- "At the end of 2008, the OMERS Fund posted a -15.3% total rate of return, and reported a $279 million funding shortfall. This funding deficit could grow to more than $6 billion over the next few years, as the full impact of 2008 is reflected in the funding balance sheet...
To address the existing funding shortfall, OMERS SC has approved an increase to both member and employer contribution rates, effective with the first full pay period in 2010.
“These contribution rate increases will help address the initial $279 million part of the overall funding shortfall. More significant contribution increases or changes to benefits, or a combination of both, will be required in the next several years as the remaining $6 billion is recognized on the balance sheet of the Fund,”
I have never been a fan of OMERS, obviously because of their misguided investment in DRTP and their huge write-downs years ago that impactd negatively the budgets of cities across Ontario. Here we go again!.
Some of their investment decisions are so troubling to me that I, if I was a member, would want my local CUPE union to look at alternatives including pulling out of OMERS and look for other ways to finance my pension.
They are not merely pension fund investors, they are venture capitalists now too:
"OMERS Administration Corp, one of Canada's biggest pension funds, aims to boost its participation in the nation's flagging venture capital industry, hoping to find opportunities in helping startup companies grow.
OMERS chief executive Michael Nobrega told Reuters in an exclusive interview the pension fund manager could allocate as much as 3% of its considerable investment capital to new ventures as early as the end of the Canadian summer."
Another example, while most Pension Funds put a small percentage of their funds into private equity, infrastructure and real estate, OMERS' goal is different:
"As a result, our investment strategy over the long term is to maintain our asset mix exposure to public market investments, such as public equities and interest bearing investments at approximately 57.5 per cent of the Plan’s net investment assets with the remaining 42.5 per cent representing exposure to private market investments, such as private equities, infrastructure and real estate."
Michael Nobrega, its head, recently said
"Nobrega reiterated that OMERS plans to shift its asset mix from the current allocations of 40 percent private market, 60 percent public market, to an even 50/50 mix."
Take a look at this BLOG that I happened to find "OMERS" takes a drubbing in Private Equity" http://pensionpulse.blogspot.com/2009/02/omers-takes-drubbing-in-private-equity.html
I just saw this story as well
"Ottawa (15 December 2009) Pension plans increase 4.5 percent in value in second quarter of 2009
Revenues of $26.6 billion exceeded expenditures of $16.0 billion in the second quarter for a positive cash flow of $10.6 billion. This was a reversal from the previous quarter and the first positive cash flow since the second quarter of 2008.
The positive cash flow resulted primarily from significant gains on the sale of securities and a 37.2 percent increase in investment income compared with the first quarter of 2009."
Nobrega wants to be a player, not just a pension fund
" OMERS Administration Corp plans to nearly double in size in coming years through organic growth, although the Canadian pension fund has no plans at present to merge with other large funds, Chief Executive Michael Nobrega told the Business News Network.
OMERS is one of Canada's top pension plans, with more than C$43 billion ($41 billion) in assets under management, but Nobrega has argued it needs to be bigger to be able to take advantage of global opportunities.
"I think anything under C$100 billion, you can't play," he told BNN television in an interview. "OMERS itself will grow organically over the next three to four years into the C$70 billion-C$80 billion range."
"The Ontario Municipal Employees Retirement System (OMERS) is to reduce its reliance on external GPs. The CAN$43bn (€27.4bn) pension fund has decided to move away from externally managed funds and into direct private equity investing, with the goal of shifting its private equity portfolio from 80 per cent direct investments from the current 35 per cent, according to reports.
The pension’s goal is to reduce externally managed investments to 20 per cent of its portfolio. Currently, OMERS’ private equity portfolio is 65 per cent invested through fund managers and 35 per cent through direct investments. The fund reportedly has a target of ten per cent allocation to private equity.
The fund has expanded its global reach over the past year by opening offices in London and New York. At the time of opening the London office, OMERS president and CEO Michael Nobrega said that the fund’s “long-term goal is to invest 42.5 per cent of our net investment assets in private markets on a global basis.” OMERS has $5bn of capital interests in real estate and infrastructure assets in the UK."
Is OMERS involved somehow in the border crossing? While their name is conspicuous by its absence in the short-listed candidates for the DRIC road, I expect that they are lurking behind one or more of them as financing source or more likely as financing manager where they would generate fees.
Who do they think they are: Macquarie!
I wonder how successful OMERS has been in raising funds. As you know, they would not be adverse to having small pension funds forced to deal with them. he rather arrogantly stated:
"Mr. Nobrega has been on the record calling on the province to require pension funds to consolidate into "superfunds" to better manage their assets.
In its latest budget, the province proposed legislation to give the OTPP the ability to also manage assets for smaller pension plans. OMERS already manages several other smaller pension plans but is pushing for the establishment of several provincial "superfunds."
Mr. Nobrega said there is still resistance among trustees of smaller pension plans to accept the notion that they would be better managed by a larger pension fund."
But now Nobrega wants more:
"Michael Nobrega, president and chief executive of Ontario Municipal Employees Retirement System (OMERS), wants the Ontario government to enact legislative changes immediately to make it easier for people in the province to save for their retirement...
he would like to see the Ontario government, through its legislative powers on pension plans, tweak its rules and allow individuals to join major pension plans already in existence.
OMERS and Ontario Teachers' Pension Plan, the two largest pension plans in the province, are available only to their constituents. But with a little legislative imagination, these plans could be open to anyone who wants to join, and ease the pension woes of people who are not covered by a plan, Mr. Nobrega contends..."
Back to Windsor...do you think that Mr. Nobrega has decided to forget about DRIC and put his money elsewhere. I do. I doubt that Ontario can pay for the DRIC road as an example. And here is where the real opportunity may lie for OMERS:
"Ontario assets interest funds
Crown sale mulled; Teachers' Pension Plan, OMERS keen to bid
Ontario's Crown corporations could turn into the crown jewels for Canadian pension plans, with two of the largest signalling yesterday that they would be interested in any move toward privatization of the profitable government assets.
Ontario Teachers' Pension Plan (OTPP) and Ontario Municipal Employees Retirement System (OMERS) said they would bid on assets if the Ontario government decides to privatize any or all of its iconic corporations, including Hydro One Inc., Ontario Power Generation, the Ontario Lottery and Gaming Corp, and the Liquor Control Board of Ontario, to offset mounting debt.
The deficit is estimated to be $24.7-billion this fiscal year.
Premier Dalton McGuinty confirmed yesterday that his government wants to ensure it is getting the best "bang for the buck" for its key assets.
An Ontario government source said Mr. McGuinty has asked Bay Street investment banks for advice on the province's options, which could include sale of part of some or all of them. But the advice has not yet been received."
It's all full circle. I heard years ago the story that DRTP was OMERS' consolation prize when Hydro's privatization plans fell apart. Now Mr. Nobrega may finally get even more into the power business and abandon the Windsor borde4r:
"Q Which assets in particular do you like?
A If I had to prioritize these assets for us, the electricity sector is where we should be. If we had limited dollars to reinvest in Ontario — because these are large assets — it would be the electricity sector because we have experience there. We are already into Bruce Power and others."
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