Ontario’s Pension Decisions: What They Mean for Your Business

In one of his first acts as Canada’s new prime minister, Justin Trudeau has agreed to work with Ontario Premier Kathleen Wynne as she implements a new pension plan throughout the province. This is a reversal from the stand taken by former PM Stephen Harper and his government, which refused to change regulations to help establish or collect contributions for the Ontario Retirement Pension Plan (ORPP).

Trudeau and Wynne met October 27 in the first face-to-face meeting that Trudeau has had with a provincial premier since his party was elected eight days earlier. The two are cooperating and appear to be a good match, as Wynne aggressively campaigned for Trudeau and he likewise helped her during her 2014 election bid. As noted in Trudeau’s statement following the meeting, Canada’s new Liberal government will “direct the Canada Revenue Agency and Departments of Finance and National Revenue to work with Ontario officials on the regulations and administration of the ORPP.”

Options for Ontario Employers

The Ontario government has stated that its latest plan will help 3.5 million provincial residents when they retire. No third-party partner will be necessary, which means that pension plans will be less expensive and more efficient for both the province and its businesses.

A joint statement by Trudeau and Wynne indicates that the federal and provincial governments have made progress on a mutual commitment to build increased retirement security for Ontarians. It appears that the two will be active partners in the national discussion on pension enhancement, including both the CPP and the ORPP.

  • An enhanced CPP will not happen overnight. It will likely take years, as such a change requires provincial endorsement.
  • It is expected that the Ontario government will move ahead with the ORPP during the interim period. As an employer, you should prepare for its impending launch.

The ORPP focuses on various options available to you:

  • If you had a registered workplace pension plan or had begun the process of registering one as of August 11, 2015, you will have until December 31, 2019 for planning. Other employers will have one to three years, depending on the size of their workforces.
  • The availability of options depends on whether or not you have had a workplace pension plan, whether that plan is “comparable,” and whether or not you want to contribute to the ORPP. If you lack a comparable plan, you need to set one up – or amend your existing one to make it “comparable.” Then, you will have no contributions to the ORPP.
  • If you do not maintain or contribute to a workplace pension or other retirement savings plan for your workers, you can contribute to the ORPP. There also are hybrid options; for instance, you may want to consider keeping your existing plan but reducing contributions to offset required ORPP expenses. There are legal, business, HR and financial ramifications to consider. The process can be complicated, and advice from lawyers, actuaries and employment experts will be helpful as you complete your final assessment.

Your recruitment and HR partners at Employment Professionals Canada can work with you as you decide on your best course of action under the government’s new employee pension options. Contact us today for more information as you set the right course for 2016 and beyond.