OMERS Pension Plans
The OMERS Pension Plans comprise the OMERS Primary Pension Plan (the Primary Plan or the Plan), the Retirement Compensation Arrangement (RCA) for the OMERS Primary Pension Plan, and the OMERS Supplemental Pension Plan for Police, Firefighters and Paramedics (Supplemental Plan).
OMERS Primary Pension Plan
There are two components to the OMERS Primary Pension Plan: defined benefits and Additional Voluntary Contributions (AVCs). The defined benefits paid under the Primary Plan, when combined with current 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, to a maximum of 35 years.
The Primary Plan also provides eligible members with:
a bridge benefit, which ceases at age 65, when CPP benefits are expected to commence;
early retirement options;
disability protection in the event a contributing member becomes disabled and is unable to work;
survivor benefits for a spouse and dependent children; and
portability options on termination.
Benefits payable under the Primary Plan are limited by the maximum pension allowed under the Income Tax Act (ITA). The Primary Plan's financial statements are set out in the Notes to the Consolidated Financial Statements.
Funding – 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. The AC determines the regulatory minimum and maximum funding requirements in accordance with the PBA and the ITA. The SC sets actual contribution rates and benefits.
Pensions – The Primary Plan is designed to provide lifetime defined benefit pensions. 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.
Normal Retirement Age – 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.
Death Benefits – The benefits are payable upon the death of a member to a surviving spouse, eligible dependent children, a designated beneficiary, or the member’s estate. Depending upon eligibility requirements, the benefits may be paid in the form of a survivor pension, lump sum payment or both.
5. Escalation of Pensions – Inflation protection increases pensions each year, based on the increase in the Canadian Consumer Price Index (CPI), as follows:
Benefits earned on or before December 31, 2022 receive full inflation protection, up to a maximum increase of 6%. Any excess is carried forward so it can be used in later years when the CPI increase is less than 6%.
Benefits earned on or after January 1, 2023 are subject to shared risk indexing, meaning that the level of inflation protection will depend on the SC’s annual assessment of the financial health of the OMERS Plan.
6. Disability Pensions – 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.
The AVC component of the Primary Plan permits members to make additional voluntary contributions on which the member earns the net investment return of the Primary Plan.
Retirement Compensation Arrangement (RCA) for the OMERS Primary Pension Plan
The RCA is an arrangement that provides pension benefits for Primary Plan members with earnings exceeding the amount that generates the maximum pension allowed by the ITA with respect to service after 1991. It is a separate trust arrangement and is not governed by the PBA and is not 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 modified pay-as-you-go basis by equal contributions from participating employers and active members and by the investment earnings of the RCA fund.
Current and future contributions are determined annually to ensure that the existing RCA fund and future investment earnings are expected to be sufficient to pay projected benefits and expenses over the 20-year period following each actuarial valuation date.
OMERS Supplemental Pension Plan for Police, Firefighters and Paramedics
The 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 FSRA and with the CRA under Registration #1175892.
Participation in the Supplemental Plan is effective only upon agreement between employee groups and their employer.