Province passes Ontario retirement pension plan act
Ontario is moving forward with the Ontario Retirement Pension Plan (ORPP).
On June 2, the province passed the Ontario Retirement Pension Plan Act, which outlines the key elements of the plan.
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Mitzie Hunter, Associate Minister of Finance for the ORPP, told CBC News the ORPP is intended to provide Ontarians with a predictable stream of retirement income for life.
"The ORPP builds on the strength of the CPP and aims to replace up to 15 per cent of a person's pre-retirement income, of up to $90,000" she said.
Hunter said the ORPP was created because pension coverage is decreasing in Ontario, adding two-thirds of workers are unable to access a workplace-safe pension plan.
No movement on CPP
"The reason that we entered into the ORPP in the first place was because we couldn't get any movement on CPP enhancement under the previous federal government," she said.
Hunter said later this month, the Ontario finance minister will attend a national meeting to see if the provinces can reach a consensus on CPP.
"Our premier has said we would be happy if we can find a consensus across the country on CPP enhancements but were not going to let people down if we can't, and therefore, we will continue to put the ORPP in place in the absence of a consensus on CPP," she said.
The ORPP plans to expand coverage to over four million workers by 2020 who do not have adequate workplace coverage. It will not affect Ontarians who already have a registered workplace pension plan in place, as long as it passes the ORPP comparability test.
"When we talk about comparable, what we mean is a plan that provides people with a predictable stream of income for life, and the security that they won't outlive their savings," Hunter said.
The ORPP and CPP combined will provide eligible people with about 40 per cent of their pre-retirement income, she said.
Ontarians should continue saving
But that doesn't mean Ontarians should stop saving for retirement on their own.
"Certainly the individual will want to save on their own for their other goals that they have in retirement," Hunter said.
"We're just ensuring that when people retire, they can retire in dignity and they will have a predictable stream of income for life," she said.
In addition to helping individual Ontarians, Hunter said the ORPP will also help the economy at large.
She said the Conference Board of Canada conducted a cost benefit analysis of the ORPP and found both consumers and the economy is better off under the ORPP.
"This is good news for Ontarians. The ORPP is expected to add billions of dollars to Ontario's economy in the long term," she said.