A new report examining executive compensation at the Ontario Municipal Employees Retirement System (OMERS), released today by CUPEOntario, reinforces the urgent need for an independent review of the pension plan.
The report, “High Pay, Low Returns: Why are OMERS Executives Paid So Much?”, used publicly available data to compare compensation received by the top five executives at OMERS to that paid to executives at comparable defined benefit pension plans and funds. It found OMERS is paying some of the highest rates of executive compensation, even though the plan is smaller in terms of assets and its investments have been underperforming in comparison.
“OMERS members deserve to know why their plan paid higher rates of compensation to top executives, while its investments underperformed comparable defined benefit pension plans and funds,” said Fred Hahn, President of CUPE Ontario. “That’s why CUPE Ontario, the largest representative of workers in the plan, is renewing our call for OMERS to cooperate fully with an independent and transparent review of its investment returns”.
The report, which examined compensation over a ten-year period, discovered:
- OMERS pays some of the highest absolute rates for its top executives despite being one of the smaller plans in terms of assets under management. During this period, OMERS paid top executives more than twice the average compensation, per billion dollars of assets under management, of all these plans.
- OMERS pays some of the highest levels of top executive compensation despite having investment returns that underperformed every other plan.
- As a result, OMERS plan members are paying almost 68% more in executive compensation for every 1% increase in investment earnings.
- OMERS benchmarks are among the lowest of all the plans compared. Over ten-years, OMERS failed to meet its own investment return benchmarks but continued to pay excessive compensation to top executives.
CUPE Ontario has voiced concerns with the administration of OMERS in the past. Last year’s report, “Not Just One Tough Year” showed that, from 2010-2020, OMERS investment returns underperformed those of comparable defined benefit pension plans and funds.
“Investment returns are a critical part of funding the pensions of front-line workers,” said Hahn. “Poor investment returns can lead to more pressure to reduce future pension benefits. The average OMERS pensioner received just over $24,000 in 2020, with many lower-waged workers, who are disproportionately women and racialized workers, receiving far less. Our members, front-line municipal, school board and child welfare workers, should not have to worry about their future pensions, knowing OMERS executives have been paid enormous amounts of money over the years, even as they failed to perform compared to similar defined benefit pension plans and funds. It’s well past time to fix OMERS.”
CUPE Ontario represents 125,000 of OMERS 289,000 active plan members. The union has been calling for an independent and transparent review of OMERS, led by worker and employer sponsors, since OMERS made public its 2020 results showing a return of -2.7%, or a loss of $3 billion, even as other large defined benefit pension plans and funds posted substantial investment gains during the same time frame.