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Ontario takes first steps in setting up new provincial pension plan

Finance Minister Charles Sousa speaks in Toronto on Feb. 18, 2014


The Ontario government is taking the first steps toward setting up a new provincial pension plan – but is also holding more consultations to work out some details.

The government will table legislation Monday afternoon that would set some basic rules for the pension plan, such as its 2017 start date and the fact it would be managed by an arm's-length agency.

"We are taking the necessary steps to ensure that Ontarians are better able to enjoy their retirement years," Finance Minister Charles Sousa said at a Queen's Park press conference. "And that is something that benefits everyone."

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The Ontario Retirement Pension Plan, to be paid for jointly by workers and their employers, is meant to roughly double Canada Pension Plan benefits. It will be mandatory only for people who do not already have a "comparable" pension through their employer.

Associate Minister Mitzie Hunter said the government will start another round of consultations next year on some pieces of the plan. For instance, the government has to decide what exactly a "comparable" pension is – something that would determine how many companies can get out of joining ORPP. The province must also set a low-income threshold, below which people would not have to contribute to the pension.

The government has already been consulting on the pension plan for the past year. It has set up an advisory panel to help with its work.

Mr. Sousa said Monday he would also introduce long-awaited legislation to allow for Pooled Registered Pension Plans, voluntary plans that companies and individual workers can buy into.

The ORPP is a key policy of the Liberal government, which argues it is the best way to fix the retirement savings crunch in this country. In a sign, perhaps, of how important the government sees the need for a pension plan to be, Mr. Sousa even paraphrased Abraham Lincoln's Gettysburg Address at the press conference Monday.

"No one will likely remember what we say here today," he said. "But people will remember what we are doing here today."

But the federal government and the small business lobby is against the ORPP, arguing businesses shouldn't be forced to pay more to help their employees' retirements. They have labelled the new pension plan a "payroll tax." Mr. Sousa dismissed that as an "extreme point of view."

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"These are premiums. These are contributions made by individuals into their savings plan for themselves. None of this money comes to the coffers of the government. It's managed outside of government," he said. "They made this same argument about CPP in the 1960s. They were wrong then, and they're wrong now."

Progressive Conservative MPP Julia Munro contended the government should be consulting more on the pension plan. She said that, given its potential to drive up business costs, it has not been sufficiently debated. The government's consultations to date, she argued, have not allowed enough people to voice their concerns.

"There hasn't been a fulsome debate or conversation," she said. "We need to have a broader public conversation, so people understand what in fact they are potentially looking for."

New Democrat Leader Andrea Horwath said that, instead of setting up a pension plan on its own, the province should wait until the next federal election, in case the NDP wins and enhances CPP instead.

"We'll see what happens next year," she said.

The government has said the ORPP could be rolled into CPP if Ottawa ever changes its mind and decides to enhance CPP.

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