Looking Ahead

OMERS has long recognized the need to manage change. A statement from our 1968 Annual Report highlighted: “A pension fund, if it is to be effective, must meet a number of requirements – it must be financially sound, provide efficient and helpful service to its members, be aware of the constant demand for change and improvement and be responsive to the needs of its members. OMERS makes every effort to meet these requirements.”

Looking beyond 2017, change will remain a key factor and the OMERS Plan will continue to mature. In 1997, the ratio of active members to retirees was slightly less than 3:1. In 2017, this ratio was just below 2:1. By the late 2030s, our Plan is expected to have an active member to retiree ratio of 1:1. As the Plan matures, it becomes more vulnerable to stresses, as there are relatively fewer members to carry the cost of any impact, which, without preparation in advance, could require higher contribution rates, reduced benefits, or a combination of the two, in the future.

The makeup of Plan membership is shifting and this has an impact on determining contribution rates. In 2017, a Membership Evolution Study was conducted to help OMERS better understand the changing nature of work and its implications for OMERS active membership. The study identified four areas of potential workplace disruption:

• growth in non-full-time work
• privatization
• new, alternative service-delivery models
• automation and technology

These factors are expected to contribute to OMERS active membership leveling off, or even potentially declining in the coming years. The Study's findings will be used to support planning and Plan design decisions to ensure long-term sustainability of the Plan.

While benefits that have been earned to date are protected, we need to look ahead and examine the ability to adjust the Plan. Formal consultations with key stakeholders took place in 2017 regarding the possible introduction of Modified Inflation Indexing. During the consultations, we heard that our sponsors and other stakeholders wanted to learn more about a range of Plan design options that could be available. To this end, in 2017, the Sponsors Corporation initiated a Comprehensive Plan Review. This Review is a logical extension of OMERS commitment to managing and planning for change, and is an opportunity to evaluate the Plan in response to realities that are largely beyond our immediate control.

We are aware of the challenges ahead and the forces at play. Through our research studies and through the Comprehensive Plan Review, OMERS is committed to finding the right solutions, which are essential to protecting, securing and sustaining the Plan for the benefit of us all. The following realities are driving us to assess the Plan: