Ontario will halt provincial pension plan if CPP deal reached

Creating a new Ontario Retirement Pension Plan was a key plank in Premier Kathleen Wynne's last election campaign, but she's now signalling she's willing to abandon it, if a deal to improve CPP is reached Monday

Ahead of crucial meeting of finance ministers, Kathleen Wynne and Charles Sousa offer compromise

Premier Kathleen Wynne and Finance Minister Charles Sousa are sending signals that they will scrap their proposed Ontario Retirement Pension Plan if Ottawa and the provinces can reach a deal on enhancing the Canada Pension Plan.

Premier Kathleen Wynne is signalling she's willing to abandon her proposal to create a provincial pension plan if a meeting on Monday leads to a deal on improvements to the Canada Pension Plan (CPP). 

The federal and provincial ministers of finance are set to meet in Vancouver on expanding CPP contributions and payouts, with negotiations happening behind the scenes this weekend. A deal requires the consent of seven of the 10 provinces with two-thirds of Canada's population. 

If an agreement emerges, the Wynne government will put a halt to the looming Ontario Retirement Pension Plan (ORPP), senior officials tell CBC News.

In an interview on CBC's Power and Politics, Ontario Finance Minister Charles Sousa said his government wants to see "an enhanced CPP that's timely, that's adequate, that provides a sufficient amount of supports in the long run."

"If that is able to be achieved this weekend, we will proceed with CPP enhancement as opposed to the Ontario pension plan," Sousa told host Rosemary Barton. 

The push to boost pension contributions stems from concern that too many Canadians aren't saving enough for a comfortable retirement, with the modern labour environment of casual and contract work providing too few employees with workplace pensions.

With the Harper government reluctant to boost CPP, Wynne made the creation of a new provincial pension plan a key plank in her victorious 2014 election campaign. It would cover some three million Ontarians who don't have a workplace pension. 

In an interview airing Saturday on CBC Radio's The House, host Chris Hall asked Wynne why she's now willing to abandon the plan. 

"I've always said my first choice is to have a CPP enhancement," Wynne said.  "What's changing is that it looks like there's more of a possibility that we might get agreement across the country."

Finance Minister Bill Morneau meets his provincial counterparts Monday in Vancouver to discuss boosting Canada Pension Plan premiums and benefits. (Paul Chiasson/Canadian Press)

The Ontario provincial pension plan would create a maximum annual pension of $12,849 for a worker who pays into the plan for 40 years. Wynne has indicated she's willing to accept a deal that boosts CPP pension benefits to about two-thirds what her government is proposing under the Ontario plan

Wynne described herself as "more optimistic" about the chances for a deal than she was just a few weeks ago. 

"There are a number of premiers across the country who would like to see movement," Wynne said. "There's more potential for some success. I'm excited about it, but I will not bet on what the outcome will be." 

Ontario Retirement Pension Plan 

Who would pay into it? 

  • Employees who don't have a workplace pension (about 3 million workers) and their employers

How much would premiums be?

  • Employees and employer would each contribute 1.9% of the worker's annual earnings up to $90,000

How much would pension benefits total?

  • If you make $60,000/yr, you and your employer would each pay $1,073/yr in premiums. If you contribute for 40 years, your Ontario pension would be $8,566/yr

Federal Finance Minister Bill Morneau has said he wants to see a deal on CPP completed by the end of the year. But Ontario government officials are pushing for an agreement now, otherwise their plans for the ORPP must keep moving ahead. 

After clashing sharply and frequently with then-prime minister Stephen Harper over the ORPP, Wynne's position on its fate under a new federal Liberal government has followed a somewhat wiggling path.

During the federal election campaign Wynne suggested she would drop the provincial plan if Justin Trudeau and the Liberals won. A few months after the Liberal victory, Ontario insisted it would proceed with its own pension plan, after a meeting of federal-provincial finance ministers failed to produce a deal to boost CPP.

Provincial pension delayed til 2018

In February, Sousa announced a one-year delay in the provincial plan's start date, to Jan. 1, 2018, and agreed to work with Ottawa and the provinces to "develop options" for enhancing the CPP that would be on the table ahead of Monday's meeting of finance ministers. 

Still, the Wynne Liberals continued to talk of the provincial pension plan as a high priority and to put the machinery in place to establish it. In January, the government named the CEO of the corporation administering the plan. The legislation creating the ORPP passed at Queen's Park on June 2, and has already received royal assent. 

In Question Period earlier this month, Associate Minister of Finance Mitzie Hunter said the government is "moving forward with the implementation" of the pension plan. "It will bring financial security. It will ensure that when people retire, they could do so with dignity." Hunter has since been shuffled to the education ministry. But Wynne named Indira Naidoo-Harris to become the new associate minister responsible for the ORPP.