Dear CUPE members in OMERS,
This week will be the first time that OMERS makes public its mid-year investment results.
CUPE Ontario wants OMERS’ returns to be strong. Good investment returns are in the best interest of workers and employers alike. Solid returns are critical to delivering on the modest OMERS pension promise, without putting more pressure on contribution rates or members’ hard-earned benefits.
A few things to consider as we all review these short-term results.
First, why is OMERS, which traditionally only reports its returns on an annual basis, releasing its mid-year investment returns now?
We don’t think it is a coincidence that OMERS has suddenly decided to report its results more frequently, just months after having to announce its embarrassing investment failure of -2.7% in 2020 (a year in which other defined benefit pension plans and funds had very strong returns). It is hard not to see this as an attempt for OMERS to “turn the page” and to distract from the growing support for CUPE’s call for an independent review of OMERS’ poor investment record.
A poor investment record that a recent report by CUPE shows OMERS underperforming other comparable, defined benefit pension plans and funds – not only in 2020, but over the last 10 years.
What do these mid-year, short-term investment results really mean?
OMERS always claims to believe pension investment returns are best measured over the long-term and cannot be fully measured over very short periods. CUPE Ontario agrees, which is why our report focused on OMERS dramatic underperformance over a 10-year period. During that period, OMERS did indeed have single years with fairly strong investment returns where they were not at the back of the pack of peer plans. However, over the longer-term, those more positive years were too few and far between, and over the longer-term, the plan’s underperformance is undeniable.
We should also remember to read the OMERS material tomorrow with a critical eye. In the news release about its poor 2020 investment returns, OMERS stated that “Over the ten-year period leading up to 2020, OMERS investment portfolio performed well by any measure…” CUPE’s report showed that actually, during this exact period, OMERS returns were at the very bottom of the eight large pension plans and funds in Canada.
Clearly not a portfolio that had “performed well by any measure.”
OMERS should not be engaging in such spin about its investment record. OMERS staff and Administration Corporation Board have a duty to act in the best interests of plan members, and this includes being honest and open with plan members about their investment record.
So, what should we expect the returns to be?
CUPE Ontario sincerely hopes that OMERS investment returns improve going forward. We will watch the announcement of mid-year results closely, as we always watch announcements about OMERS returns. We hope that OMERS returns will reflect the ongoing strength in investment markets in 2021. We know that other pension funds and investors have reported strong returns for 2021 so far, and OMERS should be no different.
No matter what the mid-year results show, CUPE Ontario will continue to stand by its position that the serious longer-term underperformance of OMERS merits an expert, independent review, conducted by Sponsors and other representatives of plan members. We will continue to work with Sponsors, both employee and employer, as well as other unions representing workers, to ensure that plan member interests are properly defended at OMERS for the long-term.
