arrangement
The RCA was established to provide pension benefits based on full earnings for those members with earnings exceeding the amount that generates the maximum pension allowed by the Income Tax Act. The determination of the value of these benefits is made on the basis of a periodic actuarial valuation. The RCA net assets available for benefits are accounted for separately from the Plan and the accrued liabilities of the RCA are valued separately from the Plan actuarial valuation.