Dear OMERS Sponsors Corporation Chairs,
Now that I have the details of the proposed changes to my OMERS pension plan that will significantly impact my retirement, I am writing to strongly urge you, and all the representatives on the Sponsors Board, not to proceed with the implementation of the following changes:
- Replacing guaranteed indexing with conditional indexing;
- Changes to the way the accrual rate is calculated; and
- Changes to early retirement provisions.
These changes have the potential to dramatically decrease the amount and security of my pension once I retire.
After yet another high performing year, OMERS is well ahead of schedule to be fully funded by 2025, keeping our plan in a strong position to maintain all core benefits.
Implementing conditional indexing will allow you to remove indexing for years after the date of implementation until the pension plan meets specific conditions – some of which will be decided at a later date, behind closed doors and based on a financial management strategy that has not even been created yet.
We understand that some of the conditions being proposed include that indexing would continue only when OMERS is above 105% fully funded AND that the implementation of indexing won’t cause the plan to go below 105% fully funded. In other words, the plan would likely have to be 108-109% funded for retirees to receive their indexing.
This means that after the changes come into effect, it will be impossible for members to know when they will receive indexing, when they won’t or if they will at all, which is a huge loss of pension security. My costs for goods and services will go up every year, but I won’t know if my pension will keep pace.
The proposed changes to how the accrual rate is calculated would also mean a substantial loss in benefits for many plan members.
Right now, calculating our pension is done by multiplying years of service by an accrual rate of 1.325% for salaries up to the current Year’s Maximum Pensionable Earnings (YMPE) of $55,300 and by two percent on wages above that amount. The proposed changes would raise this salary threshold by 14% before increasing the accrual calculation to 2%. This will mean that my pension earnings will grow at a significantly slower rate. The result will be a lower pension for anyone currently earning above the YMPE. A member earning at the proposed threshold would see a six percent reduction in their pension from this change alone.
Changes to early retirement mean that even if a person has worked for more than 30 years, or has attained their “90 factor”, they cannot qualify for unreduced early retirement until they reach 60. This is punitive for those who have dedicated their working lives to their job and have paid into their pension on every pay cheque for 30 years.
Most OMERS pension members make modest salaries, but we defer a portion of our wages to the plan because we know a decent and secure defined benefit pension is critical for our retirement. We also know that our modest salaries turn into modest pensions. Maintaining these secure benefits are critical to us keeping up with the constant increases in the cost-of-living once we retire.
I know the current proposal comes out of a Comprehensive Plan Review based on worst possible case scenarios of the future. Any attempt to reduce OMERS’ current benefits puts my own retirement planning in jeopardy. That is not a possibility – that is a fact.
I am asking all members of the OMERS Sponsors Board to do the right thing and vote against these proposed plan changes and I ask that you ensure this correspondence is shared with your fellow board members.