Ontario is set to introduce new legislation today that will propose a framework for establishing a new provincial pension plan; along with legislation to facilitate the use of pooled registered pension plans (PRPPs) in the province.
The government plans to table new legislation this afternoon — the Ontario Retirement Pension Plan Act, 2014 — which would help create the Ontario Retirement Pension Plan (ORPP). It would also commit the government to establishing the plan by January 1, 2017. Additionally, the government plans to release a consultation paper in the coming weeks that sets out proposed implementation details of the ORPP. There will be formal consultations held in January 2015.
Along with the bill that will set the path for a new provincial pension plan, the province will also introduce the Pooled Registered Pension Plans Act, 2014, which will provide a legal framework for the establishment and administration of the new retirement savings vehicle created by the federal government, PRPPs, in Ontario.
The government is pursuing the creation of a new provincial plan in the absence of federal support for expanding the Canada Pension Plan (CPP).
“The retirement savings challenge is complex and requires collaboration from all sectors, as well as a range of tools to ensure a strong and stable retirement income system. That is why encouraging investment in voluntary retirement savings tools such as pooled registered pension plans is an important part of the government’s strategy to enhance retirement savings for all Ontarians,” said Charles Sousa, Ontario Minister of Finance.
The government reports that less than 35% of workers in Ontario currently have a workplace pension plan; and, in the private sector, only 28% have a workplace pension.
“The Ontario Retirement Pension Plan Act represents a major step forward in fulfilling our government’s commitment to creating a strong, secure retirement income system,” said Mitzie Hunter, Associate Minister of Finance (ORPP).
The Canadian Life and Health Insurance Association (CLHIA) says it welcomes PRPP legislation in Ontario.
“We firmly believe that PRPPs are what is needed to improve access to workplace pensions and improve the retirement income prospects of Ontario workers,” says Frank Swedlove, president and CEO of CLHIA.
As for the introduction of the ORPP legislation, the association notes that there are, as yet, very few details available and caution will be needed as the government fleshes out those details. An important consideration in the implementation of the ORPP is what will happen with existing pension plans that people have at the workplace.
“A balanced approach will be needed to ensure that the ORPP doesn’t undermine existing plans and disadvantage Ontario workers. The very real risk is that Ontario workers will be worse off if employers with already attractive plans find themselves unable to continue those plans if they are required to offer the ORPP,” cautions Swedlove.
— With files from IE staff