Monday
Dec082014

Ontario Businesses Urge Government to Defer Ontario Retirement Pension Plan Legislation

The latest update Wednesday, December 17, 2014: 
The Government of Ontario is starting a consultation process on the ORPP legislation.  They are currently asking for feedback in three areas:

  • Defining a comparable workplace pension plan: Since the ORPP is intended to help those without workplace pensions, workers already participating in a comparable pension plan would not be required to enrol in the ORPP.
  • A minimum earnings threshold: To reduce the burden on low-income workers, earnings below a certain threshold would be exempt from contributions, similar to the Canada Pension Plan (CPP). 
  • Supporting the self-employed: Since self-employed individuals have a unique status in the labour market as both employee and employer, the province is consulting on how to best assist them in saving for their retirement.

If you have any comments on any of these areas please send them to sandra@peterboroughchamber.ca

There will also be opportunity to comment through the "Peterborough Chamber" group of LinkedIn. 

         

In this Rapid Policy Update, you will find key information on two bills that were introduced today by the Government of Ontario. Both bills will introduce significant reforms to the pension system. The Ontario Chamber Network has significant reservations about the Ontario Retirement Pension Plan Act, 2014 (Bill 56), which will impose new costs on employers.

We are broadly supportive of the spirit of the Pooled Registered Pension Plans Act, 2014 (Bill 57), which could provide businesses with a voluntary retirement savings tool. We will provide additional information to the Chamber Network as it becomes available over the coming days.

OCC White Paper on Pension Reform  

Answers from Associate Minister Mitzie Hunter after Network Conference Call 

 

Bill 56: Ontario Retirement Pension Plan Act, 2014

The Ontario Retirement Pension Plan Act, 2014, will pave the way for the creation of the Ontario Retirement Pension Plan (ORPP). If passed, this Act would commit the government to establishing the ORPP by January 1, 2017.

The ORPP is the government's response to Ontario's growing retirement savings challenge, in which a significant number of today's workers could struggle to maintain their standard of living during retirement.

The ORPP, which aims to supplement the Canada Pension Plan (CPP), will require employers to match employee pension contributions. Employees and employers will contribute 1.9% each (3.8% combined) on an employee’s annual earnings up to $90,000.

 

Our Position

As we stated in a recent media release, the Government of Ontario should defer its ORPP legislation until it has answered outstanding questions about the impact the plan could have on Ontario's economic competitiveness.

The ORPP will increase the cost of doing business in Ontario. For example, in the case of a business that employs 10 people with a salary of $45,000, the employer will be obligated to pay almost $8,000 per year in additional pension contributions.

We have been adamant that the Government of Ontario hold back on its proposed pension plan until Ontarians know more about its potential impact on the economy. Businesses across the province are already facing rising costs, including soaring electricity prices, high WSIB premiums, and a higher minimum wage.

In a recent letter, a coalition of over 50 chambers of commerce and boards of trade called on the Government of Ontario to answer outstanding questions about the impact the plan could have on the economy.
 

Bill 57: Pooled Registered Pension Plans Act, 2014

The government also introduced the Pooled Registered Pension Plans Act, 2014, which would allow Ontario businesses to offer Pooled Registered Pension Plans (PRPPs) to their employees, as well as make them available to the self-employed.
 

Our Position

PRPPs must form part of the solution to Ontario's retirement challenge. PRPPs are voluntary, low-cost, and tax assisted savings vehicles that leverage the province's existing pension infrastructure. They do not require the creation of a new pension bureaucracy.

Press Release:
TORONTODec. 8, 2014 /CNW/ - The Ontario Chamber of Commerce and its network of 160 chambers in communities across the province are urging the government to defer legislation that will pave the way for the Ontario Retirement Pension Plan (ORPP). The business group is calling on the Government of Ontario to answer outstanding questions about the impact the plan could have on the province's economic competitiveness. Businesses are concerned that the proposed pension plan will lead to job losses in the province.

Today, the government is introducing legislation that will pave the way for a new public pension scheme for Ontario. The ORPP, which aims to supplement the Canada Pension Plan (CPP), will require employers to match employee pension contributions, increasing the cost of doing business. For example, in the case of a business that employs 10 people who earn $45,000 each, the employer will be obligated to pay almost $8,000per year in additional pension contributions.

According to a recent survey conducted by the Chamber, 72 percent of businesses in the province believe that pension reform should be a priority for government. However, the same businesses are also clear about their concern for Ontario's broader economic picture, in which the economy is projected to grow slowly for the foreseeable future.

"Employers worry that by making it more expensive to hire, the new pension plan will negatively impact job creation and hurt Ontario's competitiveness," says Allan O'Dette, President & CEO of the Ontario Chamber of Commerce. "Combined with increases in electricity prices, high WSIB rates, and, for many employers, a higher minimum wage, the new pension plan will burden businesses that are already struggling to meet the rising cost of doing business in Ontario."

According to the same survey, only 23 percent of the nearly 1,000 responding businesses could afford the costs associated with increased employer pension contributions.

A coalition of over 50 chambers of commerce and boards of trade from across the province recently submitted a letter to the Government of Ontario, calling on it to respond to a number of crucial, but unanswered questions.

"What will be the impact of a fully-implemented ORPP? What happens when a business can't afford to meet the requirements of the ORPP? How much will it cost to administer a standalone provincial plan?" asks O'Dette. "Businesses across Ontario are seeking answers to these questions."

"The retirement income challenge is a real one," he adds. "However, we need to ensure that any changes to the pension system are made with a full understanding of the impact they will have on Ontario's business climate. We are not satisfied that these questions have been fully answered."

 

PrintView Printer Friendly Version

EmailEmail Article to Friend

« Policy Forum 2014: Cultivating a culture of openness with City Hall | Main | Increasing Gender Diversity in Corporate Leadership - Press Release Government of Ontario Tuesday, December 2, 2014 »