The Ontario Chamber of Commerce (OCC) and a coalition of large Ontario employers are calling on the provincial government to broaden its definition of a comparable pension plan under the Ontario Retirement Pension Plan (ORPP).
In a letter addressed to Premier Kathleen Wynne, a group of more than 150 organizations are urging the government to expand its definition of pension plan comparability to include capital accumulation plans, including (but not limited to) DC plans.
Read: ORPP could hurt economy: Survey
Allan O’Dette, president and CEO of the OCC writes, “Ontario employers remain concerned that the ORPP will harm Ontario’s economy and will penalize employers and employees that are contributing to a secure retirement future.
The organization says the ORPP penalizes employers who are already investing in their employees’ retirement savings. It notes that these savings plans often have contribution levels above those stipulated for the ORPP; the average company contribution rates to DC plans and group RRSPs in Canada are 5.2% and 4.3%, respectively.
Read: Business, labour groups divided over ORPP
The ORPP will force employers without a comparable plan to contribute 1.9% on an employee’s annual earnings up to $90,000. Employees will also have to contribute 1.9%.
The OCC also believes employers who offer non-comparable retirement savings plans might choose to reduce the contributions in non-comparable plans to offset the new costs incurred by the ORPP.
While the organization is in favour of the government’s policy objective to tackle the undersaving challenge, it says the ORPP is a blanket solution to a narrow undersaving problem that many employers have addressed by offering workplace pension plans.
Read: What you need to know about the ORPP
“Expanding the definition of comparability would help to mitigate the impacts that the ORPP will have on employers who are already investing in the retirement savings of their employees,” he writes.
The letter was signed by a number of companies including AGF, Canadian Tire, Magna, Ford, General Motors, Sun Life Financial, Manulife, Great-West Lifeco, Walmart, GE Canada, AstraZeneca and IBM.