1. Update presentation for OMHRA April 12, 2018
Comprehensive Plan Review
Update presentation for OMHRA
April 12, 2018

2. Today’s agenda Welcome and introductions 2017 Financial Highlights
OMERS in a changing world
The Comprehensive Plan Review
Your thoughts: an interactive exercise
Open discussion
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3. 11.5% Net Return 94% Funded $95B Net Assets 2016 HIGHLIGHTS
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4. Net assets
$ billion
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5. 6.2% $5.7B 6.0% $5.4B Discount Deficit rate Positive trends 2016 2017
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6. Our funded status
Percentage funded
Year
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7. OMERS in changing world

8. Looking ahead We are obviously pleased with the short-term results
Mindful of the challenges and risks that lie ahead
Based on its formal mandate, the SC Board voted unanimously in to launch a Comprehensive Plan Review
A matter of prudent management and good governance
A tangible extension of OMERS legacy of innovation and change
An opportunity to rethink the Plan in response to realities that are largely beyond our immediate control
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9. Plan maturity
With fewer contributing members to make up for potential investment losses, the Plan will become more vulnerable to economic downturns
2030+
1:1
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10. Longevity
When people collect pensions for longer periods, the result is increased Plan liabilities and, by extension, higher Plan costs
Years beyond age 65
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11. Active Membership Growth in 25 Years
Workforce trends
Any decline in membership intensifies our maturity challenges – and makes the Plan even more susceptible to economic shocks
Active Membership Growth in 25 Years
Baseline
Good
Bad
Ugly
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12. Economic factors We are highly dependent on future investment income
Our funded position
We are highly dependent on future investment income
The strong investment returns of recent years are going to be difficult to match in the future
Particularly as the world’s population ages
What we owe
(eventually)
Its Economic Value
(risk-free)
Our Funding
Target
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13. CPP Enhancements
Total contributions
CPP enhancement will increase costs and benefits for both members and employers
We need to consider how our Plan should adjust to this reality, if at all
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14. The comprehensive plan review
Two key questions emerge as we look to and beyond:
Can OMERS current benefit and contribution levels be sustained (improved) over the longer term?
Regardless, is there a better and more equitable way to deliver the pension promise in a changing world?
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15. The opportunity & Obligation
Model the Plan’s long-term financial health
Assess what members, unions, employers and sponsors really want and need from the OMERS Plan, today and in the future
Consider a range of design options within an identified cost range
Determine what, if any, potential benefit changes warrant consideration
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16. Our ultimate goal
Ensure that the Plan remains sustainable, meaningful (relevant) and affordable for generations to come
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17. The Comprehensive Plan Review

18. Discount rates across the country
Real Rate of Return
Inflation
Discount Rate
Active:Inactive Ratio
Real Risk-Free
0.30%
2.00%
2.30%
OTPP
2.75%
4.80%
0.89
LAPP
3.25%
5.25%
1.65
OP Trust
3.40%
5.40%
0.96
HOOPP
3.45%
5.45%
1.73
Win. Civic Emp. PP
3.50%
5.50%
1.13
Win. Police
1.00
NLTPP
2.50%
6.00%
1.75
BCMPP
6.25%
1.50
CAAT
3.60%
5.60%
0.43
OPB
3.70%
5.70%
1.51
NL PSPP
3.75%
2.25%
0.95
NS Teachers
4.15%
6.15%
NSPSSP
0.68
OMERS
4.20%
6.20%
0.94
HRM
4.30%
2.10%
6.40%
1.20
Real Rate of Return
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19. Discount rates (2016): Major Ontario plans
According to the 2020 strategy, OMERS intends to reduce the discount rate to 5.75% by 2025 (or sooner)
Active: Inactive Ratio
0.89
0.96
1.73
1.51
0.94
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20. Considering the impact
6.0%
17.4%
4.8%
22.5%
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21. Comprehensive Plan Review
Defining “sustainability”
Consistently deliver – through both favourable and adverse circumstances – an appropriate range of benefits within an acceptable range of costs and across generations
Guiding principles
Secure
Relevant
Affordable
Equitable
Simple
The design challenge
Balance the “appropriate range of benefits” with the “appropriate range of costs” – without favouring one generation over another
Our fundamental objective is to ensure that the Plan remains viable – and valued by its many constituents – over the next 20, 50, and even 100 years.
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22. The formula for success
1. DB Model
Certainty
2. Core benefits (fixed)
Security
3. Levers (conditional)
Flexibility
4. Funding Management Strategy
Objectivity
Sustainability
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23. bookends for modeling purposes
Current plan provisions
Best average formula
Stepped accrual rate (CPP integration)
Optional participation for “qualifying” non-full-time members
Enhanced early retirement provisions
Complex earnings definition
Guaranteed indexing in retirement
Pre-retirement indexing
Subsidized spousal benefits, but limited optional forms
Service cap
Disability pension
Proposed baseline options
Career average formula (with updates)
Flat accrual rate (no CPP integration)
Mandatory participation for “qualifying” non-full-time members
No enhanced early retirement provisions
Simplified earnings definition
Conditional indexing in retirement
No pre-retirement indexing
No subsidized spousal benefits, but additional optional forms
No service cap
No disability pension
Other options & considerations
Using the current plan as a starting point, the proposed “baseline” provisions serve to define the range of potential options (limits) for modeling purposes
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24. Design options for consideration
Projected reduction in contribution rate resulting from the change
Options to include conditional enhancements
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25. The engagement cycle – three phases
Phase 1 – Sponsors
March – April
Phase 2 – Influencers
(April – May)
Phase 3 – Members
May – June
1. Sponsors*
SC Board
3. Members
(active & retired)
2. Influencers (employers & unions)
*Includes other key stakeholders
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26. Your thoughts: an interactive exercise

27. Getting started To respond via text message
Text omerssc to to join the session
Text your response to each question – A, B, C…
To respond via the internet
Go to:
The first poll will be on your screen
Simply respond to each question
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28. I support the comprehensive plan review:
Strongly disagree
Disagree
Agree
Strongly agree
Don’t know
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29. Given the option, My employees would prefer to:
Contribute more to maintain the current OMERS Plan
Keep contributions at current levels, but reduce benefits
Design a revised Plan that better balances benefit and contribution levels
Don’t know
Other
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30. Looking forward, what is your biggest people / talent challenge?
Attraction of key talent
Retention of key talent
Positive churn of key talent (“presenteeism”)
Growth of part-time employment
Expansion of the gig economy
Outsourcing/privatization of core work/services
Other
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31. From a pension perspective, How do you expect employees to behave in the future?
Take full advantage of early retirement subsidies
Delay retirement beyond their earliest unreduced retirement date
Delay retirement beyond age 65
Don’t know
Other
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32. which of the following “conditional” provisions would you support:
Conditional indexing
Career average formula
Variable contribution rates
All of the above
None of the above
Other
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33. Given the pending introduction of an enhanced CPP, OMERS Should:
Retain the current integrated formula (no change)
Adopt an updated integrated formula (that reflects increased CPP contributions and benefits)
Adopt a flat-rate pension formula (de-integrate from CPP), but retain a bridge benefit
Adopt a flat-rate pension formula (de-integrate from CPP) with no bridge
Don’t know
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34. OMERs should extend mandatory participation to part-time members:
No; participation should be left to individual employers
No, but enhance communication to employers and members to ensure both understand their options/obligations
Yes, regardless of employment status/income
Yes, but only for employees earning above a defined minimum (e.g., $20,000 annually)
Yes, but permit an “opt out” for employees earning less than a defined minimum
Answers 4 and 5 combined
Don’t know
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35. What other changes/ideas should we consider
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36. Open discussion