COSF Pension Merger

The City of Ottawa Superannuation Plan (COSF) applies to Ottawa Police and City of Ottawa employees hired before 1965, at which point all City employees became members of the new OMERS provincial system. There are a limited number of these legacy pension plans remaining in Ontario municipalities today. Given the cost of administering these closed plans (no new contributing members) Trustees and plan Sponsors reach a point where it is appropriate to consider other administrative or delivery models. Merging the COSF pension plan with OMERS has been a major discussion for many years. Recently the Ontario Legislature made amendments to the Pension Benefits Act to facilitate such a merger. Months ago the Regulations to the Act were amended to provide a framework for such a change. The OPA remains very committed to our COSF pensioners and plays an active role in the discussions around merger of these two plans. As a public service to our COSF retirees and all former City of Ottawa COSF retirees the OPA is pleased to host this information page which will, as best we can, provide updated news on the discussions of the merger of COSF and OMERS. Of course we will not be posting any information that is confidential or contains information that would otherwise be subject to privacy legislation. The merger of pension plans is a complex process and therefore subject to considerable speculation and, sometimes, honest confusion. We hope that by providing this information page, much of that can be alleviated.  If you have any questions we encourage you to contact the COSF Trustee representing the union to which you belonged as an active employee with the City. Updates are below.

Bill Cole

COSF Pension Trustee

 

UPDATE October 16, 2017

The Trustees met on this date and followed with the presentation of the Annual General Meeting. The COSF continues to have strong performance in its various investment areas. Key issues at this meeting, however, include an update on the discussions between the COSF and representatives from OMERS on the question of merger. The COSF has finally heard from OMERS on its calculation of asset transition costs. These are the costs necessary to bridge the differences that exist within the plan – which are almost entirely the differential between the OMERS’ 100% inflation protection vs. the COSF 55% protection. As the pension sponsor the City of Ottawa would be responsible for payment of the differences. 

The calculations provided by OMERS exceed those calculated by the City of Ottawa and, in the end, result in a difference that the plan sponsor, the City of Ottawa, does not wish to invest. We have questioned the methodology used by OMERS vs that used by COSF and cannot find a way to bridge the gaps. Simply put, OMERS calculations make the transition costs too large – and the City of Ottawa has lost its interest in paying the difference. 

For now, it would appear that there will be no continued efforts to merge the COSF pension plan with OMERS. This does not prevent the parties from returning to this subject at any point in the future. 

UPDATE January 13, 2017

The Trustees met on January 13, 2017. Since this website’s purpose is to focus on the ongoing interests in merging the COSF pension with OMERS, we begin with some limited general comments – the annual Election of Officers returned all incumbent Trustees to the positions held during the 2016 year; Trustees received a report from the Fund’s investment advisor which indicated continued strong performance; an operating budget for 2017 was approved and all regulatory filings have been made as required. Turning to the issue of OMERS merger there remains little to report – which is both frustrating and disappointing. OMERS  continues to study the appropriate calculation of transition costs. As this has been the response from OMERS over months now, the Trustees are growing weary with the loss of momentum from 2015 and 2016. Nevertheless there remains an interest in considering the transition where it makes long-term sense for our pensioners.

UPDATE October 17, 2016

The COSF Annual General Meeting was held following the Trustees’ October meeting. The financial performance of the Fund remains stable and it is positioned well to respond to the domestic and international changes in markets. On the issue of OMERS there is no information to provide pensioners. Having invested considerable time and effort in our discussions with OMERS, the COSF Trustees are hopeful that discussions of pension merger will continue and will be, in the end, fruitful. At this point we are awaiting responses from OMERS on formulas for pension asset valuation – a key step in the process to both evaluate the merits of, and determine next steps.

UPDATE September 8, 2016

The COSF continues to perform well, with returns that are competitive with the financial markets. On the question of pension merger, OMERS has been considering options on how to value the pension plans as part of moving forward. It would be necessary to establish relative values of the COSF plan at an anticipated point of transfer – simply put, what would it cost for OMERS to deliver the pensions promised to COSF members. A difference in the valuation of the plans at the point of transfer would have to be assumed by the COSF plan sponsor – the City of Ottawa. As of September 8, 2016 the representatives from OMERS were continuing to study the process for merging the COSF plan. OMERS was to meet at the end of August, and COSF Trustees should receive news from OMERS shortly.

UPDATE May 20, 2016

In March 2016 representatives from COSF and OMERS began an exchange of information on the preliminary valuation of the COSF plan. This would include a description of the demographics of the pension plan. This would be part of the basic information that OMERS would use to determine the costs that would be associated with the transition. OMERS intends to review the information over the summer months and we anticipate their setting out their view of the process for transition.

UPDATE February 12, 2016

Reflecting the slow pace of change to the Regulations applying to pension administration in Ontario, we are just now in receipt of a final draft of the regulations governing pension plan mergers. With this in hand the COSF Trustees can now consider merger questions with a clear understanding of the law, and the development of a business case for the merger of the COSF with OMERS. From this point the COSF and OMERS representatives will have to define a common set of rules around actuarial valuation and liabilities of the COSF.  At this meeting the Trustees of the plan further discussed the role of stakeholders in the process and the interaction with the Pension Superintendent for Ontario.