OMERS Posts Investment Gains, Still Facing Deficit

February 28, 2005 ( - The Ontario Municipal Employees Retirement System (OMERS), one the largest public pension funds in Canada, posted 12.1% gains in 2004, but is still facing a mounting actuarial deficit.

Despite returns that outperformed its 9.9% benchmark, the public pension plan is facing a $983 million (Canadian) deficit in the basic plan for 2004. CBC news reported that this figure could climb to $2.5 billion by the end of 2005. The figures were calculated by an independent actuary, according to CBC.

OMERS reported investment profit of $3.7 billion in 2004, up from the previous year’s total of $3.5 billion. Growth was seen in every sector except Canadian stocks, with large gains being brought in from real estate, infrastructure and private equity. These three top-performing sectors currently make up 18% of the fund; however, OMERS plans to increase this to 40% in the future.

The deficit is due to the fact that investment returns are calculated over five years, CBC says, and the poor figures posted in 2001 and 2002 are now coming back to cut into the profits made in the past two years.

OMERS provides pensions for about 350,000 active and retired municipal employees, including firefighters and police officers, on behalf of 900 local government employers.