The Government of Ontario has announced additional details on pension plan comparability regarding the Ontario Retirement Pension Plan (ORPP).

DC plans will be considered comparable if they are locked in, be regulated by existing provincial pension standards, and meet a minimum contribution threshold (an annual contribution rate of 8% and require at least 50% matching of the minimum rate from employers).

And in order for DB plans to be considered comparable, they will need to be equal or exceed the benefits being offered through the ORPP. The minimum comparability threshold that earnings-based DB plans will need to meet is an “annual benefit accrual rate of at least 0.5%.”

Enrollment in the ORPP will be staged in four waves:

  • Wave 1 – Jan. 1, 2017: Employers with 500 or more employees without registered workplace pension plans
  • Wave 2 –Jan. 1, 2018: Employers with 50 to 499 employees without registered workplace pension plans
  • Wave 3 –Jan. 1, 2019: Employers with fewer than 50 employees without workplace pension plans
  • Wave 4 –Jan. 1, 2020: Employers with a workplace pension plan that’s not modified or adjusted to meet the comparability test as well as employees who aren’t member of the workplace’s comparable plan

For Waves 1 to 3, employer and employee contribution amounts will be phased in starting at 0.8% each in the first year, 1.6% each in the second year, and 1.9% each in the third year.

For Wave 4, employer and employee contribution amounts will be 1.9% each.

The ORPP Administration Corporation will contact all Ontario employers in early 2016 to verify their existing plans.

Employers with a a registered workplace pension plan that exists on Aug. 11, 2015 or that’s begun the process of registering one will be assigned to Wave 4.

“If the plan meets comparability thresholds by the time Wave 4 begins, the employer will not be required to enroll in the ORPP,” the government says.

Any employer that doesn’t have a workplace plan but sets up a comparable plan prior to its entrance wave will not be required to enroll in the ORPP.

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Neil Craig:

Typical government math. 4&4 into a DC plan equals 1.9 and 1.9 into the ORPP. Pigs will be flying soon.

Tuesday, August 11 at 11:46 am | Reply

Joe Nunes:

Neil, stop confusing politics and logic!!

Politically the DC lobby has won. Practically, employers are blackmailed into establishing a more generous plan than the ORPP to access the exemption. I guess employers have to decide if they can afford 4% or if they can stand holding their noses and sending 1.9% to Ontario knowing that none of their employees will be able to afford to retire under that program alone.

Tuesday, August 11 at 4:53 pm | Reply

Robert in Vancouver:

It’s a tax that is desperately needed to pay for current gov’t employee pensions and benefits.

That’s why Wynne is delaying it for smaller companies, it will crush them. But she is delaying till after the next provincial election.

Ontario’s debt is the largest sub-national debt in the world and more than double California’s debt. Without equalization payments, Ontario would be like Detroit, or worse.

Predictable results of left-wing gov’t policies such as the new tax/ORPP.

Tuesday, August 11 at 4:58 pm | Reply

Christine D.:

I own a hair salon and have gone from charging no tax for a haircut, to charging GST, to charging GST & RST (originally retail sales tax) which turned into the HST. (13% increase)

Minimum wage has gone from 6.85 to 11.25 in another month. (77% increase)

And now, let’s add another payroll tax. (3.8% less available to spend)

The price of that haircut sure has skyrocketed over a relatively short time, don’t you think?

Wednesday, August 26 at 9:48 pm | Reply

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