OMERS reports 12% return, still has funding shortfall

The Ontario Municipal Employees Retirement System has posted a healthy 12% return for 2010, with net assets rising to $53.3 billion as of December 31, 2010, up from $47.8 billion at the end of 2009.

“OMERS achieved excellent investment results in 2010, supporting our mission of creating surplus wealth for plan members and sponsors,” said John Sabo, chair of the OMERS administration corporation board of directors. “Our performance, which stems from our asset mix shift to world-class private market investments, and strong market investment returns driven by the recovery of the global financial markets, reflects our focus on risk-adjusted returns, which is designed to manage volatility and respond to our long-term liability profile.”

In the seven years since OMERS adopted a policy of shifting its asset mix more heavily into private market investments, the plan has earned an annualized return of 8.11%, which includes the investment loss of 15.3% in 2008.

However, OMERS continues to face a funding shortfall caused by the 2008 global economic downturn. The plan’s 2010 funding deficit was $4.5 billion, versus $1.5 billion a year earlier.  Actuarial assumptions indicate OMERS requires an investment return of 6.5% annually to keep assets and liabilities in balance.