An independent review of the Ontario Municipal Employees’ Retirement System will examine the unique governance structure of the investment organization.

The current structure of the investment organization designates two separate entities with different duties and responsibilities, notes Jordan Fremont, a partner in the pensions and benefits group at Stikeman Elliott LLP. The OMERS Sponsors Corporation sets the contribution rates with a view to maintain the sustainability of the plan and consider the needs and interests of stakeholders, while the OMERS Administration Corporation administers the plan’s investments and is responsible for valuation.

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“That’s somewhat of an unusual structure to have those roles responsibilities separated, but it makes sense in many respects because the duties that rest with each of those entities are quite different,” he adds. “There’s no one way to set up a governance structure, this is one model. There are other models and each of them can have their benefits and that can have their deficiencies.”

Last week, the province appointed Robert Poirier, a former board member at Metrolinx and former chair of the Toronto Port Authority, to lead the review. He currently serves as the chief executive officer at consulting firm NeuState Advisory. The provincial government said the review will examine various aspects of the two entities, including board representation and the effective delivery of their mandates.

According to a report by the Globe and Mail, several employers wrote to the province in June asking for a review of the plan sponsor and its pension fund governance structure. The report noted a “perceived lack of transparency” as one of the leading complaints against the investment organization related to a planned contribution rate change starting in 2027 that will require some employees to pay more to the plan.

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“I would expect that the focus would be very narrow in terms of the mandate that’s been given to the reviewer,” says Fremont.

The extent of the audit will also include how plan assets are managed and how investment decisions are made. It won’t, however, focus on any financial details or decisions regarding contribution rates, fairness of plan benefits, or the supplemental plan.

In a press release, Paul Calandra, Ontario’s minister of municipal affairs and housing, said the province is committed to “strengthening” the plan sponsor’s governance. “This review will ensure important decisions that impact members continue to be made in a transparent way.”

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The OMERS’ last review took place in 2012. However, that review was scheduled in 2006 to inspect changes made to the organization’s governance model, says Fremont, adding there’s an emerging trend for pension plan governance becoming a greater focus for both the public at large and plan stakeholders.

“This particular review, . . . is coming at the behest of certain stakeholders, whether there will be ongoing reviews in the future at regular intervals remains to be seen.”

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