Ontario has passed legislation to create the Ontario Retirement Pension Plan (ORPP).
The Liberal government used its majority to give final reading to the bill to create the ORPP, insisting the province must take action because the federal Conservatives refuse to enhance the Canada Pension Plan.
Read: ORPP Administration Corporation details revealed
Associate Finance Minister Mitzie Hunter says about two-thirds of Ontario workers do not have a workplace pension, and virtually all of them will be forced to join the provincial plan.
“After a lifetime of working and contributing to the economy, Ontarians deserve a secure retirement,” Hunter says. “We are working to strengthen the retirement income system in Ontario and will give the people of this province a predictable, lifelong stream of retirement income, while supporting the prosperity of the province as a whole.”
Read: ORPP bill moves ahead
Mandatory 1.9% contributions from employers and workers will be phased in over two years, starting with larger companies in 2017 before moving to smaller operations like convenience stores and dry cleaners.
The Progressive Conservatives call the ORPP a job-killing payroll tax, but the New Democrats say it’s the “best option” for workers until the CPP is enhanced.
Ontario wants to mirror the CPP as much as possible, and Hunter says the province still would prefer to enhance the CPP instead of creating its own provincial plan. Contributions would be ”locked-in” just like CPP contributions, prohibiting people from cashing them out before retirement.