More than three-quarters of Ontario companies surveyed for the Canadian Life and Health Insurance Association (CLHIA) are saying they would likely reduce contributions to their existing workplace pension plans if required to contribute to the Ontario Registered Pension Plan (ORPP).

Two-thirds of those companies would consider eliminating their plans completely if the ORPP is enforced.

Environics Research conducted the survey in January for the CLHIA. It polled 401 Ontario companies with defined contribution (DC) plans or group registered retirement savings plans (RRSPs).

“[The ORPP] really disenfranchises all those employers who have done the right thing and set up good plans for their employees,” says Leslie Byrnes, the Toronto-based vice president of distributions and pensions.

The ORPP’s objective is to provide a predictable source of retirement income to Ontarians who are at risk of not saving enough. It will come into force in 2017. Employers and employees will be required to contribute an equal amount, which is capped at 1.9% on an employee’s earnings up to $90,000. Anyone who is already enrolled in a comparable workplace pension plan will not be required to participate in the ORPP.

The problem is what the Ontario government sees as “comparable,” according to Byrnes.

“They have indicated that, in their view, a comparable plan is defined benefit (DB) or target-benefit multi-employer pension plan,” says Byrnes.

However, this interpretation would exclude any companies that use DC plans, adds Byrnes.

The CLHIA is not the only organization with this concern. Byrnes recently attended a roundtable regarding this issue and hosted by Mitzie Hunter, Ontario’s associate minister of finance. Attendants representing groups such as small business, finance, and tourism, were saying that the plan does not target the right people and might even force employers to cut back on other benefits such as health and dental plans.

This issue can be resolved if the Ontario government is willing to modify their current plan, according to Byrnes.

“You have 2.4 million Ontario workers who are in workplace retirement plans that they are going to disqualify as [non-comparable],” says Byrnes.

Those plans must be considered “comparable” or else the government risks compromising the retirement savings of people in those plans, she adds.