An update on Shared Risk Indexing

Two years ago, OMERS announced Shared Risk Indexing (SRI) as a tool to manage the health of the Plan in the future. SRI provides OMERS with the option to adjust the level of inflation protection on benefits earned after December 31, 2022. While SRI is a tool that may be used by OMERS to address funding issues in the future, a decision to grant less than 100% inflation protection (for benefits earned after December 31, 2022) would require a motion supported by two-thirds of the OMERS Sponsors Corporation Board.

It is important to note that even if less than 100% inflation protection (for benefits earned after December 31, 2022) is provided at some point in the future, your pensions will never be reduced. Only the amount of indexation provided for benefits earned after December 31, 2022 would change. Benefits earned for service up to the end of 2022 will continue to receive full inflation protection.

Many of the other Ontario pension plans have a similar form of SRI, typically called “conditional indexing,” that permits the annual inflation increase to be determined on an annual basis, already in their plans.

If you tuned in to OMERS Annual Meeting last month, you heard about our strong investment returns for 2021. We were proud to share these results and other successes, such as progress to date towards our net-zero greenhouse gas emissions target. We also discussed the challenges we face, including growing global economic and geopolitical uncertainty along with increasing Plan maturity (a decrease in the ratio of contributing active members to retirees collecting a pension). It has never been more important to strengthen the Plan against external forces and prepare for the Plan’s maturity. SRI helps us prepare for Plan maturity because it allows risks to be shared across a broader group of members rather than all the risks being borne entirely on the shoulders of our active members.There is no impact on retired members’ pensions.

Our goal is to provide you with information about SRI so you can understand what it means to you. We will provide regular updates about SRI in the coming months.