The Canadian Source Of Employee Pension Fund Investment And Benefits Plan Management


OMERS Members Invest In AVCs One Year Later

The Additional Voluntary Contributions (AVC) program offered by the Ontario Municipal Employees Retirement System (OMERS) celebrated its first anniversary on January 1, 2012. This innovative retirement savings opportunity was developed in response to requests from members who wanted to invest in the OMERS Fund on a voluntary basis.

retirement savingsIn addition, the program follows OMERS philosophy of providing Canadians, specifically plan members, options to retire comfortably. At the program's launch, OMERS invited all active, deferred, and retired members to participate in this new product and, to date, more than 6,000 members have chosen to open an AVC account. Net assets in the program are valued at $124 million as at the end of March 2012. The net annual rate of return credited to funds in an AVC account for 2011 was 2.59 per cent after investment expenses.

Periodic Contributions

AVCs are similar in some ways to a registered retirement savings plan. Through AVCs, members can invest in the OMERS Fund of diversified global assets by transferring in funds from other retirement vehicles or, for active members, by making periodic contributions via direct debit. Investments include, but are not limited to, Canadian and global fixed income, equities, infrastructure, real estate, and private equity. Members benefit from OMERS expertise in providing solid long-term returns within reasonable risk tolerance guidelines.

From the start, many OMERS members were enthusiastic about participating in this new option. However, what do OMERS members have to say about the AVC option one year later?

In 2011, just before retiring, Sandi Mackenzie, an educational assistant for the Durham District School Board, decided to transfer funds from her RRSP to an AVC account. (As a retired member, her only investment option is through a fund transfer.) "The AVC option was appealing," she says. She and her spouse found the $23 annual fee and low investment expenses to be attractive. She also appreciates that OMERS invests in "concrete ways." She gives HS1, Britain's high-speed rail link, as an example and says that she feels good about these types of investments.

Mackenzie is aware that her money is invested in the OMERS Fund and thinks of her AVCs as a long-term investment. "I still feel strongly about choosing the AVC option. I know I've made a good move. I will be investing in the AVC option further, and know that I have until April 30 to do so."

OMERS allows transfers into AVC accounts from January 1 to April 30 each year. However, the contribution options for active members are slightly different. OMERS members who are currently contributing to the plan have the choice of making automatic bi-weekly or monthly contributions to their AVC account, transferring funds from registered vehicles, or both.

Liane Kunath, a pension and benefits administrator with the Region of Durham, knows how to take advantage of the options available to her.

Since enrolling in the AVC program, she has transferred a lump sum from an RRSP and set up automatic contributions. "AVCs provide me with an additional retirement savings opportunity," she says. She also likes that there are no minimum or maximum transfer limits from existing RRSPs.

"I like that OMERS has diversified global assets and that my money is mingling with the fund's other $55 billion."

Kunath trusts OMERS financial team and investment expertise. "OMERS has a good track record with their investments returns and this is appealing to me. I'm confident in OMERS expertise and reputation for long-term growth."

Kunath also appreciates the fact that OMERS provides a secure online tool to help manage her investments. "myOMERS is the key to my AVC account – it's easy to view my account information and hopefully watch my money grow. I can initiate transfers into my account and set-up and manage my bi-weekly contributions."

Unlike her other financial statements that were "not easy to decipher," she finds her AVC statements a lot friendlier to read. "Via myOMERS, I can easily see that I actually made money in 2011. I can see what I contributed and how much I made."

Economic Uncertainty

Despite the economic uncertainty this past year, which tended to make investors cautious, active, retired, and deferred OMERS members continue to sign up to invest their additional savings in the OMERS Fund. One of the greatest achievements of the AVC program is knowing that members 'trust' in the OMERS brand and the investment management team.

When Tom Christou, senior human resources manager at the Toronto District School Board, decided to retire last year, he was determined to invest a portion of his retirement gratuity in the program once the 2012 transfer window opened. He transferred it to an RRSP and then into his AVC account.

He believes OMERS offers a great investment opportunity to members and says that participating in the AVC program was a good investment decision for him.

"OMERS reputation, good rate of returns, investment strategy, and low fees is what I found appealing about this program," says Christou.

"OMERS invests wisely and makes me feel secure. I know this is a long-term investment that will grow with the OMERS Fund. My intention is to use it in the future – I consider it my 'little extra' that will help me do the things I want to do during my retirement."

The AVC option is open only to OMERS members – active, deferred, or retired. OMERS encourages interested members to learn about the product before enrolling and seeking advice from an independent financial adviser.

Valerie Sambar is a communications specialist at OMERS.

Note: The opinions expressed in this article are those of the interviewed OMERS plan members and should not be construed as financial advice.

Interactive issue now onlineSubscribe to our magazine

Subscribe to Daily News Alerts

Subscribe now to receive industry news delivered to your inbox every business day.

Private Wealth Online