Business groups believe there will be unintended economic consequences if the Ontario Retirement Pension Plan (ORPP) becomes law, but labour organizations say it doesn’t go far enough.
The Canadian Federation of Independent Business (CFIB) told the Standing Committee on Social Policy, which is holding public hearings on the ORPP over the next couple of weeks, that small business owners shouldn’t be forced to make additional pension contributions.
“We fear this is going to be a very significant charge” to Ontario businesses, said Plamen Petkov, the CFIB’s vice-president of Ontario.
Read: What DC plan sponsors need to know about the ORPP
If the ORPP is implemented, the organization believes employers with DC plans should be exempt and companies with fewer than 20 employees shouldn’t have to contribute to the ORPP.
Labour organizations such as the Ontario Federation of Labour (OFL) are in favour of the ORPP. “I want to thank the government for introducing this legislation,” says OFL president Sid Ryan. “It’s long overdue.”
However, he believes the plan should be universal and every Ontarian should be required to contribute to the ORPP, noting that some DB plan members don’t work full time. Currently, the ORPP consultation paper says workers already participating in a DB or target benefit multi-employer pension plan (MEPP) wouldn’t be required to participate in the new plan while those in a DC plan would have to contribute to the ORPP as they’re not considered “comparable.”
Read: Will employers scrap DC plans because of the ORPP?
The Association of Management, Administrative and Professional Crown Employees of Ontario, the Canadian Centre for Policy Alternatives and United Steelworkers also said the plan should be mandatory and universal for all Ontarians.
The Ontario Chamber of Commerce (OCC) is worried about the unintended economic consequences of an ORPP. Liam McGuinty, manager of policy and government relations, said the added costs of paying for the ORPP may stop some companies from hiring more people. He cited a recent OCC survey, which found 44% of businesses will cut their current payroll or hire fewer employees in the future.
He also noted employers with DC plans may consider scrapping their plans altogether or might make reductions. “You might see a clawback in the existing DC contribution rate,” McGuinty said.
Frank Swedlove, president of the Canadian Life and Health Insurance Association (CLHIA), was also worried about the unintended consequences of the ORPP. He said proposing that DB and target benefit MEPPs be considered “comparable” and be excluded from enrolling employees in the ORPP will impact 2.4 million Ontario workers in DC plans or group RRSPs.
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“We worry that not considering these plans as ‘comparable’ could cause employers to reduce or even drop the effective retirement plans they already have in place,” Swedlove added.
The Ontario Nonprofit Network is also worried about the costs of implementing an ORPP.
“Staffing is the largest cost for non-profits with paid employees,” said Cathy Taylor, executive director of the organization. “Our budgets simply cannot absorb an increase in ORPP-related staff costs after several years of funding freezes.”
However, she is in favour of the plan because many non-profit workers don’t have a workplace pension plan and it would help improve their retirement income security.
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