Township employees will be eligible to join the Ontario Municipal Retirement System (OMERS) on Aug. 1.
Council approved a recommendation and passed a bylaw making the township an OMERS employer at its June 24 meeting. The move follows well over a year of investigation of the pros and cons of joining the pension plan utilized by nearly every municipality in the province. A bylaw authorizing the move was passed at the meeting.
“As council is aware, employee attraction and retention has been a concern for some time, which can primarily be attributed to the lack of participation in the Ontario Municipal Employees Retirement Savings Plan,” stated CAO Patty Sinnamon in a report to council.
Representatives from OMERS will be meeting with eligible township employees to review the plan and employees will decide individually whether they wish to opt in. Should an employee opt out of the plan, they retain the right to join at a later date. However, if they decide to opt in, they must remain in the plan as long as the township employs them.
The opt-out provision is in place to protect existing long-term employees, who Sinnamon said are better off not to join OMERS if they plan to retire within 26 months.
The employee and employer match contributions to the plan. Current OMERS contribution rates are 9 per cent up to the Canada Pension Plan (CCP) maximum of $52,500 and 14.6% beyond the CPP maximum.
Currently township employees contribute to matched, self-directed RRSPs and the contribution rate is 5%. This practice will continue for opted out employees, but the contribution rate will be bumped to 9%.
Councillor Jim Curry asked if employees could choose to stay at the 5% contribution rate.
“It would be at nine across the board,” explained Sinnamon.
“I’m looking at our mature employees. They’re going to take home less,” said councillor Neil Driscoll.
Councillor Andy Knetsch said the switch to OMERS is unavoidable.
“I think in this current term of office where we’ve had staff members leave for whatever reasons, one of those reasons has been because of OMERS … there’s no way of getting around it.”
The cost to the township for the RRSP contributions, based on the 2014 salary grid at a 5% contribution rate would be approximately $71,932 and is included in the 2014 operating budget. The cost to Mapleton, should all eligible employees join the OMERS plan would be approximately $151,450. However, said Sinnamon, “It is highly unlikely that all employees will join the plan given individual ages and retirement plans.”
Sinnamon noted a line item was added to the township’s 2014 administration budget to add $50,000 to help offset the cost of OMERS. As the township will be joining OMERS part way through the year, the increased cost will be pro-rated to the remaining five months and fully funded within the 2014 budget.
Sinnamon noted the mayor and councillors have not been included in the plan at this point.
“Given that there is less than five months until the municipal election, I would suggest that this decision be left to the new council,” she stated.
