Members of the Ontario Municipal Employees Retirement System (OMERS) claim the Ontario government is “raiding” their pension plan and giving the money to municipalities to compensate for government underfunding.
OMERS is one of the largest pension plans in Canada, with $36 billion in assets. It has around 300,000 members, composed of active and retired local government employees.
The pension fund has a surplus of somewhere between $4 billion and $6 billion. Under federal tax law, pension funds are required to either increase benefits or call a contribution holiday when surpluses get too big. Given the size of the OMERS pension surplus, neither employers nor employees have to make contributions until Jan. 2003.
In addition, $1.4 billion was used to increase pension benefits. However, the government decided that an equal amount – another $1.4 billion – should go to employers. The rationale was that, because the employers and employees had contributed equally to the fund, they should share any surplus or liability on an equal basis.
Municipalities can use this windfall to extend their contribution holiday for another three years, even though employees will have to contribute after 2002. The province will pass legislation this fall authorizing the employer-only exemption from contributions.
OMERS members say the government is taking money that belongs to them. It wants the surplus to be used to further increase pension benefits.