The Government of Ontario announced key details about the Ontario Retirement Pension Plan (ORPP) design on Tuesday and reaction to the announcement was both negative and positive.
The Canadian Federation of Independent Business (CFIB) says the province has chosen to ignore the province’s small businesses.
Read: ORPP design details announced
“This move is a further slap in the face to Ontario’s small businesses and their employees,” says CFIB president Dan Kelly. “Today’s changes don’t even exempt employer-matched RRSPs, which are popular among employees and one of the few retirement savings vehicles some small businesses can afford.”
The Canadian Life and Health Insurance Association (CLHIA) says the announcement recognizes DC plans “can provide significant retirement income security for Ontario workers, and that pooled registered pension plans have the potential to extend such coverage to millions more.”
But it says the “proposals are complex and the industry will need some time to analyze what implications this announcement will have for the retirement savings plans of Ontarians and indeed other Canadians who work for national companies.”
The Ontario Chamber of Commerce (OCC) is encouraged by the government’s decision to expand the definition of comparability to include some DC plans.
“Today’s announcement is a step in the right direction,” says Allan O’Dette, the organization’s president and CEO.
But the OCC warns that in its current form, the ORPP will raise costs for the majority of businesses who operate in the province, including those employers that offer non-comparable plans like group RRSPs.
Restaurants Canada welcomes the government’s move to extend the phase-in period for the ORPP, but is disappointed the government did not address youth unemployment and access to first-time jobs by changing the age of ORPP enrolment from 18 to 25.
“Restaurants Canada has always been concerned about the negative effect that higher employment taxes will have on youth,” says James Rilett, the association’s vice-president, Ontario. “With unemployment for Ontarians under 25 three times higher than those 25 and over (14.8% vs 5.0%) and students struggling to find first-time jobs, we are asking the government to adapt their plans to protect jobs for youth.”
Labour organizations weren’t happy with the design changes.
Unifor is disappointed about exemptions to the new provincial plan. It believes a universal and mandatory plan is the best solution.
Read: What you need to know about the ORPP
“This new Ontario pension should model the successful Canada Pension Plan,” says Unifor Ontario regional director Katha Fortier. “For those with no workplace pension at all, this is a positive step, but it could be so much more.”
The United Steelworkers say the ORPP is bad policy because many Ontarians would be excluded from participating in the plan.
“These broad exclusions stand in stark contrast to the CPP, which includes all Canadian workers and employers, including the self-employed,” says Marty Warren, United Steelworkers Ontario director. “The ORPP would provide needed benefits to some, but not to others. It makes no sense from a policy stand-point for the Ontario government to propose a pension plan design that deviates so sharply from the CPP.”
And Canadian Union of Public Employees Ontario president Fred Hahn says changes to the proposed ORPP “betray the Liberals’ promise to build a pension plan for all Ontarians and could threaten the expansion of the Canada Pension Plan.”
“Instead of creating a truly universal system that could be rolled into a future CPP expansion, today’s announcement leaves even more Ontarians out,” he adds. “Defined contribution plans, like RRSPs, have higher financial services fees, leave workers vulnerable to the whims of the markets and provide substantially less retirement income security.”
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