TORONTO, Ont. – Ontario Premier Kathleen Wynne provided details on the design of the new Ontario Retirement Pension Plan (ORPP) today.
The ORPP was one of the Premier’s initial election promises and the government claims the program will address the 3.5 million Ontario workers that do not have a secure workplace pension plan.
According to today’s announcement by the Premier:
Employers who offer a workplace pension plan that is comparable to the ORPP will be exempt. A comparability test for each type of plan has been developed.
Qualifying plans would need to meet a minimum contribution threshold, be locked in and be regulated by existing provincial pension standards.
When fully rolled out, the ORPP will require companies to pay premiums of 1.9% of salary for each employee, up to $1,643 a year, and workers will pay an equal amount.
Large employers (500 or more employees) with no 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. If you’re an employer with a plan that doesn’t meet the comparability test, you will start making contribution in 2020.
Like the CPP, the ORPP would be funded by equal co-contributions from both employers and employees.
The Premier added that the ORPP will be phased in. The hope of the provincial government is that every employee (even the self-employed) in the province would be part of the ORPP or comparable pension plan by 2020. Benefits would be paid starting in 2022. To date, the federal Income Tax Act (ITA) does not allow self-employed individuals to partake in registered pension plans. Ontario has asked the Government of Canada to amend the ITA to allow for the self-employed to participate in the ORPP.
The OTA claims they need the trucking industry’s input on the new program. “OTA 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,” the association wrote in a press release. ”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, we need input from you.”