Wednesday
Feb032016

Why are we ploughing ahead with ORPP?

The provincial government released the final design parameters for the Ontario Retirement Pension Plan (ORPP) last week, but it wasn’t successful in quieting the calls from the business community to delay the plan until the federal government has completed its review of the Canada Pension Plan (CPP).  

Many members of the Peterborough Chamber of Commerce are left wondering why the rush?  When the ORPP was announced, the reason for hatching a made-in-Ontario retirement plan was because the federal government was unwilling to consider expanding CPP.  The new government has committed to a conversation with Canadians about how to improve the program and yet Ontario is ploughing ahead.  Our agricultural community may have something to say about the impact of ploughing a field that has been tapped too often.   

The Ontario Chamber of Commerce policy staff has identified the impact of the newly announced design details including:

Implementation timelines. We learned that government will not extend ORPP implementation timelines, as we had asked. This will put pressure on both government and employers to meet the January 1st, 2017 implementation timeline, which we believe is very ambitious. These tight timelines necessitate increased collaboration between government and employers over the next 11 months.

A new funding policy. In the event that the ORPP becomes underfunded, there exists the potential for the ORPP Administration Corporation Board of Directors to increase contribution rates by up to 0.2 percent. The OCC had been seeking a guarantee that employer contribution would not exceed 1.9 percent and we will continue to lobby the government on this point.

A clearer definition of employment. Until the parameters were issued, it was unclear what constituted an “Ontario employee.” This has now been defined. A person will be considered employed in Ontario if they report to work, full- or part-time, at an employer’s establishment in Ontario. This definition captures a greater number of businesses than many anticipated, including federally regulated businesses.

A streamlined comparability test. The government is establishing a comparability test that can be applied at the level of a subset of employees. This has important implications for those employers whose employees are not offered identical benefits. For example, some employers have different benefits for part-time and full-time employees. The government has indicated that this test would streamline the administrative process of assessing plan comparability. The OCC looks forward to receiving greater detail on this comparability test.

ORPP is a large part of the cumulative burden that Ontario businesses are facing.  It has the potential to hurt our competitiveness by hampering a business’ ability to hire or even retain their current employees.  While the economic analysis by the province indicates that there will be a period of reduced GDP growth, as businesses adjust to the cost, the analysis is also banking on reduced Employment Insurance (EI) and Workplace Safety & Insurance Board (WSIB) premiums.  These are not guaranteed reductions.  In the case of EI the federal Liberals did say during the election they would reduce premiums, but not near the same amount as expected when the premium rate was announced under the previous government.  In the case of WSIB, the earliest implementation date is 2019, allowing for a year of adjustment for businesses.  

In October 2015, the Peterborough and Kingston Chambers of Commerce submitted a recommendation to the federal government that employees be allowed to increase their CPP contributions.   

The Peterborough Chamber has been involved in the ORPP conversation for the past two years and has contributed letters and impact analysis on behalf of our members.   And while some of the design details have been created in direct response to focused advocacy by us and our colleagues at the OCC, the question remains why January 2017 is a hard and fast timeline. 

Taking the time to allow the federal government to examine the CPP is not a sign of weakness; it’s a sign of a province recognizing that ORPP will have a negative impact on our fragile economy, hurt our competitiveness and is not the best answer right now for business or Ontario residents.   

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