Notwithstanding a possible Liberal majority in next week’s federal election, and the idea that it would “negate” the need for an Ontario Retirement Pension Plan (ORPP), according to Ontario Premier Kathleen Wynne, awareness of the plan remains scattered, at best. This and other findings were discussed as part of a larger Benefits Canada survey presented at the Canadian Pension and Benefits Institute’s (CPBI) panel discussion on the ORPP this week.
The ORPP Study of Plan Sponsors and the 2015 CAP Member Study show that while 97% of plan sponsors are aware of the proposed plan, 39% of plan members and 44% of non-participants are still unaware or have not heard anything about the ORPP.
“I think there is a lot of confusion on what, when and where,” noted Jillian Kennedy, senior consultant with Mercer and member of the panel. “I think it’s causing a lot of anxiety and anticipation for plan sponsors, and I think it’s great to have sessions and discussions to get the employee perspective.”
It’s perhaps this confusion and lack of details that are adding to plan sponsors’ opposition to the plan. Of plan sponsors surveyed, 68% oppose it. Not surprisingly, more than half of plan members and non-participants support the ORPP.
As for improving saving levels, 59% of plan sponsors “definitely” and “somewhat” agree the ORPP will increase pension coverage among Ontarians. As for improving retirement savings levels, 48% “definitely” or “somewhat” agree with that statement.
“If the question is simply ‘Will it improve coverage?’ I would say yes, it will, because now everyone in the province will have a workplace or comparable workplace pension plan,” explained Evan Howard, vice-president of pension management for CAAT.
“The second question is more about adequacy, and I don’t think the government is [saying] this is the plan to provide all the retirement income security for the retired—it will be another leg in the three-legged stool of retirement savings,” he added.
The survey further revealed 56% of plan sponsors would keep both their DC plan and ORPP open to new and existing members. Two-fifths (37%) said they would freeze or close their DC plans if they were not viewed as “comparable” by the legislative standard.
Depending on who forms the next federal government could change the course of this proposed ORPP legislation. A Liberal win could mean a CPP expansion; thus, the ORPP would never come to fruition. Should the ORPP go ahead, however, much more detail and explanation will be required to reassure plan sponsors of their administrative tasks and economic costs.
For more ORPP stories, go to benefitscanada.com/orpp