The Ontario arm of the Canadian Union of Public Employees is seeking a third-party review of the Ontario Municipal Employees Retirement System’s investment strategies, returns and internal performance after the pension fund reported billions of dollars in losses for 2020.

The report looked into how the OMERS — which counts 125,000 Ontario CUPE members among its membership — performed compared to other large public sector pension funds in 2020, as well as how it performed compared to its own benchmark, calling the underperformance more than just a new or short-term problem.

“The review should be conducted by the plan sponsors and stakeholders themselves — the risk-bearing parties to OMERS — and should be fully independent of OMERS staff, who have a clear conflict of interest in conducting a review of their own performance.”

Read: OMERS’ portfolio lost 2.7 per cent, net of expenses, in 2020

The report found the OMERS’ longer-term performance has significantly lagged behind other large pension funds and plans, in periods before and after the 2020 results were in. It also noted the OMERS has fallen behind even some of its own internal longer-term return benchmarks and didn’t disclose these failures in annual reports.

“This blatant issue of lack of transparency, which does not exist in other pension plans, makes it very difficult for sponsors like CUPE Ontario to understand why OMERS continues to underperform,” said Fred Hahn, the union’s president, in a press release.

In its 2020 annual report, the OMERS said its portfolio lost 2.7 per cent, net of expenses, last year as the coronavirus pandemic hammered its investments. It said widespread lockdowns in investments that included retail properties and the transportation and entertainment sectors explained more than half of the shortfall to its benchmark for the year.

As well, it noted its portfolio holds significant allocations to dividend-paying financial services and energy businesses, which didn’t fully recover during the market rally at the end of last year. The OMERS said it was also hurt by a rebound in the Canadian dollar after it fell sharply at the start of the pandemic.

Read: OMERS posts 11.9% return for 2019 led by public equities

In 2019, the OMERS posted an 11.9 per cent return. That year, the net return added $11.5 billion in value to the pension fund, pushing its funded status on a smoothed basis to 97 per cent.

However, in a chart comparing the 10-year annualized returns of eight of Canada’s largest pension funds in the decade leading up to the pandemic, the CUPE Ontario report found the OMERS was the lowest performing fund.

The pension plan maintained the same funded status as at Dec. 31, 2020, according to its 2020 report. This is significantly lower than some of Canada’s other large pension funds, said the CUPE report — at Dec. 31, 2020, the Ontario Teachers’ Pension Plan was 103 per cent funded, while the Public Sector Pension Investment Board was 111 per cent funded and the Healthcare of Ontario Pension Plan was 119 per cent funded.

Read: OMERS appoints Blake Hutcheson new CEO

In a statement, George Cooke, chair of the board of directors at the OMERS Administration Corp., said a third-party independent review isn’t warranted. “OMERS investment program is governed by an independent expert board, whose members have been nominated by our sponsors. The board continually and thoroughly reviews investment performance, independent of management, utilizing external experts where appropriate.

“Following the 2020 results specifically, we undertook a thoughtful look at our investment strategy and past decisions with an open mind. We are confident in our strong new leadership team and have concluded that our current investment strategy is appropriate.”