Liberals introduce bill to create provincial pension plan
Ontario Finance Minister Charles Sousa and Associate Finance Minister Mitzie Hunter announce they are introducing new pension legislation on Monday Dec. 8, 2014. (ANTONELLA ARTUSO/Toronto Sun)
The Kathleen Wynne government has introduced legislation to clear the way for the creation of a new Ontario Retirement Pension Plan (ORPP).
The proposal would create workplace pensions for many people who currently are without one, enhancing their retirement savings, but would mean a significant reduction in regular take home pay starting Jan. 1, 2017.
Associate Finance Minister Mitzie Hunter said while her government would still prefer to see the federal government enhance the country’s CPP plan, it is prepared to go ahead with the made-in-Ontario initiative.
“What I keep hearing, without exception, is that people are worried about saving enough for their retirement. People are concerned about outliving their savings,” Hunter said Monday. “The under-savings problem in this country is real.”
The ORPP would provide portable, predictable retirement income for employees who currently have no workplace pension plan, Hunter said.
Finance Minister Charles Sousa said Ontario is also bringing in legislation to facilitate pooled registered pension plans (PRPP) for employers and employees.
“PRPP are voluntary, tax-assisted individual retirement savings plan,” Sousa said. “They are a new low-cost savings vehicle that is professionally managed and portable from one workplace to another. They are also intended to make it easier for employees and self-employed persons to save for retirement.”
Many businesses have expressed strong reservations about the ORPPs.
The Ontario Chamber of Commerce, with a network of 160 chambers across the province, warned of job losses and urged Wynne’s government to defer the ORPP legislation.
“Employers worry that by making it more expensive to hire, the new pension plan will negatively impact job creation and hurt Ontario’s competitiveness,” Allan O’Dette, president and CEO of the Ontario Chamber of Commerce, said in a statement. “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 2014 Ontario budget, the ORPP would impact about 3 million workers who do not already have a workplace pension plan.
Employees making $45,000 a year would see an extra $788 a year come off their paycheques, in exchange for up to $6,410 more in annual retirement income.
Workers earning about $90,000 a year would see their take home shrink by about $1,650 a year, but could bank on an extra $12,8100 in annual income on retirement, the budget says.
Employers would be required to match employee contributions.
Progressive Conservative MPP Julia Munro said the Liberal government has held invitation-only consultations on the ORPP which tells her that it’s concerned about negative public reaction.
Introducing two bills for two different types of pension plans on the same day is a deliberate attempt by the government to further confuse citizens about what it has in mind, she said.
NDP Leader Andrea Horwath said she, like federal NDP Leader Thomas Mulcair, continues to support a CPP enhancement where Canadians would pay more into the existing plan in order to collect higher benefits.
Would you support a new mandatory Ontario pension plan if you and your employer both had to kick in extra money each year but you got more on retirement?