Chamber: Ontario Pension changes a 'step in the right direction'

Today, the Government of Ontario announced that it will expand the comparability rules under the proposed Ontario Retirement Pension Plan (ORPP). However, business owners remain concerned about the introduction of a new pension plan and the impact it would have on the cost of doing business.

The Sault Ste. Marie Chamber of Commerce is encouraged by the government’s decision to expand the definition of comparability under the ORPP to include some Defined Contribution (DC) plans. With this change, employers that already provide certain DC pension plans for their employees will be exempt from contributing to the ORPP. Chamber President Monica Dale, notes that for a business to be exempt from the ORPP, their DC plan must “have a total combined contribution rate of 8%, and the employer must be contributing at least 4% of that”.

The Chamber network is also encouraged by a longer phase-in period announced today, which will help many Ontario businesses transition into the plan. The ORPP phase-in period will start with large employers (500 or more employees) in 2017 and follow with medium sized employers (approximately 50-499 employees) in 2018, and small employers (50 or fewer employees) in 2019.

In June, the Sault Ste. Marie Chamber, the Ontario Chamber of Commerce (OCC), and a coalition of over 150 businesses, sector associations, chambers of commerce, and boards of trade came together to urge the government to expand its definition of pension plan comparability to include capital accumulation plans, including, but not limited to, Defined Contribution plans.

Despite today’s announcement, the Chamber warns that in its current form, the ORPP will raise costs for the majority of businesses who operate in the province, including those employers that offer non-comparable plans like Group RRSPs. Recent OCC survey data indicates that if faced with mandatory increased contributions under the ORPP, 44 percent of businesses would reduce their current payroll or hire fewer employees in the future.

Following considerable advocacy efforts by a coalition of businesses led by the Ontario Chamber of Commerce, the government committed to releasing a cost-benefit analysis of the ORPP before the end of the year.