About the Plan
The OMERS Defined Benefit Pension Plan is designed to provide our members a reliable stream of income in retirement.
OMERS Primary Pension Plan
The Primary Pension Plan (referred to most often as the "Primary Plan" or "The Plan"), was created in 1962 by an act of the Ontario Legislature, and is a multi-employer, jointly sponsored defined benefit pension plan whose members are mainly employees of Ontario municipalities, local boards, public utilities and non-teaching school board staff. The Primary Plan is governed by the , the Pension Benefits Act (Ontario), (PBA), the Income Tax Act (Canada), (ITA), and other applicable legislation.
The defined benefits paid under the Primary Plan, when combined with Canada Pension Plan (CPP) benefits, are designed to approximate 2% of a member’s average annual earnings for the highest-paid 60 consecutive months, multiplied by their years of credited service.
The defined benefit component of the Primary Plan is funded by equal contributions from participating employers and members, and by the investment earnings of the Primary Plan assets. (AC) determines the regulatory minimum and maximum funding requirements in accordance with the PBA and the ITA. (SC) sets actual contribution rates and benefits based on its assessment of the long-term health of the Plan.
Attributes of the Plan
The Primary Plan is designed to provide lifetime defined benefit pensions, and its funding requirements are determined on a very long time horizon. These pensions are calculated as a percentage of the member’s annual earnings averaged over the highest 60 consecutive months, multiplied by years of credited service.
The normal retirement age (NRA) is 65 years for all Primary Plan members, except for police officers and firefighters, who generally have a normal retirement age of 60 years. Effective January 1, 2021, an OMERS employer can elect to provide NRA 60 benefits to all or a class of paramedics. For unionized employees, access to NRA 60 benefits is subject to negotiation between employers and unions.
Inflation protection adjusts OMERS retirement, disability and survivor pensions each year, based on the increase in the average of the Canadian Consumer Price Index (CPI) for the preceding 12-month period ending in October compared to the average CPI for the same period of the previous year, as follows:
Benefits earned on or before December 31, 2022 receive full inflation protection, up to a maximum annual increase of 6%. Any excess is carried forward to later years when CPI increases by less than 6%, provided the pension is still in pay.
Benefits earned on or after January 1, 2023 are subject to Shared Risk Indexing (SRI), meaning that the level of inflation protection will depend on SC’s annual assessment of the financial health of the OMERS Plan, and may be less than full inflation protection.
A disability pension is available at any age to an active member who becomes totally disabled, as defined by the Primary Plan. The pension is calculated using a member’s years of credited service and the average annual earnings during the member’s highest 60 consecutive months of earnings, consistent with a normal retirement pension. Generally, disability pensions continue until normal retirement, at which time it becomes an OMERS normal retirement pension.
The Primary Plan is a Registered Pension Plan as defined in the ITA and is not subject to income taxes for contributions received or investment income earned. The operations of certain entities holding private equity, infrastructure, private credit or real estate investments may be taxable.
The AVC component of the Primary Plan permits members to make additional voluntary contributions on which the member earns the annual net investment return of the OMERS Fund. AVCs are provided through the OMERS Primary Pension Plan but are separate from your defined benefit pension and not included in the calculation of your OMERS pension amount. Learn more about .
In addition to the Primary Plan, the OMERS Pension Plans also comprise the Retirement Compensation Arrangement (RCA) for the OMERS Primary Pension Plan, and the OMERS Supplemental Pension Plan for Police, Firefighters and Paramedics (Supplemental Plan).
Retirement Compensation Arrangement for the OMERS Primary Pension Plan
The Retirement Compensation Arrangement (RCA) provides pension benefits for Primary Plan members with earnings exceeding the amount that generates the by the ITA with respect to service after 1991. The RCA is a separate trust arrangement from the Primary Plan, and is not governed by the Pension Benefits Act (PBA) nor is it a Registered Pension Plan under the ITA. The RCA is governed by the OMERS Act, the ITA and other applicable legislation. It is funded on a partial pay-as-you-go basis by equal contributions from participating employers and active members and by the investment earnings of the RCA fund.
OMERS annually determines contributions to target sufficient funding. The target aims to ensure that the RCA fund, future contributions, and future investment earnings are sufficient to pay projected benefits and expenses over a 20-year period.
OMERS Supplemental Pension Plan for Police, Firefighters and Paramedics
The OMERS Supplemental Pension Plan for Police, Firefighters and Paramedics (Supplemental Plan) became effective on July 1, 2008, pursuant to the requirements of the OMERS Act. The benefit provisions and other terms of the Supplemental Plan are set out in the Supplemental Plan text. The Supplemental Plan is registered with Financial Services Regulatory Authority (FSRA) and with the Canada Revenue Agency (CRA) under Registration #1175892.
Participation in the Supplemental Plan is effective only upon agreement between certain employee groups and their employer.
Generating Economic Contribution and Social Value
Beyond the monthly cash payment retired OMERS members receive, research conducted for OMERS found that they report feeling healthier, having better financial security and experiencing a higher satisfaction with live, compared to people who do not have a pension plan. Using 2020 data as a base, the research also found that OMERS contributes approximately $12 billion to Ontario’s GDP on an annual basis, supporting one in every 64 jobs in Ontario, and that this Plan serves as a compelling reason for members to stay with their employer. For more information on this research, please see the .