Saturday, May 18, 2024

OMERS: A Financial Powerhouse Reports $5.6 billion Investment Income for 2023


MIL-OSI: OMERS Generates $5.6 billion in Investment Income in 2023

In an impressive financial feat, OMERS, the defined benefit pension plan designated for the broader municipal sector employees across Ontario, has reported a formidable investment return of 4.6%, translating to $5.6 billion, net of expenses, for the year 2023. This achievement marks a significant milestone in the organization’s financial journey, showcasing its adept capacity for generating substantial revenue. Over a span of a decade, OMERS has consistently demonstrated financial resilience, with an average annual investment return of 7.3%, net of expenses, thereby contributing an additional $66.4 billion to the Plan.

As of December 31, 2023, OMERS reported its net assets to have reached $128.6 billion, an increase from $124.2 billion in 2022. Furthermore, the Plan’s smoothed funded status has improved to 97%, up from 95% the previous year, indicating a robust financial health and stability.

OMERS President and Chief Executive Officer, Blake Hutcheson, expressed satisfaction over the organization’s performance, emphasizing its strategic focus on long-term investments and operational resilience through varying economic cycles, “Our focus at OMERS remains on our ability to see through economic cycles… Our 10-year result speaks to our ability to invest through turbulent times while continuing to deliver for our members,” Hutcheson said.

The organization’s strategic financial planning has not only aimed at sustaining its financial promises but also at adventuring into new investment opportunities sparked by higher interest rates in 2024, promising potential for improved future returns. This strategic shift towards a more diversified asset mix underscores OMERS confidence in its long-term financial strategy.

Chief Financial and Strategy Officer, Jonathan Simmons, highlighted the diverging returns between public and private assets in 2023. He noted that while public equities and fixed income saw favorable returns partly due to higher interest rates, private asset strategies faced challenges from increased operational costs, higher cost of debt, and slower economic growth — factors impacting private market investors globally.

OMERS impact extends far beyond its financial accomplishments. Hutcheson elaborated on the profound economic contribution of OMERS, stating, “Through a combination of pension payments, investment activities, and our operations, OMERS impacts more than 1 in every 11 Ontario households.” This engagement translates to an annual contribution of $13.7 billion to Ontario’s GDP and supports over 143,000 jobs provincewide, with significant investments in key Ontario assets like Bruce Power and Yorkdale Shopping Centre.

Securing its promise to deliver for its members over the long haul, OMERS affirms its dedication to building a sustainable, affordable, and meaningful plan, ensuring security in retirement for generations to come. This commitment is underscored by OMERS maintaining high ratings from four credit rating agencies, including two ‘AAA’ ratings.

About OMERS, it serves as a jointly sponsored, defined benefit pension plan involving 1,000 participating employers and over 600,000 active, deferred, and retired members from diverse municipal and emergency services sectors across Ontario. The team’s global presence in cities like Toronto, London, New York, and Sydney, among others, embodies its dedication to serving its members and managing a diversified investment portfolio of high-quality assets ranging from bonds to real estate.

2023 saw OMERS deploying $11.5 billion in capital towards investments poised to sustain the organization’s long-term pension promise, continuing its trajectory of impactful financial management and strategic investment.

As OMERS moves forward, it remains focused on nurturing and expanding its investment portfolio, perpetuating its legacy of financial stewardship, and continuing to play a vital role in the economic and social prosperity of Ontario. The path ahead looks promising, with strategic investments and solid financial planning setting the stage for enduring success and member security.

Natalie Kimura
Natalie Kimura
Natalie Kimura is a business correspondent known for her in-depth interviews and feature articles. With a background in International Business and a passion for global economic affairs, Natalie has traveled extensively, providing her with a unique perspective on international trade and global market dynamics. She started her career in Tokyo, contributing to various financial journals, and later moved to London to expand her expertise in European markets. Natalie's expertise lies in international trade agreements, foreign investment patterns, and economic policy analysis.

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