1. Ian Kinross, OMERS Manager, Client Services
2007 CRST Conference OMERS Plan Performance and Supplemental Plans Information
Philip Haggerty, OMERS Vice President, Sponsor and Stakeholder Relations
Ian Kinross, OMERS Manager, Client Services

2. Our session today Plan Performance Supplemental Plan Overview
Supplemental Plan Provisions
Formula and examples
Contribution rates and cost
Lifecycle of a Supplemental Plan
RCA
Timing and how to reach us

3. Our #1 Priority and Promise:
To pay our members’ pensions and to ensure they remain secure

4. OMERS Performance in 2006

5. OMERS 2006 Results - Highlights
Gross return of 16.4%against an actuarial return of 6.75%
Net investment income totaled $6.5 billion
Net assets increased from $41.1 to $47.6 billion
Added value of $3.8 billion above the actuarial return

6. Net Investment Asset Growth Market Value ($ Billions)60 50
48.2
41.6 40
36.6
36.2
35.5
33.9
32.7
31.9
29.5
30.1 30
25.7
20.9
21.6 20 10 94 95 96 97 98 99 00 01 02 03 04 05 06

7. OMERS Funded Position Short-term Outlook $Billions
past actual
future projection
this slide outlines our actuarial assets and liabilities
If you look at 2006 you may wonder why we are still showing a deficit in spite of the great returns I’ve just presented
this is due to a process called actuarial smoothing, which allows us to report losses or gains in any given year over a five-year process
it is a government-approved process, and allows a pension plan to maintain an even keel in the face of fluctuations in returns in any given year
you and I use smoothing everyday in our own personal finances
for instance if we buy a $25,000 car we may smooth our payments over 5 years so we don’t have to take the full hit in the first year
or if we are lucky enough to win a million dollars in the cash-for-life lottery, payment of the winnings are smoothed over several years so we don’t get the benefit all in the first year are
so by the same token it is the losses OMERS felt in 2000 and 2001 that are impacting our actuarial position in 2006, but I am pleased to report that we are coming to the end of the period during which we have to factor in those losses
so even though we still have an actuarial deficit in 2006 despite great returns the past couple of years, you can see from the slide that we are projecting that very soon those lines are going to cross and we will enter what I call the green zone, which is where we all want to be
then once we get there, how do we stay there
go to next slide
Actuarial Liabilities
Actuarial Assets

8. OMERS Asset Mix Strategy
What is it?
Gradual shift in weighting from public investments to private investments
Why are we doing it?
Returns from private investments are expected to be stronger and more stable over time

9. Long Term Investment Strategy Shifting Asset Mix to Alternative Assets
37.5%
62.5%

10. Asset Mix (as at December 31, 2006) $ billions
2003
Public Investments
$36.0
75.8%
$26.3
82.2%
Private Investments
Total
$47.6
100%
$32.1
$ % $ %

11. New and Improved Assets - 2006
Seven Iconic Canadian Fairmont Hotels
Major partner in purchase of Associated British Ports Ltd.
Follow-on investments in Bruce Power
OMERS invested $975 million for one third interest in Associated British Ports (ABP), the largest port operator in the United Kingdom, currently owns 21 ports in the U.K. and employs 3,000 staff.
The Fairmount hotels include The Banff Springs, Chateau Lake Louise, Chateau Whistler, Jasper Park Lodge, Fairmont Vancouver Airport, Fairmont Le Chateau Montebello and Fairmont Kenauk at Le Chateau Montebello.
Bruce Power
OMERS has committed to provide funding of approximately $1.65 Billion between 2007 and 2011 to the restart and refurbishment of three of the eight reactors at Bruce Power.
This will result in Bruce Power supplying approximately 25 per cent of Ontario’s electricity by 2011 up from the current 20 per cent.

12. Plan Costs $ Millions 2004 2005 2006 Investment Management Expense 147
160
169
Pension Administrative Expense 43 36 38
Total Operating Cost
190
196
207
$ Dollars
2004
2005
2006
Cost per member
138
111
114

13. Industry Leader in Service
We now serve over 372,000 members, 2.2% more than 2005, and over 900 employers
Pension payments of $1.49 billion were made to over 101,000 retirees and the number is growing…
Our web site had 607,600 visits in 2006 , an increase of 26%
Satisfaction rating of 91% in pension services

14. Responding to Service Needs
Pension Division met or exceeded all of its performance measures
Pensions paid promptly on the first banking day of the month
Initial claims processed in less than two business days versus target of three days
More than 90% of inquiries resolved at the first call
E-access program continues to grow with 87% of employers (covering 99% of active members) registered in the program

15. Our Priorities for 2007 and Beyond
Generate strong investment returns
Continue the shift to private investments
Maintain first-in-class pension services
Finalize supplemental plan design
Build a strong foundation with the SC

16. Supplemental Plan Information Session CRST Conference – October 2007

17. Supplemental Plan Overview
What is the Supplemental Plan?
Stand-alone RPP which is separate from Primary Plan
Funded by those who participate in Supplemental Plan
Enhances or “top ups” the benefits in Primary Plan
Supplemental
top up
Supplemental pension plans are separate, stand-alone pension plans that would offer benefits not available in the primary pension plan, such as early retirement and a pension based on the highest three years of earnings
Participation in supplemental plans can be negotiated between individual employers and eligible employees. This would allow for local bargaining of benefits between the employer and the applicable union. If additional benefits are offered, contributions for those participating employees and employers would be increased to pay for those benefits
Primary

18. Supplemental Plan Overview
Why/how were Supplemental Plans established?
Police and fire successfully lobbied the government for enhancements to their pension
Government introduced Supplemental Plans as part of OMERS Act, 2006
OMERS Administration Corporation must develop Supplemental Plan to offer optional benefits for police, firefighters and paramedics by July 1, 2008
Sponsors Corporation responsible for future amendments and to establish other Supplemental Plans
Under Bill 206 a supplemental plan must be established for “public safety” occupations - police officers, fire fighters and paramedics (as defined) within 24 months of the coming into force of the new Act. Once the supplemental plan is in place, employers and employees may bargain for benefits under the plan. Only one benefit can be bargained initially, and an additional benefit only at three-year intervals after that
The legislation also permits the Sponsors Corporation to establish supplemental plans for other OMERS members
Supplemental Plans will be entirely funded by their participating members and employers. The Act will not allow cross-subsidization of one pension plan by another. In addition, the administration costs associated with supplemental plans will be paid entirely by participants in those plans

19. Supplemental Plan Overview
Who is covered by the Supplemental Plan?
Supplemental Plan available to:
Members of the police force – most police officers are NRA 60 and police civilians are NRA 65
Firefighters – most firefighters are NRA 60
Paramedics – NRA 65
OMERS has 200-plus employers with police, firefighter and paramedic members
Represents 40,000 active police, firefighters and paramedics in the Primary Plan – 17% of OMERS active membership

20. Supplemental Plan Overview
Who is covered by the Supplemental Plan? (cont.)
Supplemental Plan is not automatically provided – membership contingent on local bargaining
Employer may provide benefits for a class or classes of employees – employer specifies coverage date but can’t be before July 1, 2008
Examples of employee classes are: police officers (NRA 60), police civilians (NRA 65), senior officers (NRA 60)
Each class can only be provided with 1 provision every 36 months
If employer provides coverage - benefits would apply to all members in that class – individual member cannot opt out

21. Supplemental Plan Overview
Who is covered by the Supplemental Plan? (cont.)
Police officers and Firefighters
(NRA 60)
Paramedics
(NRA 65)
Police Civilians
2.33 Accrual rate  
80 factor
85 Factor
“Best four” earnings
“Best three” earnings

22. Supplemental Plan Provisions
Primary Plan
Supplemental Plan
Accrual Rate
2.0%
2.33%
Pensionable Earnings
“Best-five” (Avg. of best-five consecutive years of contributory earnings)
“Best-three”
“Best-four” (Avg. of best-three or best- four consecutive years of contributory earnings)
Early retirement factors age/service
For NRA 60
For NRA 65 (police civilians and paramedics)
85 Factor
90 Factor
(Considered one benefit for Note 2 below purposes)
80 Factor
Notes:
2.33% accrual is not available to police civilians
Only one benefit can be provided to a class at a time - additional benefits not more often than every 36 months
Supplemental Plan pays top-up only
Early retirement is within 10 years of Normal Retirement Age (NRA)

23. 2.33% accrual rate – example calculation
3. Formula and examples
2.33% accrual rate – example calculation
Jim retires at age 60 (his NRA) – class has 2.33% coverage
Credited Service = 25 years, including 2 years of 2.33% Supplemental Plan service
“Best five” earnings = $70,000
Supplemental Plan: Jim’s top-up pension is $462.00
Here’s how it is calculated:
2.33% X 2 years X $70,000 = $3,262.00
Less
2% X 2 years X $70,000 = $2,800.00
Annual top-up = $462.00

24. 2.33% accrual rate – example calculation
3. Formula and examples
2.33% accrual rate – example calculation
What if Jim purchases all of his Supplemental past service (e.g. 23 years)?
Supplemental Plan: Jim’s top-up pension is $5,775.00
Here’s how it is calculated:
2.33% X 25 years X $70,000 = $40,775.00
Less
2% X 25 years X $70,000 = $35,000.00
Annual top-up = $5,775.00

25. 2.33% accrual rate – example calculation
3. Formula and examples
2.33% accrual rate – example calculation
Now let’s look at Jim’s total pension:
Primary Plan: 2% x 25 years x $70,000 $35,000.00
Supplemental Plan: top-up pension based on 25 yrs of service + $5,775.00
Jim’s total annual pension to age 65 $40,775.00
Less the bridge benefit at age 65 $7,833.00
Jim’s total pension annual from age 65 $32,942.00
Note: Estimated Bridge benefit = $7,833 (.675% x AYMPE $46,420 x 25 yrs)

26. “Best three” earnings - formula
3. Formula and examples
“Best three” earnings - formula
Example of “best five” versus “best three” earnings
Jim’s salary increases each year on January 1
,000
,000 , , ,
$70,000 $72,000
His
“best three”
earnings
= $72,000
(2009 – 2011)
His “best five”
earnings = $70,000 (2007 – 2011)

27. “Best three” earnings - example calculation
3. Formula and examples
“Best three” earnings - example calculation
Jim retires at age 60 (his NRA). Class has “best 3” coverage.
Credited Service = 25 years, including 2 years of “best three” supplemental service
“best five” = $70,000; “best three” = $72,000
Supplemental Plan: Jim’s top-up pension is $80.00
Here’s how it is calculated:
2% X 2 years X $72,000 = $2,880.00
Less
2% X 2 years X $70,000 = $2,800.00
Annual top-up = $80.00

28. “Best three” earnings - example calculation
3. Formula and examples
“Best three” earnings - example calculation
What if Jim purchases all of his Supplemental past service (e.g. 23 years)?
Supplemental Plan: Jim’s top-up pension is $1,000.00
Here’s how it is calculated:
2% X 25 years X $72,000 = $36,000.00
Less
2% X 25 years X $70,000 = $35,000.00
Annual top-up = $1,000.00

29. 3. Formula and examples
“Best four” earnings
Let’s compare the best three, best four and best five earnings for Jim
,000 , , , ,
“best four”
= $71,000
“best three”
= $72,000
“best five” = $70,000

30. 80 Factor Early Retirement example
3. Formula and examples
80 Factor Early Retirement example
Fred is an NRA 60 member, age 57 and has 25 years of Primary Plan credited service which includes 2 years of Supplemental Plan credited service
Fred’s age + service: age years of service = 82 points which is 3 points away from the Primary Plan’s Factor 85. A 15% reduction (5% per point) will be applied to Fred’s Primary Plan pension i.e. he receives 85% of his pension.
Fred’s 82 points means that he has met the “80 Factor” and therefore there is no reduction to the pension associated with his 2 years of Supplemental Plan service.

31. 80 Factor Early Retirement example
3. Formula and examples
80 Factor Early Retirement example
Supplemental Plan top-up calculation
(2% x 2 years x $70,000) no reduction = $2,800.00
(2% x 2 years x $70,000) x 85% = $2,380.00
Supplemental Plan annual top-up pension = $420.00
Total Pension to age 65
(2% x 25 years x $70,000) x 85% = $29,750.00
Plus Supplemental Plan top-up pension = $
Total Pension to age 65 including top-up = *$30,170.00
* Pension will be reduced by bridge benefit at age 65

32. 3. Formula and examples
80 Factor and 85 Factor
There may be no top-up “80/85 Factor” pension – for example:
member is already entitled to unreduced early retirement under Primary Plan – e.g. member has 30 years of service which results in an unreduced pension under the Primary Plan
the member retires on normal retirement date
Where member has 30 years of service and an unreduced pension under the Primary Plan, contributions to Supplemental Plan will cease (no longer required for 80 / 85 Factor benefit)

33. 80 Factor – example calculation
3. Formula and examples
80 Factor – example calculation
What if Jim purchases all of his Supplemental past service (e.g. 23 years)?
Supplemental Plan: Jim’s top-up pension is $5,250.00
Primary Plan pension: $29,750
Total pension: $35,000
(2% x 25 years x $70,000 = $35,000)
Total combined pension from both Primary and Supplemental plans is identical to how Factor 80 would work in Primary Plan only

34. Minimum Value Guarantee
3. Formula and examples
Minimum Value Guarantee
Ensures total benefits paid from the Supplemental Plan will be at least equal to the member’s Supplemental Plan contributions plus interest, minus any contributions previously refunded
If the member’s benefit is less than their Supplemental Plan contributions plus interest, OMERS will refund contributions plus interest.

35. 4. Contribution rates and cost
Who pays the costs?
Benefits funded by both employers and members participating in Supplemental Plan
Future service - from the agreement effective date forward
Contribution rate x contributory earnings
Employer pays matching share
If employer provides coverage for the class individual members within class cannot opt out
Past Service – prior to the agreement effective date
Member pays present value cost – individual cost taking member’s age, service and earnings into consideration
Member’s choice whether or not to purchase

36. 4. Contribution rates and cost
Who pays the costs?
Primary Plan cannot subsidize the Supplemental Plan
Actuaries expect increased incidence of early retirement for the % coverage – this impacts the Primary Plan
Additional contribution must be made to the Primary Plan to cover expected additional liability associated with increased early retirements (rebound costs)
Only applies where employer provides the 2.33% coverage – impacts future service contributions only

37. Future Service contribution rates
4. Contribution rates and cost
Future Service contribution rates
Member Supplemental Plan Future Service Contribution rates. Employer matches. These rates are in addition to Primary Plan.
Supp. Plan Benefit Provision
NRA 60
NRA 65
Supp. Plan Costs
Primary Plan Rebound Costs*
Total Costs
2.33% Accrual
2.75%
0.2%
2.95%
2.35%
0.3%
2.65%
Factor 80/85
.95%
None
.75%
Negligible
Best three
1.1%
.9%
Best four
.85%
Reminder that Police civilians are not entitled to the 2.33% benefit
* Rebound only required if member has the 2.33% Supplemental Plan benefit

38. Contributions for 1 year: 2.33% Benefit
4. Contribution rates and cost
Contributions for 1 year: 2.33% Benefit
Example of annual future service contributions – NRA 60
Primary Plan has higher rate above YMPE (e.g., 2010 estimate - $47,800) – Supplemental Plan same rate below/above YMPE
Member contributions = $6,151 + $140 + $1,925 = $8,216 (Total Supplemental Plan related contributions = $2,065)
Matched by employer
Primary Plan
Primary Plan Rebound
Supplemental Plan
Earnings
$70,000
Contribution Rate
7.9%/10.7%
0.2%
2.75%
Member Contr.
$6,151
$140
$1,925

39. Contributions for 1 year by provision:
4. Contribution rates and cost
Contributions for 1 year by provision:
2.33 Accrual = $2,065
“Best Three” = $770
“Best Four” = $595
Factor 80 / 85 = $665
Matched by employer
Contribution rates may change in the future

40. Past Service Member always retains choice to purchase past service
4. Contribution rates and cost
Past Service
Member always retains choice to purchase past service
Employer contributions not accepted by OMERS for purchase of past service
Past service may be paid by lump sum or amortized for up to three years (members can amortize over 12, 24 or 36 months)
Service is credited as payments received (lump sum or monthly)
Service can be purchased in pieces
If at end of amortization period (e.g., after 3 years) there is still service to purchase, new cost established and new amortization schedule can be set up

41. Contribution rates and cost
Contribution rates represent the cost of the benefit and cost to administer the Supplemental Plan (no cross subsidization)
Rates may change in future depending on factors including total membership in Supplemental Plan
Current rates based on assumption of 1,000 members participating in Supplemental Plan
Global costings for class of members, for the purpose of bargaining, will be available July 1, 2008
Request for costings must come through the employer as the employer has the class and earnings information needed to do the costing

42. Supplemental Plan benefit “life cycle”
5. Lifecycle of a Supplemental Plan
Supplemental Plan benefit “life cycle”
Establishing a Supplemental Plan with OMERS 1
End of coverage 6
Enrolling members & past service costs 2
Leave periods & disability – after coverage effective date 5
Employer reporting & member statements 4
Remitting contributions – member / employer 3

43. 6. RCA
RCA
ITA imposes maximum on pension that can be paid from RPP – maximum value changes annually
RCA is a vehicle for paying pension over limit
Primary Plan has RCA
RCA only applicable to service where 50/50 cost sharing
Past service not included in RCA as member pays full cost
RCA not viable for Supplemental Plan

44. 2.33 Provision – ITA limit implications for Supplemental Pension
(for 1 year of service and using 2007 ITA Maximum RPP pension figures – the ITA maximum pension figures change annually)
Final Average Earnings
$107,385
Final Average Earnings
$120,000
Final Average Earnings
$125,104
RCA
2007 ITA Maximum Pension from RPP $2,222.22
Supp. RCA Pension
Supp. RCA Pension
Supp. RPP Pension
Supp. RPP Pension
Primary
RPP Pension
Primary
RPP Pension
Primary
RPP Pension
RPP

45. 7. Timing and how to reach us
On target for completion of implementation project by July 1, 2008
Costings to support bargaining process will be available beginning July 2008
Project received start-up funding to June 30, 2008
Starting July 1, 2008, certain costs will have to be paid for by Employer and/or Member Associations (e.g. presentations on Supplemental Plans; costing requests requiring extra work for OMERS, etc.)
External Communications are now taking place:
13 information sessions throughout Ontario in Q4 2007

46. 7. Timing and how to reach us
Visit Employers and/or Members section (and select Police, firefighters, paramedics) at
Special information (including examples and sample worksheets) on Supplemental Plans is now available on our website
Contact us: or toll-free

47. c
Questions & Thank you