Ontario Municipal Employees Retirement System, Toronto, returned 3.17% on its investments in 2011, according to a news release on the fund's website.
Net assets increased 3.4% to a record high C$55.1 billion (US$55.2 billion) for the year.
The plan had a funding deficit of C$7.3 billion at the end of 2011, a 62.2% increase from C$4.5 billion at the end of 2010. The plan anticipates returning to a surplus in 10 to 15 years based on a combination of expected investment returns, temporary contribution increases and benefit reductions, according to the news release. According to Pensions & Investments data, the system was 100% funded as of Dec. 31, 2007.
OMERS' public markets portfolio, which consists of stocks and bonds, returned -0.22% return for the year. Private market asset classes performed much better — infrastructure returned 8.8%; real estate, 8.4%; strategic investments, 7.24%; and private equity, 7.23%.
“Our view of risk is shaped by prudent use of debt, stringent investment criteria and rigorous discipline in all our investment decisions,” said Michael Nobrega, OMERS president and CEO, in the news release. “This view is in line with protecting capital and ensuring liquidity for our plan members in turbulent market conditions.”
In 2003, OMERS adopted a policy of shifting more assets into private markets. It ended 2011 with a 58% allocation to public markets and 42% to private markets, compared to 82% and 18%, respectively, in 2003. OMERS had a 7.48% annualized return for the last eight years, surpassing the performance benchmark of 6.55%.
Mr. Nobrega and Jennifer Brown, chief pension officer, were not available for comment by press time.