Pension fund expands global investments while increasing green assets and reducing carbon emissions
OMERS, the defined benefit pension plan for Ontario’s municipal sector employees, reported an 8.3 percent investment return for 2024, net of expenses, amounting to $10.6bn and exceeding its 7.5 percent benchmark.
Net assets grew to $138.2bn from $128.6bn in 2023, with a smoothed funded status rising to 98 percent from 97 percent.
Over the past decade, OMERS has achieved an average annual investment return of 7.1 percent, net of expenses, adding $70.5bn to the plan.
President and chief executive officer Blake Hutcheson attributed the strong performance to strategic decisions and effective portfolio management.
He stated, “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 added that he is proud of the work of OMERS’ leaders and teams, as well as the strategies implemented over the past four years.
He noted that this approach has led to an average annual net return of 8.1 percent during that period.
Hutcheson emphasized the organization's commitment to delivering pension promises to its nearly 640,000 members.
Chief Financial and Strategy Officer Jonathan Simmons highlighted the benefits of portfolio diversification.
“Our actions to diversify the global portfolio positioned the plan well in 2024,” he noted.
Public equity investments delivered double-digit returns, complemented by strong contributions from private credit and infrastructure.
The plan's strategy included maintaining currency exposure to the US dollar.
While real estate assets generated operating income, returns were moderated by lower valuations.
OMERS also increased its allocation to fixed income, citing attractive return opportunities, and expanded its use of leverage to enhance investment returns.
In 2024, OMERS made significant investments to bolster its portfolio. In September, the organization agreed to acquire Allianz Capital Partners' 13.5 percent stake in India's Interise Trust, increasing OMERS' ownership to 34.8 percent.
Interise Trust manages a diversified portfolio of 17 operational road concessions across eight Indian states, covering approximately 7,300 lane kilometers.
Additionally, in August, OMERS, in partnership with DWS Group, reached an agreement to acquire Grandi Stazioni Retail, which manages commercial and advertising leasing spaces in 14 Italian railway stations.
These stations attract over 800 million visitors annually. This acquisition marks OMERS' entry into the Italian market and expands its global infrastructure portfolio.
OMERS also reported a 58 percent reduction in portfolio carbon emissions intensity since 2019 and an increase in green investments to $23bn, following its internal OMERS Climate Taxonomy.
Independent credit rating agencies continue to rate OMERS highly, with ‘AAA’ ratings from S&P, Fitch, and DBRS.
The 2024 Annual Report is scheduled for release on February 28, 2025.
