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.

Copyright © 2020 Transcontinental Media G.P. Originally published on benefitscanada.com

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John Case:

This appears as another attempt to propose another poorly thought out plan funded on the taxpayers ever growing obligations. Stop

Wednesday, June 03 at 1:07 pm | Reply

David Blair:

I do not see anything which suggests these employers have presented any evidence to demonstrate their CAP plans are, to date, generating pension amounts, comparable to those from DB plans. Surely data must be available on the outcomes of these plans compared to, say, the CPP. All the information I have been able to gather is that CAP plans pension outcomes are relatively dismal.

Wednesday, June 03 at 1:09 pm | Reply

Scott Aver:

In my estimation, a 1.9%/1.9% employee/employer matching contribution will not sustain the ORPP Defined Benefit Plan as we know it. Who is responsible for the unfunded liability when it occurs?

Wednesday, June 03 at 1:25 pm | Reply

Joe Nunes:

David Blair is right that we don’t have the evidence that we would like that all DC plans are working — but Scott Aver is more right that a 1.9%/1.9% DB plan isn’t going to deliver meaningful benefits and shouldn’t be likened to a government sponsored or even private sector DB plan.

If you are going to have exemptions then a 5%/5% DC plan is certainly as good as some of the lean DB plans we see. Let’s use some common sense.

Frankly, exemptions make a mockery of the whole thing. All sorts of people that don’t need the ORPP will be pushed in and all sorts of people that actually need it will be pushed out because their employer is exempt. We will spread the administration costs of a brand new program over a portion of the population and if Ontario screws up the funding then we will all pay a little more through higher taxes.

The one-size-fits-all ORPP remains a very bad idea.

Saturday, June 06 at 2:49 pm | Reply

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