OMERS Sponsors Corporation (SC), which represents active and retired members and employers, approved two plan changes in a meeting on June 28, 2012:
In addition to setting the contribution rates for 2013, the SC approved a new method for allocating contribution rates in the future. These changes do not affect OMERS retired members, deferred members, or survivors.
As well, the December 31, 2011 valuations for the OMERS Primary Pension Plan (OMERS Plan) and the OMERS Supplemental Plan for Police, Firefighters and Paramedics (Supplemental Plan) will be filed.
Contribution rate changes for the OMERS Plan are effective with the first full pay in 2013.
*The CPP earnings limit in 2012 is $50,100; the limit in 2013 will be higher. OMERS members pay a lower rate on earnings up to the YMPE because OMERS and the CPP are designed to work together to provide pension benefits. Contributions are tax deductible which lessens the net impact on Plan members.
In 2010, OMERS announced a three-year plan to increase contribution rates. The contribution rate increases set for 2013, are the third increase.
These rate increases are intended to be temporary until the deficit is eliminated, and are part of a long-term strategy to return the OMERS Plan to full funding.
This change will cap a member's earnings for pension purposes and it will only affect members earning over seven times the CPP earnings limit. (If the cap were in effect for 2012 this would be 7 x $50,100 or $350,700.)
This change applies to the OMERS Plan, the Retirement Compensation Arrangement (RCA) for the OMERS Plan, and the Supplemental Plan. This cap is in addition to the existing cap on contributory earnings (i.e., for incentive pay).
The effective date of the cap on contributory earnings is:
Details for OMERS employers will be posted in the Employer Administration Manual.
Filing Plan valuations: Pension plans must file an actuarial valuation – showing assets and obligations –
at least once every three years. The decision was made to file the December 31, 2011 OMERS Plan and Supplemental Plan valuations with the regulators. The next required filing will be the December 31, 2014 valuation.
OMERS is one of the top pension plans in Canada, and like many other major public sector plans, is on course to address funding challenges. More about plan funding and the value of an OMERS pension is in Member News.