Details Released on Ontario Retirement Pension Plan

TORONTO — Ontario premier Kathleen Wynne announced on details on the design of the Ontario Retirement Pension Plan (ORPP) that the government says is designed to address the 3.5 million workers in the province who do not have a secure workplace retirement pension plan.

Among the highlights in the announcement, according to the Ontario Trucking Association (OTA):

  • Employers who currently offer a workplace pension plan that is comparable to the ORPP will be exempt. A comparable plan is one that provides a predictable stream of replacement income and an adequate standard of living in retirement similar to the benefit that would be provided by the ORPP. A comparability test for each type of plan has been developed
  • Qualifying plans — including defined contribution (DC) plans, would need to meet a minimum contribution threshold, be locked in and be regulated by existing provincial pension standards. To be considered comparable, a DC plan must have a minimum annual contribution rate of 8 percent; and require at least 50 percent matching of the minimum rate from employers.
  • When fully introduced, the ORPP will require companies to pay premiums of 1.9 percent of salary for each employee, up to $1,643 a year, and workers will pay an equal amount.
  • The ORPP will be phased in. The goal is that every employee in Ontario would be part of the ORPP or a comparable workplace pension plan by 2020. Benefits would be paid starting in 2022.
  • Large employers, those with 500 or more, that do not have registered workplace pension plans will start making contributions in 2017. Employers with 50 to 499 employees will start making contributions in 2018 and those with less than 50 employees will start in 2019. Employers with registered plans that do not meet the comparability test, will start making contributions to the ORPP in 2020.
  • Like the Canadian Pension Plan (CPP), the ORPP would be funded by equal co-contributions from both employers and employees.
  • Contributions would also be phased in, reaching 1.9 percent each from employers and employees by 2021.

The province says its goal is for every employee in Ontario to be part of the ORPP or a comparable workplace pension plan by 2020, including the self-employed. However, the federal Income Tax Act (ITA) does not currently allow self-employed individuals to participate in registered pension plans.

Ontario has asked the federal government to amend the ITA to allow for the self-employed to participate in the ORPP, but so far that has not been agreed to.

 For further information on the announcement go to the Ministry of Finance website.

OTA says it was one of over a thousand groups or individuals to participate on the consultations on the ORPP, expressing concerns over the cost implications of the plan. According to the group, by clarifying the exemptions and by phasing the ORPP, the government will argue it has attempted to address the concerns raised by employer groups. In order to respond further, OTA is asking for input in a survey on its website.

Below is a graphic of when the ORPP would be phased in.


Graphic: Ministry of Finance

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