Ontario municipalities and Canada’s largest civic unions are up in arms over Bill 206, which proposes to restructure the Ontario Municipal Employees Retirement System (OMERS). The bill aims to end the government’s role as plan sponsor for OMERS and create a separate Sponsors Board and Administration Board to handle the plan from now on.

One of the more vocal opponents on the bill has been the long-serving mayor of Mississauga, Ont., Hazel McCallion. Her beef is not so much with the new administrative structure but with supplemental plans for police, firefighters and paramedics that have been added into the legislation. “Unfortunately, as a result of the premier giving the firefighters some assurance that they were going to get a supplemental plan…that should not be a decision of the provincial government when they’re getting rid of something. It’s up to the participants to decide whether there should be a supplemental plan or not.” She wonders why only certain employees(firefighters, police and paramedics)have been “hand-picked” for a supplemental plan. McCallion estimates that Bill 206 and the supplemental plans attached to it will cost her city an extra $3 million per year. But, the OMERS plan is in a deficit situation to the tune of $963 million. So, trying to figure out the changes made by the provincial government and what the costs and administrative burdens will be is “like pinning jelly to a wall,” says the outspoken mayor.

But Ontario Premier Dalton McGuinty has said the supplemental plans were introduced to recognize that emergency workers have more strenuous jobs and deserve the right to negotiate alternative benefits.

Mayor of Toronto, David Miller, has similar views to McCallion. “Clearly this bill will result in additional benefit and administrative costs to the city with no gain to public service,” he says. “As the bill doesn’t provide any additional funding to employers and given the city’s fiscal situation, we will simply need to raise property taxes, cut important services or look to the province for relief.”

But there are different issues troubling the Ontario division of the Canadian Union of Public Employees(CUPE). Brian O’Keefe, secretary treasurer of CUPE in Toronto says, “We have no objections to supplemental plans or supplemental agreements, it’s just the way this thing is being structured is a huge problem(see “Bill 206 Primer,” this page).” O’Keefe says if the provincial government is getting out of the pension plan, he wants all stakeholders to have a hand in the decisionmaking process. “There has to be accountability to the stakeholders,” he says. “From a governance point of view, it’s a bit of a nightmare.”

That’s because CUPE is unhappy with the reporting, or lack of a reporting structure, between the two governing bodies. The Sponsors Corporation has little power and doesn’t need to meet very often, unlike the administration board, which meets on an ongoing basis, he notes.

There is, however, little that can be done at this point, both at the union level and at the municipal level. Says McCallion, “They should go back to square one and employers and employees should have a say and come up with a plan that is certainly better than this plan.”

But how does OMERS and the provincial government respond to all the negative criticism? “What happens up there really doesn’t change our mandate or what we are doing which is invest the money, generate the valuation and administer the plan,” says Paul Haggis, president of OMERS in Toronto. “And no matter what happens, that’s not going to change.”

Haggis won’t comment directly on Bill 206 but he does point out how it might streamline some aspects of the plan. “If there’s anything, it may be considered a cleaner delineation between the plan sponsor role and the administration, investments and valuation generation that happens on the corporate side.”

Debbie Oakley, senior vice-president of communication with OMERS adds that what the bill is doing is bringing collective bargaining to the foreground. “We respect the right to push their(sponsors)positions because it is a bargaining process in advance of the real bargaining that will be going on,” she said. OMERS believes that autonomy is a good thing, something it says it has been supporting for 10 years. But it feels the bill is something for the government to work out and it’s up to the sponsors to work out issues with the government.

“We didn’t worry about all the other political issues that have gone back between various sponsors and the government,” adds Oakley. As a fiduciary, she points out, OMERS has received the security and stability with an updated text that governs the plan as well as clear roles for the two administrating bodies.

And yet there are political forces at work. Brad Duguid, parliamentary assistant to the Minister of Municipal Affairs and Housing and MPP for Scarborough Centre, said it’s not possible to please all parties. “After 10 years of discussion on this, we are finally ready to have the plan devolve from the province to the stakeholders.” He adds that dissenters have assumed all take-up of all the benefits immediately. “We have ensured that there is a gradual consideration of these benefits—you can only negotiate one benefit per every 36-month period. They may not be getting everything they want but we’ve tried to strike a reasonable balance.”

Bill 206 Primer

June 1, 2005 – The government of Ontario introduces Bill 206.
Nov. 2005 – Public hearings on Bill 206 take place before the Standing Committee on General Government.
Jan. 25-26, 2006 – Two days of hearings take place with a presentation from OMERS.
Feb. 2006 – Expected passing of bill including amendments from OMERS.

Bill 206 would replace the government of Ontario as the plan sponsor of the Ontario Municipal Employee Retirement System (OMERS)with two governing bodies: The Sponsors Corporation and the Administration Corporation.
• The Sponsors Corporation has the authority to determine plan design, set contribution rates and establish a fee to cover its expenses.
• The Administration Corporation has the authority to act as administrator and trustee of the OMERS pension plans as well as advise and assist the Sponsors Corporation on reasonable requests related to governing the pension plans.

The more controversial aspect of the Bill requires the establishment of supplemental pension plans for members employed in the police/paramedic/fire sector(supplemental plans provide optional additional benefits to plan members beyond the basic plan, funded by additional contributions from those employees and their employers).

Supplemental plans would be negotiated between individual employers and eligible employees. According to plan documents, this system is meant to allow for local bargaining of benefits between the employer and the applicable union. If additional benefits were offered, contributions for those participating employees and employers would be increased.


The Ontario Municipal Employees Retirement System(OMERS) is a multi-employer pension plan set up and administered under the Ontario Municipal Employees Retirement System Act. It provides pensions for various groups including, but not limited to, employees of Ontario municipalities, local boards, public utilities and school boards(non-teaching staff).

The plan is a contributory defined benefit pension plan financed by equal contributions from participating employers and employees and by the investment earnings of the plan. Reporting to a 13-member board, the president and chief executive officer is responsible for the overall management of OMERS.

Net Assets: $36.8 billion
Pension Obligation: $35.4 billion
Deficit: $963 million
Members: 258,000
Retirees: 97,000

Source: OMERS Annual Report 2004


Joel Kranc