The City of Toronto has completed the transfer of its Metropolitan Toronto Pension Plan to the Ontario Municipal Employees Retirement System.
The Metro plan was the last of the City’s four defined benefit plans to move to OMERS, following the Corporation of the City of York Employee Pension Plan, the Metropolitan Toronto Police Benefit Fund and the Toronto Civic Employees’ Pension Plan, which all moved over in 2019. All four plans have been closed to new members since 1968 and have no active members.
At the time of the transfer, the Metro plan had $430.9 million assets under management, with 119 per cent funding on a solvency basis.
“We are very, very happy that we have been able to move the four plans to OMERS,” says Hatem Belhi, director of pensions, payroll and employee benefits at the City of Toronto. “I think that’s a really great thing for the city and a great thing for the pensioners. Everything went so well with no negative impact to pensioners. They started receiving their payments from OMERS on time; there was no change. The whole transition went very well.”
The City of Toronto had been in discussion with the OMERS for many years about the possibility of consolidating its closed plans, said Celine Chiovitti, the OMERS’ vice-president of pension and corporate services, in an email to Benefits Canada. “But it wasn’t until changes to Ontario pension regulations [allowing single-employer pension plans to merge with multi-employer pension plans] enacted in 2015 provided a clear path to enable this that the transaction moved ahead.”
Belhi says the transfers made sense for the City because it was looking to move away from pension administration and the plans’ financial liabilities. “As the owner of those plans, you always maintain financial liability for the plans. By moving that to OMERS we get out of that future liability . . . It really allows us to focus on other things other than pension administration — it’s not a core business for the City.”
Metro plan members will now benefit from the OMERS’ automatic indexation. “In the past, that decision had to be made every year based on the assets and based on the funding levels of the plan. Now, going forward with OMERS, they will get it automatically based on the cost of living that OMERS determines, which is very positive for them.”
Members will also receive a portion of the plan’s surplus, as part of a 2018 distribution agreement negotiated between the City and pensioners, represented by Koskie Minsky LLP. The surplus will be shared on a 50-50 basis between plan members and the City. Expenses incurred by either party during the negotiations and implementation of the agreement will be deducted from their respective portions.
After the plan windup is complete, which Belhi estimates could be in six to nine months, pensioners will receive their portion of the surplus in a lump-sum payment.
The City still retains administration over one plan, the Toronto Fire Department Superannuation and Benefit Fund Plan. “It was clear from the committee and the pensioners that there was no desire to move it at this point, so it’s remaining with the City.” says Belhi.
The Financial Services Regulatory Authority of Ontario signed off on the Metropolitan Toronto Pension Plan’s merger on Jan. 8, 2020.