The Ontario Chamber of Commerce (OCC) is calling on the government of Ontario to support employers in the transition to the Ontario Retirement Pension Plan through a series of offset measures.
“Our objective is to ensure that the ORPP does not weaken Ontario’s economic recovery,” said Allan O’Dette, president and CEO of the Ontario Chamber of Commerce.
“The government projects that the ORPP will provide economic benefits to Ontario over the long-term. In the short-term, however, the plan will place new costs on employers at a time when their costs are already rising as a result of increasing electricity rates and weakened purchasing power.”
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The government intends to time the implementation of the ORPP to coincide with reductions in Employment Insurance and Workplace Safety and Insurance Board premiums, with the intention of partially offsetting the costs of new pension contributions.
While the OCC said it supports the government’s intent, it also published an analysis that shows the costs of new pension contributions will still be significant.
According to the OCC’s analysis, the average employer will face significant cost increases in 2022, the year when both EI and the first wave of WSIB reductions are in full effect.
For an average employee making $30,000 a year, the employer would incur $306 in new costs; a $50,000 employee would see the employer faced with a $554 cost increase; and a $90,000 employee would see the employer faced with a $1,331 cost increase.
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The OCC’s analysis also demonstrates the impact the ORPP will have on three different representative firms: a small, medium and large business would see 31% of its new costs covered by EI and WSIB reductions. For employers that are not currently subject to WSIB premiums, these measures will offset even less of the cost of ORPP contributions.
As such, the OCC is calling on government to introduce offsets that would mitigate the impact of the ORPP through a number of targeted measures, including:
- Targeted tax relief;
- Electricity rate reductions;
- Greater local economic development funding;
- Transition supports for small businesses (similar to those implemented in conjunction with the Harmonized Sales Tax); and
- Modernized private sector pension solvency funding rules for employers that offer defined benefit plans
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“I appreciate the efforts that government has made over the past months to respond to the concerns of the employer community, including the recent delay in ORPP contributions and the expansion of comparability rules,” said O’Dette.
“I look forward to continuing to outline employers’ concerns as the government moves forward with the implementation of the ORPP.”