Chapter 4: OMERS posts $8-billion loss for 2008

http://www.theprovince.com/business/fp/OMERS+posts+billion+loss+2008/1320127/story.html

Summary
OMERS Administration Corporation (Ontario Municipal Employees Retirement System), which is one of Canada’s biggest pension funds, has reported that in 2008, more than $8-billion was loss due to the global economic crisis. Comparing this year’s $8-billion net investment loss to last year’s profit of $3.9-billion, there is a significant difference. The pension fund has more than $52-billion and has an effect on around 390,000 Ontario municipal employees, such as police, firefighters, and transit workers. In 2008, the pension fund had a negative 15.3% rate of return whereas in 2007, its return rate was 8.7%.

Connection
This article relates to the sources of government revenue in which we learned in chapter 4. A lot of the government’s spending comes from taxes imposed on the citizens. As for OMERS, 70% comes from investments and the remaining 30% is directly from employee and employer contributions. But because of the global economic turndown, the 70% funding from investments have decreased drastically. This will have a direct effect on the budgeting of these pension plans. Even though OMERS does not tie in with the government’s spending, it is a group that supports employees that work/worked government jobs. OMERS is beneficial to municipal workers and their net loss in their investments affect them directly.

Reflection
Ontario Municipal Employees Retirement System (OMERS) may not have any effect on me. In a sense, it does relate to me. As an employee of the Vancouver Public Library, if there was an OMERS for our city, I would not be very happy with what’s going on currently for OMERS. Since employees have CPP deducted from their income, it only sounds fair if they receive what they anticipated. But I understand that not everything in life is going to work the way it was set out to. The economy going bad was definitely not something that anyone could have controlled. Its just sad to hear that the pension fund had decrease over 10% compared to last year. Especially since inflation is going up, with the pension fund decreasing, it would be very hard for the senior citizens to buy what little they can.