OMERS Contributes Far More Than $13.7 Billion Annually to Ontario’s GDP

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OMERS issued a press release earlier stating it contributes $13.7 billion annually to Ontario’s GDP, supporting 143,000 jobs:

OMERS, the defined benefit pension plan for municipal sector employees in Ontario, contributes $13.7 billion annually to the province’s GDP, according to new research conducted by the Canadian Centre for Economic Analysis (CANCEA).

OMERS released the study on Pension Awareness Day (February 15) to highlight the importance of pensions to members, to all Ontarians, and to our province’s economy.

“By delivering on our commitment to our members, OMERS continues to create economic value in Ontario,” said Jonathan Simmons, OMERS Chief Financial and Strategy Officer. “OMERS retirees spending their pension payments, activity from our investments, and the impact of our operations support more than 143,000 jobs provincewide – up 19% from three years ago.”

Based on a review of 2023 data, OMERS overall contribution to Ontario’s economy grew by 14% in the past three years. One in 11 households in Ontario are impacted by OMERS in some way, whether directly through OMERS membership or its broader impact in the province, according to CANCEA.

The research highlights that approximately $8.7 billion of GDP is a direct result of OMERS retirees spending their pension payments. This spending supports local economies across Ontario and gives a significant boost to these communities. OMERS investments and operations in the province contribute an additional $5 billion of GDP.

"We are focused on delivering on our pension promise to members and their families,” said Celine Chiovitti, OMERS Chief Pension Officer. “With changing demographics and an increasing proportion of the population over the age of 65, access to a pension plan has never been more critical.”
“As a pension plan that pays billions of dollars per year in stable, secure retirement benefits to our members, our impact reaches beyond payments to individual members. We are proud OMERS is positively contributing to hundreds of thousands of households, both urban and rural, across Ontario.”

A backgrounder including a breakdown of OMERS impact in each region across Ontario is available here.

The full CANCEA study can be found here.

Did you catch this part of the press release:

Based on a review of 2023 data, OMERS overall contribution to Ontario’s economy grew by 14% in the past three years. One in 11 households in Ontario are impacted by OMERS in some way, whether directly through OMERS membership or its broader impact in the province, according to CANCEA.

The research highlights that approximately $8.7 billion of GDP is a direct result of OMERS retirees spending their pension payments. This spending supports local economies across Ontario and gives a significant boost to these communities. OMERS investments and operations in the province contribute an additional $5 billion of GDP.

Now, for those of you who are unaware, OMERS is one of Canada’s largest defined benefit pension plans, providing public service and other employees in Ontario with a stable and secure income in retirement. 

For more than 60 years, it has humbly served as the steward and guardian of the retirement income of more than half a million active, deferred and retired municipal employees from communities across Ontario.

With a world-class team of investors and professionals across offices in North America, Europe, Asia and Australia, OMERS has generated $127.4 billion in net assets, as at June 30, 2023, and it will continue growing strongly for many more years.

Led by Huntsville's man, Blake Hutcheson, and a highly qualified team, OMERS is doing its job ensuring that retired and active members working at police and fire stations as well as paramedics and other important public sector jobs can rest assured their retirement security is in good hands.

As the press release states, today is  Pension Awareness Day in Ontario and OMERS joins OTPP, HOOPP, OPTrust, IMCO, CAAT Pension Plan and UPP in raising awareness on how important pensions are to the overall economy.

Of course, every day is Pension Awareness Day here at Pension Pulse, I am providing a service to Canadians at large who want to understand where and how our large well-known pension funds (or pension plans in some cases) are investing.

But I do think it's important to take a step back and look at the bigger picture as to why pensions matter and why we need to do a better job covering Canadians in the private sector who are falling through the cracks, anxious about outliving their savings during retirement. 

On Monday, I discussed why it may be time to expand the CPP again during the age of uncertainty, covering the thoughts of former Bank of Canada Governor now Special Advisor at Osler, Hoskin & Harcourt Stephen Poloz.

Some actuaries on LinkedIn and privately disagreed with me stating there is a cost and risk born by Canadian contributors when we expand the CPP.

My answer to them -- and remember, I'm coming at this from a right-of-center economic viewpoint -- is there is a much bigger cost to society if we maintain the status quo which will only ensure more pension poverty down the road.

Don't get me wrong, these are smart actuaries and while I understand the points they're making, they fail to recognize the bigger risk at hand if we do not bolster Canada's retirement system and cover more people adequately in the private sector.

And no, more financial literacy isn't the answer, expanding the CPP is the answer.

I trade every day and probably know more about markets than the best CIOs out there and I'm telling you these are brutal and dangerous markets.

It may not seem like that as the S&P hits a fresh record high but you will understand when it hits the fan and it won't be pretty.

Anyways, tomorrow I'll cover markets and take a sneak peek into the portfolios of the world's most powerful money managers and then tell you why you should ignore what they bought and sold last quarter.

Before I forget, earlier today, OMERS' new Chief Pension Officer, Celine Chiovitti, posted her thoughts on LinkedIn on rethinking “retirement” on Pension Awareness Day:

Today marks the second annual Pension Awareness Day, which presents us with the opportunity to reflect on what “retirement” means today and into the future.

With changing demographics and an increasing proportion of the population over the age of 65, access to a pension plan has never been more critical. Today, retirement looks different: we are living longer, and for many, retirement no longer means completely withdrawing from work. Instead, many are transitioning into flexible or part-time work, dedicating themselves to their community through volunteering or finding meaning and perhaps a small business opportunity in their hobbies. OMERS continues to modernize to serve our members wherever they are in their pension journey – from hire to retire and throughout retirement.

No matter how Canadians spend this chapter of their lives, they deserve access to meaningful income in retirement. Our mission at OMERS is to deliver a sustainable, affordable and meaningful plan to our 600,000+ members. In 2022, OMERS paid out $5.9 billion in pension benefits to 194,000 retired members.

As a leader in the pension industry in Canada, OMERS recognizes our responsibility to raise awareness about the value of having a secure and stable income in retirement, both for the benefit of our members and all Canadians. The value of a defined benefit pension plan goes beyond the cheque; many OMERS members have personally told me how their pension benefits have positively contributed to their lives and well-being. The effects also extend to their employers and communities, and more broadly to local, provincial and national economic and social well-being. In this regard, pensions can be considered “social infrastructure,” which is critical to ensuring our society remains vibrant, caring and productive.

This is supported by the economic and social value research conducted for OMERS by the Canadian Centre for Economic Analysis (CANCEA), with findings released this week which show that OMERS activities contribute approximately $13.7 billion to Ontario’s GDP annually. More than one in 11 households in Ontario are impacted by OMERS in some way, whether through membership or indirectly through the economic impact of our investments, operations and pension payments. OMERS investments and operations in Ontario, along with retirees spending their pension income, support more than 143,000 jobs provincewide. These findings underscore the substantial economic value OMERS provides to communities across the province, including significant contributions in central and northern Ontario.

To better understand the relationship between a secure and stable retirement income and Canadians' health and well-being in retirement, OMERS sponsored research last year, “Healthy Outcomes: Understanding the Impact of Adequate, Stable and Secure Retirement Income on the Ability of Canadians to Age Well and in the Right Place,” by the National Institute on Ageing (NIA), a think tank at Toronto Metropolitan University focused on the realities of Canada’s aging population.

The report reviewed the impact that financial security (both before and in retirement) has on the physical and mental health of Canadians, and found that there is a relationship between eligibility for pension coverage and better health outcomes. For working-age adults, income volatility can result in greater stress, which impacts health and well-being, and for older adults, sudden drops in their monthly or annual income could be detrimental if their income cannot cover the entire time spent in retirement, or if emergencies require financial resources. The study found that economic security and income stability play a role in reducing anxiety and stress.

Both the Healthy Outcomes report and the economic and social value research provide insight into the positive impacts of a secure and stable retirement income on the individual and their community. For the pension plan member, it is a financial value that also provides a better sense of life satisfaction, financial security, higher satisfaction with health, community involvement and lower stress. For employers, a pension plan, particularly a defined benefit plan, is a valuable retention tool, especially when competition for talent is so strong. And for communities, there is a higher likelihood for voluntarism, a high propensity for charitable donations and less reliance on government financial support when residents have a secure and stable source of retirement income.

The Canadian pension system acts as a cushion to reduce income instability in retirement, protecting older adults with a minimum income floor. Demonstrating the value of a defined benefit pension plan is important to ensure broad understanding and support for pension plans.

With an aging population and a blurring line between full-time work and retirement, we need to start thinking differently about what retirement means and how a defined benefit pension plan like OMERS can be part of the solution.

Very well said and let me congratulate Celine Chiovitti publicly for her well-deserved nomination, taking care of OMERS' most important assets, their 600,000+ members.

If you ask me, OMERS contributes far more than $13.7 billion annually to Ontario’s GDP.

No matter where you live in Canada, learn more about the importance of pensions in your province and communities.

And lastly, it's important that you all note, the publisher of Pension Pulse has no pension or income whatsoever, and lives with the constant stress of having to eat what he kills.

Fortunately, I'm very good at what I do but I'm also very cognizant that luck plays a role and a reversal of fortune can occur at any time.

When I tell you markets are dangerous right now, I know what I'm talking about because I live it every day before publishing my blog, I spend all day analyzing markets from A to Z (and helping my wife take care of a newborn but she does most of the heavy lifting there as my back problems have reemerged and I need a second back surgery to do fusion, argh!!).

This is why it's more important than ever to cover Canadians properly during their retirement years.

The more Canadians we cover under a well-governed, well diversified defined-benefit plan, the better off the country will be (and again, I'm a right-of-center conservative guy stating this).

Lastly, on this second annual Pension Awareness Day, I appreciate all of you who take the time to donate to this blog and support my efforts, it's greatly appreciated (top left-hand side under my picture).

Below, an older interview with OMERS' CEO Blake Hutcheson which I really like, Listen to this exchange with Goldy Hyder, it's excellent.

And the Ontario Business Lifetime Achievement Award is given to a leader who demonstrates outstanding leadership throughout their career and has made a significant and positive impact on the province and beyond. 

This year’s award recipient is Blake Hutcheson, President and CEO of OMERS. Take the time to watch the interview below and learn more about Huntville's man.

And since OMERS recently acquired a 5% indirect stake in Maple Leaf Sports and Blake is a huge Leafs fan (Auston Matthews is awesome), a recap of the last game vs the Blues where rookie Bobby McMann had a breakout night recording his first career hat trick to lead the Leafs past the St. Louis Blues 4-1. Go Leafs Go! 

Wait a minute, GO HABS GO!!! (Slaf and rest of team are finally playing awesome hockey).

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