There is a truism in the DB pension world: upside is always easier to digest than downside. From a long-term risk perspective, an effective Plan design and funding strategy for a mature pension plan should be biased toward gains. In other words, the long-term cost of the essential or “defined” benefits provided under the Plan should be covered – with a high degree of certainty – based on (1) consistent and predictable contribution rates and (2) some conservative assumptions about future events.
To the extent that outcomes are better than expected, the resulting gains can be used, on a disciplined basis, to help absorb funding blips, enhance benefits on a temporary basis, and/or manage equity across generations. It’s all about planning prudently, but taking full advantage of the positive outcomes if and when they arise. That’s just good governance and effective Plan design.
With a heightened focus on conservatism, the Board is working with internal and external experts
to determine the potential long-term impact of possible plan design decisions over time. Using sophisticated software applications, the Board is modeling a wide range of permutations and combinations in real-time – and to make highly informed decisions. There are three real-time modeling sessions, as outlined in the schedule below:
In keeping with the timelines established for the OMERS SC Plan Change Process, the Board will vote on any proposed changes at its June meeting. You will be kept fully apprised of developments through future bulletins and other communications.