The Ontario Municipal Employees Retirement System’s defined benefit (DB) plan serves more than 380,000 working and retired members in Ontario’s municipal sector. Under new provincial legislation in 2006, OMERS was given the responsibility to build a new DB plan. The new plan was designed to provide optional “top-up” benefits to OMERS members in the police, firefighter and paramedic sectors. Benefits Canada spoke with Jennifer Brown, the chief pension officer at OMERS to find out more about the new supplemental plan.

What did it take to meet the government’s requirement that OMERS build this new DB plan, and in particular a “supplemental” model that tops up benefits already provided under a primary plan?

Some key factors included: a clear understanding of our role; top-notch project management; a complete and detailed project plan; and finally, a sound approach to how the new “top-up” plan will integrate with the solid foundation provided by our primary plan.

What was OMERS’s role?

It was important to clarify our role right up front. OMERS is the pension administrator. The reality is that these new optional pension benefits may be offered in future as the result of collective bargaining. Our job was to build the pension plan, play a role as subject experts to educate members and employers, and ultimately to focus on being ready to administer the plan.

What management structure was needed to accomplish your goals?

OMERS immediately established a professional project management structure. We segmented the tasks ahead, assigned staff and segment leaders, and created a project advisory team. Our project manager Cathy Barss was a key link between the delivery teams and project leadership. She was the one who watched and heard the clock ticking as we counted down towards launch, and she kept all aspects of the project moving while managing issues and challenges throughout.

What did it take to build a new DB plan?

Some of the key items on our project plan checklist included:

  • writing the plan text that provides the legal framework, and registering the new DB plan
  • establishing a funding framework, contribution rates, and an investment policy
  • updating our systems and business processes to administer the new benefits
  • writing or modifying over 700,000 lines of system code, and fully testing our system functionality
  • delivering an annual reporting process for employers
  • creating a service delivery model, and related internal training and documentation
  • adding a new “e-tool” to the employers’ on-line suite of tools to allow them to electronically submit benefit costings
  • creating print and online information for members, including a welcome package for new members
  • communicating the new plan to members, associations and employers
  • building the new plan, while still providing top-quality service in our primary plan

How did you integrate this with the primary plan?

The supplemental plan is a stand-alone, separately registered pension plan, but it must dovetail with the benefits that exist in our primary plan. So part of the challenge was to ensure a good integration.

For example, we needed to add more “smart” language to our benefit options documents, to ensure that a member who has both primary and supplemental benefits in future can obtain the right information in one document.

The issue of past service and future service was also critical. Members who earn service going forward will also have an option to “top-up” their benefit by purchasing their past service. We needed to develop flexibility and options around the past-service purchase option—for example, by offering monthly payments via direct debit.

What are the next steps?

Ultimately, these are benefits that will be bargained at the local level between members and employers. It could be some time before the supplemental plan actually has its first members.

At OMERS, we’re proud of our accomplishment in meeting this government requirement on time by July 1, 2008. We are now prepared to administer the supplemental plan, and provide costings as required.

The new plan – at a glance

• OMERS supplemental plan acts as top-up pension to OMERS primary plan
• May be offered by an OMERS employer to eligible members
• Approximately 40,000 OMERS members in police, firefighter and paramedic sectors, working at 200-plus OMERS employers in the Ontario municipal sector, are eligible
• Top-up benefits include: 2.33% accrual rate, “best-three” and “best-four” earnings, and enhanced early retirement factors (80/85). These compare to 2%, “best-five” earnings, and 85/90 early retirement factors in the primary plan
• The supplemental plan was launched July 1, 2008 as required by provincial legislation
• Employers, and employee groups, have ability to obtain costings and negotiate benefits starting July 1, 2008.

Copyright © 2020 Transcontinental Media G.P. Originally published on benefitscanada.com

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