OMERS posts 10.3% return

TORONTO • OMERS, the pension plan for Ontario’s municipal employees, posted an investment return of 10.3 per cent for 2016, net of all expenses.

The return beat both the benchmark of 7.9 per cent and the previous year’s return of 6.7 per cent. Net assets grew to $85.2 billion, up $8.1 billion.

“Our strong investment returns in 2016 reflect the value of our well-diversified portfolio of high-quality assets, which we are continuously building,” said Michael Latimer, chief executive of OMERS. “All of our asset classes produced solid returns.”

One of Canada’s largest defined benefit pension plans, OMERS invests and administers pensions for more than 470,000 members from municipalities, school boards, emergency services and local agencies across Ontario.

The pension’s funded status improved last year for the fourth year in a row, increasing to 93.4 per cent. It was boosted by both the strong investment returns and member and employee contributions.

The OMERS portfolio includes investments in public markets, private equity, infrastructure and real estate.

Latimer said OMERS is content with a mix of 45 per cent private and 55 per cent public investments, adding that he feels no pressure to make investments in increasingly competitive sectors such as real estate and infrastructure where many pension, private equity and sovereign wealth funds are chasing the same assets.

Jonathan Simmons, the pension fund’s chief financial officer, said OMERS would be open to investing in infrastructure in Canada under the federal government’s ambitious plan, but only if certain conditions are met.

The projects would have to have scale, the pension fund would need to have governance rights over the asset, and there would have to be specific risk criteria, he said, adding that these specifications have been communicated to the government.

OMERS executives said diversification will be the key to maintaining a sustainable pension in the current climate of geopolitical uncertainty.

This could involve selling assets in situations where valuations are high.

“We could sell into that marketplace — crystallize real capital gains for the fund,” Latimer said.

Another large Canadian pension fund, the Caisse de depot et placement du Quebec, reported solid investment gains for 2016. On Friday, the Caisse disclosed a 7.6 per cent gain for the year ended Dec. 31.

Net investment results were $18.4 billion and net deposits totalled $4.3 billion. The fund’s assets totalled $270.7 billion at year end.