Ontario employers demand pension plan clarity

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The Ontario Retirement Pension Plan – due to take effect in 2017 – has pushed employers across the province into panic, desperately seeking clarity on the expected economic impact.

More than 100 companies signed an Ontario Chamber of Commerce letter, outlining primary concerns and calling on the government to answer pressing questions.

Among the employers are Benson Group, Canada Bread Company, Ford Motor Company, IBM Canada and Maple Leaf Foods.

The plan

Employers that do not already offer a workplace pension plan will be required to contribute 1.9 per cent for each employee – up to $1,643 a year – which workers will have to match.

However, the OCC claim the plan could have a serious economic impact, warning that 44 per cent of its members plan to reduce payroll or employee numbers. Some have warned the plan could cost up to 40,000 jobs.

The Liberal government is required to provide a cost-benefit analysis of the plan by the end of the year but the open letter to Premier Kathleen Wynne pushes for that date to be brought forward.

“We strongly encourage the government to beat that deadline and release the results of its analysis before moving forward with further decisions on ORPP design parameters,” wrote Chamber president and CEO Allan O’Dette.

The current parameters indicate ORPP contributions will be phased in – for large companies (more than 500 employees) contributions will start Jan. 1, 2017, and will be increased each year until 2019.

For medium-sized companies, (50 to 499 employees) contributions will begin Jan. 1, 2018 and small companies (fewer than 50 workers) will start contributing on Jan. 1, 2019 – contributions will be phased in to their maximum by 2021.

Pay-outs can begin as early as 2022, but retirees will not have earned large benefits by that point.

Primary concerns

The OCC expressed five key areas of concern, including the potential cost to companies of setting up the system – so far, the federal government has no plans to help in any way.

“To date, there has been no information released about the projected cost to set up and administer a new pension plan and how the government will ensure that the plan remains cost-effective,” wrote O’Dette. “Government must demonstrate its due diligence before the plan is implemented.”

Companies also wanted more clarification on what savings plans would and registered pensions would deem them exempt.

“It is unclear just how many employers are now exempt,” wrote O’Dette. “The government should release that number publicly so that Ontario employers and employees understand the extent of the ORPP’s reach.”

The full letter to Premier Wynee can be read here.

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