From the Fair Pensions for All campaign.
There is a serious crisis with the pension plan for municipal employees in the province OMERS. The shortfall in the pension of $10 Billion will cause problems for Ontario cities who are starting to be financially stressed from the 2008 market crash.
Contributions to the OMERS Pension Plan have grown by 40% over the the last five years, reaching an all-time high, while the Plan faces a $10 billion deficit. Pension managers suggest the problem can be solved through investment return targets being met and as long as demographic assumptions do not change.
This makes it clear that if these are the only solutions to the problems, the fund is on its way to continued shortfalls and at some point will run out of money.
Last year the plan posted a 10% return yet the shortfall climbed by another $3 billion, to a total shortfall of $10 billion. The rate of return for the plan over 10 years has been 8.24%. How much better do the pensions fund managers think they can do in the current economic environment?
Recently the Institute of Actuaries made a preliminary report on changing demographics. They found that the life expectancy for public sector employees is greater than the general public and rising for the whole population. A woman in the general public will now live to 89.4 years and for a male it is 87.3.
For the past several years the shortfalls in this plan have been growing exponentially. Nothing has been done to fix the problem and every year adds billions of dollars in liabilities onto our cities.
Several smaller communities across the province are ringing the alarms bells. The Eastern Ontario Wardens Caucus and the Mayors of Northern Ontario consider themselves to be on the edge of a financial crisis. With serious infrastructure shortfalls, increasing debts and having to use reserves to meet annual budgets, they are unable to deal with the pension crisis.
It is time to take bold and courageous action on the OMERS plan. Tinkering around the edges will not fix the problem and only structural changes can save the plan now. BT