Wynne government slowing down Ontario Retirement Pension Plan

Premier Kathleen Wynne's government is slowing down the phase-in of its controversial new Ontario Retirement Pension Plan to ease the transition for small and medium-sized businesses.

Ontario to delay phase-in of ORPP for employees of small businesses until 2019

Premier Kathleen Wynne is set to announce plans to slow the implementation of the provincial government's new pension plan for small and medium-sized businesses, sources tell CBC News. (Chris Young/Canadian Press)

Premier Kathleen Wynne's government is slowing down the phase-in of its controversial new Ontario Retirement Pension Plan (ORPP) to ease the transition for small and medium-sized businesses.

Under the new plan, only large businesses with more than 500 employees will have to begin contributing immediately when the ORPP begins in 2017. 

Medium-sized firms — those with 50-499 employees — will contribute more starting in 2018, while small businesses won't have to pay the increase until 2019.

The self-employed will also be required to contribute to the ORPP, as they do to CPP, starting in 2019.

The Ontario plan will require companies to pay premiums of 1.9 per cent of salary for each employee, up to $1,643 a year, and workers will pay an equal amount.

Workers and companies with "comparable" workplace pension plans will be exempt. 

Wynne said the Ontario Retirement Pension Plan (ORPP) is needed because:

  • Only two thirds of Ontario workers have workplace pension plans.
  • Today's workers tend to switch jobs and careers more frequently.
  • Canada Pension Plan may not provide enough for a comfortable retirement.

Wynne said the plan will address the "widening gap between what people save and what they'll need for retirement."

Other details about the plan:

  • It will expand coverage to about 3.5 million workers.
  • Every employee in Ontario would be part of the ORPP or a comparable workplace pension plan by 2020.
  • The ORPP will aim to replace 15 per cent of an individual's earnings, up to $90,000 (in 2014 dollars).
  • Wynne said costs of administering the ORPP would be covered by the plan, not taxpayers. Contributions and investment funds would be held in trust for ORPP beneficiaries and would not form part of general government revenues.
  • If approved, the ORPP would come into effect on January 1, 2017.

Ontario passed legislation in April to create the ORPP, but the federal government is refusing to help in
any way.

Critics blast plan as 'just crazy'

Wynne and Conservative Leader Stephen Harper have engaged in a war of words during the federal election campaign the ORPP, which Harper warns will kill jobs by increasing costs on businesses.

Wynne said Harper was playing politics and vowed to proceed without Ottawa's help, but admits it will cost more to set up the provincial plan without federal assistance. 

Other opponents of the ORPP are painting it as a payroll tax that will harm job creation. 

"It's about the worst public policy idea to come along in decades, said Dan Kelly, the president of the Canadian Federation of Independent Business, in an interview with CBC News. 

"To create a completely new separate bureaucracy to collect taxes on behalf of Ontarians and then save them for 40 years until retirement, we think, is just crazy." 

Harper has turned the Ontario pension plan into a federal election issue. The Conservative Party put out a news release calling it "a Justin Trudeau-Kathleen Wynne tax hike" and "a dangerous scheme to take money from workers and their families, kill jobs, and damage the economy." 

The province says a person earning $70,000 per year contributing to the ORPP for 40 years would receive a pension of $9,970 annually upon retirement.

With files from The Canadian Press


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