In case you missed it
June 26, 2018
Q: How will turbulence around international trade agreements affect our fund?
A: For decades now we’ve navigated geopolitical and economic issues. We build a risk-adjusted portfolio to withstand these kinds of buffeting.
If trade negotiations result in the introduction of tariffs, these would ultimately be a form of tax between countries. Higher taxes usually means a slower economy. The portfolio we’ve built is designed to handle changing economic conditions and a slower economy. That doesn’t mean we won’t go up and down, but the plan remains in a strong financial position.
Q: Other pension plans similar to ours allow additional voluntary contributions (AVCs). Can I invest more in our plan?
A: The simple answer is no. Our legislated mandate doesn’t currently allow us to manage and administer a personal investment account in the plan on your behalf. Allowing members to make personal investments would require changes to our legislated mandate.
We continuously evaluate opportunities to enhance our member service offerings. As part of this evaluation, we took a close look at some of the other plans allowing AVCs. The money collected as an AVC is registered, just like your regular contributions to your pension or RRSPs, and subject to the same contribution limits for income tax purposes. Only 3% of the Ontario Municipal Employees Retirement System’s members take advantage of that particular plan’s AVC benefit. Most of your annual contribution room is already used up with your regular pension contributions, so we didn’t see a compelling cost benefit to pursuing an AVC program.
Q: What portion of the pension fund’s assets came from contributions, and what percentage came from investment earnings?
A: Twenty percent of your pension comes from contributions, and roughly 80% comes from the investment that we earn on those contributions.