Business out to kill new Ontario pension plan!



Ontario pension plan

Ontario Premier Wynne and Pension Minister Mitzie Hunter defend new Ontario pension plan from business attacks.

The Ontario Government’s proposed Ontario Retirement Pension Plan (ORPP) is hitting a solid wall of business opposition.

The purpose of the plan is to provide a supplement to the Canada Pension Plan (CPP) for the roughly 60% of Ontario workers who lack a defined-benefit workplace pension. The new provincial pension aims to increase retirement incomes of those enrolled by nearly as much as the benefits paid by the CPP.

But Ontario business is doing everything it can to make sure the new Ontario pension plan never sees the light of day.

Ironically, business is backing another newly introduced Liberal retirement savings option – the Pooled Registered Pension Plan (PRPP). On December 8, two separate pieces of legislation were introduced by the Ontario Liberal Government: one enabling an eventual ORPP and the other, PRPP’s.

The Canadian Federation of Independent Business (CFIB) is one employer group that is opposing the mandatory Ontario Retirement Pension Plan (ORPP) saying the voluntary PRPP’s are all that is needed. No employer contribution is required in a PRPP while a 2% (of payroll) employer contribution would be required under the ORPP.

“We welcome today’s introduction of the Pooled Registered Pension Plans Act which will bring forward a voluntary, low-cost and administratively-simple savings plan for Ontarians,” said Nicole Troster, CFIB’s senior policy analyst for Ontario.  “By taking this initial step, Ontario joins the federal government and a growing list of provinces that have already introduced or passed such legislation.”

“We expect PRPP’s to make it easier for small businesses to contribute to a retirement plan,” said Troster. “We see the PRPP as being a more affordable tool for enhancing retirement savings, but we caution the province that implementing a mandatory ORPP would significantly diminish the financial capacity of Ontarians to contribute to voluntary options, as well,” concluded Troster.

The tabling of mandatory ORPP legislation covering roughly 60% of Ontario workers also raised strong objections from Canada’s life and health insurers – the principle sponsors of PRPP’s.

Specifically, the Canadian Life and Health Insurance Association (CLHIA) took issue with a recent consultation paper’s description of one of the key features of the Ontario Retirement Pension Plan (ORPP).  Employees who already have “comparable” workplace pension plans are not required to enroll.

What the insurers object to is the government’s definition of a “comparable” plan. The consultation paper says “comparable” would not include the defined-contribution (DC) plans many companies have adopted as a substitute for defined-benefit plans. Nor would PRPP’s be considered “comparable” to the ORPP. Insurers such as Manulife Financial Corp. and Sun Life Financial Inc. often act as DC plan providers and administrators and will be offering PRPP’s as well.

That definition of “comparable” means that employers currently offering a defined-contribution plan would have to contribute to the ORPP as well.

The provincial government’s reason for excluding DC and PRPP plans is that they don’t offer a “predictable stream of retirement income that is paid for life” the way the ORPP will. The DC plans don’t necessarily protect people from outliving their savings, the paper states, adding that employee contributions aren’t always equally matched by employers and those enrolled often run the risk of lower-than-expected returns.

The big insurers argue that more than 600,000 Ontario residents are using DC plans for retirement savings successfully, and that the introduction of a mandatory ORPP may cause companies to drop existing DC plans.

Why the big banks and insurers are wrong and why the ORPP is a good deal for Ontario workers

While employers, insurers and the big banks may make a lot of noise in opposing the CPP-type ORPP, their arguments for opposing the plan are deeply flawed. Two-thirds of Ontario workers don’t belong to a workplace pension plan and must rely on a combination of their own savings and public programs. The problem is that these workers are living longer, not saving enough, and are not sufficiently protected by mandatory pension schemes.

There is also a whole lot of employer and insurer self-interest involved in opposing the ORPP.

Employers don’t want to make contributions to a new pension plan and insurers don’t want competition to the DC and PRPP plans they offer. Insurers and banks make billions of dollars in fees by sponsoring DC plans and RRSP’s and will make billions more once PRPP’s are offered across Canada.

Labour, the NDP and the provincial Liberal government correctly maintain that while the publicly administered CPP is fundamental to the retirement income security of Ontarians, its benefits alone are too low to meet the post-retirement needs of middle-income earners. The CPP currently pays a maximum of about $12,500 a year, and the average annual benefit paid is far below that, at about $6,400 in Canada and $6,800 in Ontario.

The design of the ORPP mirrors many of the key features of the CPP. This has the two-fold benefit of building on a well-known, trusted and successful model, and of providing for seamless integration with any future expansion of the CPP. The Ontario Government has assembled a big-name line-up of external pension and retirement income advisers including former prime minister Paul Martin, former Bank of Canada governor David Dodge and Michael Nobrega, the recently retired CEO of the OMERS pension plan.

When former Prime Minister Lester Pearson introduced the CPP in1966, the big insurers and banks did everything they could to kill it off in order to protect their fees from retirement savings products like RRSP’s.

The banks and insurers were wrong then and they are wrong now.

The CPP-type ORPP should be implemented as soon as possible and the PRPP’s favoured by the banks and insurers should never see the light of day.

When it comes to ensuring that Ontario workers can retire with dignity and justice, the self-interested arguments of the big banks and insurance companies should be rejected for once and for all.

20 thoughts on “Business out to kill new Ontario pension plan!

  1. Pierre A. Lauzon

    Can someone tell me why a foreigner from another country can come to live in Canada and has never paid taxes hear or worked here and at 65 they can receive double the amount of pension that a person born here and has paid the government for over 40 plus years , they should not be able to receive any pension at all and to be able to draw a pension you should have to pay a minimum of 30 years of taxes to the government or have worked in Canada for at least 30 years and also don’t forget you should be a Canadian citizen for real. We as Canadians are loosing money to none Canadians who take advantage of us and their is proof of this , the Canadian government should stop these payments emmediately end recover the money they paid out with interest. To all Gorvernment Party’s wake up and help the real Canadians first , then we can look at how we can help the foreign visitors. Thank you.

    1. Christopher Kirouac

      Well, it’s about time!!! And I hope at least one of the plans gets implemented.After reading the “comments” from the no doubt CONservative whiners, I have to ask, why is it all right for the CON government to STEAL from E.I. ? That fund is WORKERS money.The Govnmt DOES NOT fund that.And they have NO PROBLEM stealing from O.A.S and C.P.P either,then tell us there is a “shortfall”. A lot of people in this Province make minimum wage or just slightly more.Or work 2 and 3 part-time jobs.They don’t have “extra” money to put into R.R.S.P.’s Why should they be denied a right to a decent life in their old age?? And ,if you are a “struggling” business owner,paying your employees minimum wage and whining that it is “too much”, maybe your business model is flawed.Remember ,your employees need to be able tobuy your crap too!!

      1. Allan Pearson

        “They don’t have “extra” money to put into R.R.S.P.’s”
        Than what makes you think that these people will be able to afford the employee contributions portion of the Liberal Pension Plan? What makes you think that their employers will be able to afford to give these people a raise (even if it is just cost of living raises) after the Liberals make the employers contribute also?

      2. Matthew

        The contradictions are astounding. “I don’t have money for an RRSP, but I want government to take my money to retire.” to me that statement says you have no discipline.

  2. Mabel Regimbal

    As the owner of a small business, already struggling to make ends meet and still struggling with the effect that raising the minimum wage so much at one time, I have to wonder if the Liberal government is really trying to kill these small businesses. We are providing jobs, at minimum wage all be it but still jobs that help keep those who want to work off of social assistance. At the rate the Liberal government is going, these jobs will be gone as well. Instead of hitting these small businesses so hard, they should be doing something to help them. Some communities are receiving a share of $1.6 million dollars to create more programs to give the businesses advice but the only people that are helped by these dollars, are the people they hire to run the programs, people with no more knowledge about the small businesses than the business owners. If the Liberals really want to help employees, they should get rid of the HST for small restaurants, that would insure jobs in this sector.

  3. frank trousdell

    Why do we need another money grab plan that will only give Ont gov another pot to steal from. These RSPs are no good anyway. You pay tax twice and sometimes three times by the time you use your own money. When you earn the money, when you early withdraw and when you retire and withdraw. Gov is the only winner. Under your mattress is the only plan. Don’t make interest you will pay half in taxes so you are better off hiding it in you mattress. Ontario gov are thieves, they stole my CPP! They do not care whether you can pay for your prescriptions or not. We the people of Ontario are idiots and blind sheep when electing our government. Wynn do what is truthfully right…return the billions you and your forty thieves stole and mismanaged over the past ten years!

  4. Matthew

    The ORPP is a horrible idea. The first reason is after E-health, OLG, Mars, and ornge, I really don’t trust this government to run a lemonade stand let alone handle my life savings. I highly doubt the money would be there for me when I retire.

    The worst part is that when you die, you can’t pass this money on to your spouse or kids. At least an RRSP, TFSA, or other investments can be passed on.

    And what happens if after a while I move to another province? Do I get something from what I put in or am I out if luck?

    Now I do believe that the government should be doing more to educate the public about how to save, but I really don’t want Wynne doing it for me. And Canada has one of the lowest rates of senior poverty in the world. This plan is a solution in search of a problem.

    Wynne has also suggested that this could be merged with civil service pension plan. And that some of this money could be used for infrastructure. If that happens we definitely will not see that money.

      1. Lisa

        I am also concerned about this. I do not plan to retire in Ontario. I might leave the province in 5-10 years. I don’t have family here.

  5. Richard Wakefield

    ” Two-thirds of Ontario workers don’t belong to a workplace pension plan and must rely on a combination of their own savings and public programs. The problem is that these workers are living longer, not saving enough, and are not sufficiently protected by mandatory pension schemes.”

    That means you want people like us who have prudently put enough away for retirement to pay out of our income to those who have not saved for retirement. That’s theft. Period.

  6. carol booth

    Personally I do not trust this Liberal government to be able to successfully initiate and run a pension program. The money raised will go into the general revenue and be used to help finance all programs as well as increases in government workers and politicians wages and pensions. Ontario taxpayers will then be appealed to accept even higher taxes so that the pensions owing can be paid.

  7. Doug

    The ORPP is a horrible idea. I don’t know who you people are, but I’m in the 99% and you don’t speak for me.

    Comments from Mabel, Matthew, Richard and Carol – all bang on. It will hurt small business, will be horribly mismanaged, is the worst kind of pension plan (a DB) and puts more burden on those of us living within our means.

    Pierre – that has been debunked many times over

    Frank – that is not how RRSPs work. You get a tax refund when you contribute and pay tax when you withdraw, That’s it.

  8. Allan Pearson

    This liberal government is killing our economy! Is it not enough to have raised the cost of electricity to unaffordable levels? Every machine in every factory runs on electricity, and so it is a major cost of doing business. Now under the liberals its an even bigger cost making it that much harder for Ontario businesses to survive (never mind grow and create jobs). Now they are going to add even more costs in the form of a pension plan. What a wonderful idea. Have struggling to survive businesses pay the cost of buying votes for the liberals.

  9. Rick Hebert

    oh the good people in the GTA will push it through as always. Wake up people ur not thqt stupid r u. I will say it again the white collar people in Government need to go and the blue collar need to be in power ,surely cant do any worse.

  10. Silly Ness From the Writer

    Oh for crying out loud ….. big business / banks / insurance companies are NOT objecting to the proposed ORPP …. just to exempting only existing DB plans !!! Small businesses, yes, they are objecting, for their own good reasons. The writer knowingly muddles the two for intended effect (#FAIL).

    The ORPP will wipe out existing Group RRSP DC Plans — no more borrowing from your own Group RRSP account to buy your first home, thanks to the Ontario government. 70% of Ontarians own their own home, thanks in part to the RRSP home purchase plan. That’ll be going away for Group RRSP Plans with the Ontario government’s plan. Employees love the flexibility of the Group RRSP. It belongs to them, fully portable and comes with professional investment advice from the financial planning industry. Many Group RRSP members do far better than the CPP group with their investments.

    Target Date funds allow them to be out of equities as they approach retirement. The Ontario government would have us all believe that all Group RRSP members are still 100% invested in equities at age 64. That’s NOT the case. In a Target Date Fund, you won’t be; you can’t be.

    Lots of employers put good Group RRSP plans in place years ago, not waiting for the Ontario government. Now the Ontario government wants to pretend its all their idea, and they have one that’s better. It’s not, and it won’t be.

    1. Silly Ness From the Writer

      ….. and when the ORPP starts falling short of its resources for benefits, which it will, just like the CPP, less and less employees will pay in over time. THEN the Ontario government will up its taxes on Joe Taxpayer to cover the shortfall, and everyone will be saying, “How the hell did that happen!?!”. Remember, this is a government administered idea and plan, and the WORST kind of government, the Ontario Provincial ONE!!! — the one that’s driven this province into the black hole of hell the past 20 years. Ontario used to be country’s great economic engine. Not anymore. Thanks to the Ontario government.

      So, that day of reckoning will come; it might be 40 years down the road … but it will come. Get ready, Joe Taxpayer (or your little kid Joe Taxpayers of the future).

  11. Anonymous

    just more money for the government to misuse and abuse, just like the CPP was misused and when you have to give up work for medical reasons you have to be dieing to receive CPPD benefits even though you have paid into the program for years. If you have to give up working you should be entitled to collect benefits to make ends meet so you don’t loose everything you have worked for and you should not have to go without eating to pay your mortgage. In my opinion the government should not be able to tell us we have to have a retirement plan. it is up to us to make that decision .

  12. Rob

    The problem with all of this is that the ORPP is NOT a pension plan. The Wynne government plans to use the premiums from the pensions plan on infrastructure projects. The money is being spent, not saved or invested. The money to pay the pension benefits will have to come from yet higher taxes on the workforce at the time. Don’t buy into the scam that this government is trying to pull.


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