OMERS Pension Information

February, 2006

Dear SEIU Member,

As you may have heard, the Ontario government is planning to make changes to the OMERS pension plan through Bill 206, An Act to Revise the Ontario Municipal Employees Retirement System Act. The media has indicated that Paramedics are receiving the same favourable treatment as Police Officers and Fire Fighters under the terms of bill - this is not the case.

Paramedics are being discriminated against like all other members in the pension plan reforms, with the exception of Police and Fire Fighters. Bill 206, as it is currently written, would give them special status to negotiate improvements through the collective bargaining process.

At the same time, the bill limits the ability of the plan's other members to improve future pension benefits by placing the final decision in the hands of a pension board, which is structured to favour employers.

For example, if Bill 206 becomes law, any decisions made by you and your employer as they relate to pension benefits will need the approval of the pension board. If any changes are to pass, the board must support it with a 2/3 majority vote (not 50%+1) for the change to receive approval or to send an issue to mediation, something that no other major pension plan in Canada requires.

SEIU is working in a coalition called the Coalition for OMERS Pension Fairness, with the Ontario Public Service Employees Union, Ontario Secondary School Teachers Federation, Canadian Auto Workers Union, Canadian Union of Public Employees - Ontario, and the Municipal Retirees Organization of Ontario.

The coalition, whose member organizations have been working for many years to win joint control of OMERS, agree that:

• " Bill 206 will unfairly limit access to the pension plan and limit the ability of union representatives to negotiate future retirement benefit improvements.
• " Paramedics need equal rights to early retirement provisions that police and firefighters have.
• " All plan members need the right to negotiate pension improvements with their employers without the interference of a third party.

Bill 206 must be revised to offer the same benefits to all plan members. The government needs to work together with members and employers to negotiate a sensible model for governing the OMERS pension plan.

The Association of Municipalities of Ontario, with the Coalition, is calling on the provincial government to do exactly that - but so far the government has refused.

But it's not too late yet. Call your MPP and voice your concern about Bill 206 or talk to your Shop Steward about how you can help to ensure you receive a fair pension for your years of hard work and service to the people of Ontario.

In Solidarity,

Sharleen Stewart
President
SEIU Local 1.on

Background Information

In the first draft of the Bill, Paramedics were not given "Public Safety Occupation" status, which was revised at Second Reading. However, Paramedics were not given a normal retirement age of 60, which is the main advantage of being a "Public Safety Occupation". Amendments were submitted to rectify this situation, but the government turned it down.

If Bill 206 becomes law, Paramedics will have to receive approval from the pension board, which is structured to favour employers, to secure any pension improvements, including setting a retirement age of 60.

In contrast, Police and Fire Fighters already have a normal retirement age of 60 and, because of their special status, are able to negotiate changes through collective bargaining that give them full benefits that are not subject approval by the pension board. In fact, their changes bypass the board altogether if the changes meet a pre-approved criteria.

Accrual Rates & Discrimination:

For example, a worker earning $30,000 per year with 30 years' service contributes 1.325% of their annual salary (accrual rate) to the pension plan. When Canadian Pension Plan benefits are factored in, the worker ends up with an OMERS pension of just under $12,000 per year at age 65. (Calculated with an accrual rate of 1.325%, 2% less a CPP offset of 6.75%. The CPP offset kicks in for all earnings up to $42,500 which is the yearly maximum pension earnings under the CPP.)

It is important to note that a large number of SEIU OMERS members earn $42,500 or less, and under Bill 206, will have no opportunity to improve the benefits.

If a worker in a different pension plan has an unreduced accrual rate of 2%, which is common in many public sector pension plans across the country, the result is a pension of $18,000 per year - a $6,000 difference. Currently, Bill 206 allows the Police and Fire Fighters to negotiate up to a 2.33% accrual rate.