OMERS, the renowned defined benefit pension plan for Ontario’s municipal sector employees, has reported an impressive 8.3% investment return for 2024, net of expenses, amounting to $10.6 billion. This return not only exceeded the plan’s 7.5% benchmark but also demonstrated the strength of its strategic decisions and portfolio management.
With these results, OMERS saw its net assets increase significantly, growing from $128.6 billion in 2023 to $138.2 billion by the end of 2024. The plan’s smoothed funded status rose to 98% from 97%, showcasing its overall financial health and ability to fulfill pension promises to its nearly 640,000 members.
Over the past decade, OMERS has consistently delivered solid results, achieving an average annual investment return of 7.1%, net of expenses. This track record has contributed an impressive $70.5 billion to the plan, ensuring a strong financial foundation for the future of Ontario’s municipal employees.
Blake Hutcheson, OMERS’ President and CEO, attributed this remarkable performance to the strategic decisions and active portfolio management that have been key to the plan’s success. Hutcheson expressed pride in the work of OMERS’ leadership team, stating, “Our strong result in 2024 reflects the quality of our people and portfolio, our active strategic decisions, and our steady progress as a long-term investor.”
Hutcheson also pointed to the positive results of OMERS’ leadership and strategies implemented over the last four years, which have contributed to an average annual net return of 8.1% during that period.
Jonathan Simmons, OMERS’ Chief Financial and Strategy Officer, underscored the importance of diversification within the portfolio. “Our actions to diversify the global portfolio positioned the plan well in 2024,” Simmons stated. This strategy proved successful as public equity investments delivered double-digit returns, complemented by strong contributions from private credit and infrastructure. OMERS also maintained a strategic exposure to the US dollar, further strengthening its portfolio.
However, real estate assets, while generating consistent operating income, experienced moderated returns due to lower valuations. To counterbalance this, OMERS increased its allocation to fixed income, recognizing attractive return opportunities, and expanded its use of leverage to enhance investment returns.
2024 also marked a period of strategic expansion for OMERS. In September, the pension plan secured a deal to acquire Allianz Capital Partners’ 13.5% stake in India’s Interise Trust, bringing OMERS’ total ownership in the trust to 34.8%. Interise Trust operates 17 road concessions across eight Indian states, covering approximately 7,300 lane kilometers.
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Additionally, in August, OMERS, in partnership with DWS Group, acquired Grandi Stazioni Retail, a company that manages commercial and advertising leasing spaces across 14 Italian railway stations. These stations attract over 800 million visitors annually, marking OMERS’ entry into the Italian market and further expanding its global infrastructure portfolio.
OMERS’ commitment to sustainability and climate-conscious investing was evident as the organization reported a 58% reduction in portfolio carbon emissions intensity since 2019. The pension plan also increased its green investments to $23 billion, aligning with its internal OMERS Climate Taxonomy, and positioning itself as a leader in responsible investment practices.
The organization’s financial strength is also reflected in the high ratings it continues to receive from independent credit rating agencies. OMERS has maintained its ‘AAA’ ratings from S&P, Fitch, and DBRS, reinforcing its stability and reliability.
As OMERS continues to focus on delivering on its pension promises, the 2024 Annual Report, slated for release on February 28, 2025, will provide additional insights into the plan’s financial performance and future outlook.
In conclusion, OMERS’ 8.3% investment return in 2024 marks another milestone in its long-term success, driven by effective portfolio management, diversification strategies, and sustainable investment practices. As Ontario’s municipal sector employees rely on OMERS to secure their retirement futures, the plan’s continued strong performance provides confidence in its ability to meet its obligations for years to come.