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Ontario Pension Plan Will Not Apply to Federally Regulated Companies – At Least for Now

(Jan. 12, 2015) – Ontario Premier Kathleen Wynne recently stated her government will not wait to see what changes might be coming to the Canada Pension Plan (CPP) over the next few years but will be moving forward with the first phase of its own plan to introduce the Ontario Retirement Pension Plan. According to the premier, companies with 500 or more employees will be first to be required to participate in the ORPP or provide a comparable pension to their employees on January 1, 2017. All employers will be included by 2020.

With the clock now ticking, OTA has received an indication that a key element of the government’s plan and a key concern of OTA — whether the provincial government intended to try and apply the ORPP to federally-regulated companies (not just those that come under provincial jurisdiction) – has been laid to rest for the time being.
AS part of discussions with officials from the office of the Associate Minister of Finance (who has responsibility for the ORPP), OTA was informed there is no “imminent” plan to bring federally-regulated companies into the ORPP.

In its initial discussion documents on the ORPP, the government indicated that federally-regulated employers and employees would not be covered by the ORPP. However, the government’s intentions became less clear when the Premier began making public statements that it was her desire to have the ORPP cover “every worker in Ontario by 2020” and OTA’s requests for clarification were met with equivocation.

“Uncertainty over whether people will have enough to retire on is a legitimate economic issue, so we understand the government’s motivation,”  says OTA president David Bradley. “But it is a complex issue and we’re not sure the ORPP, as structured and the rules around what is a comparable program, is the answer.”

“Regardless of how laudable the government’s intentions are, the province can’t exceed its constitutional jurisdiction,” he said.
While the government is leaving the door open to returning to the issue in the future, Bradley said he could not see how that would be possible. “No one seems to want to open up the Canadian constitution.”

For now, it appears the province is focusing their efforts with the federal government on getting the plan registered and working out the details of the ORPP’s administration.
While OTA continues to call for changes to the ORPP (e.g., additional flexibility through extension of the phase-in periods, lower minimum contribution levels, acceptance of group RRSPs/TFSAs as comparable to the ORPP and some form of relief for older workers who will pay into the plan but will not receive full benefit), provincially-regulated employers and employees are advised to begin preparing for the inevitable.

As it currently stands, starting January 1, 2017, companies with 500 employees or more that do not have comparable registered workplace pension plans, will be required to earmark 0.8 per cent of their payroll towards the ORPP which will be matched by the employee. That percentage will eventually rise to 1.9 per cent in 2020 and will be capped at a combined 3.8 per cent of an employee’s annual salary of up to $90,000. (By comparison, CPP contributions were made on up to $54,900 of earnings last year.) Those working at companies employing between 50 and 499 will begin their phase-in in 2018, with all smaller firms by 2019, and benefits will begin to be paid in 2022.

This entry was posted on Thursday, January 14th, 2016 at 12:06 pm and is filed under Community Events. You can follow any responses to this entry through the RSS 2.0 feed. Both comments and pings are currently closed.

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