The insurance industry applauds the coming conversation Ontario Premier Kathleen Wynne wants to have with Justin Trudeau on enhancing the Canada Pension Plan – but that should include putting the ORPP on hold
The insurance industry applauds the coming conversation Ontario Premier Kathleen Wynne wants to have with Justin Trudeau on enhancing the Canada Pension Plan – but that should include putting the ORPP on hold.
“The industry believes that the Ontario government should put on hold any plans to proceed with the ORPP until it is clear what are the new Federal government plans for the CPP,” says Frank Swedlove, president and CEO of the Canadian Life and Health Insurance Association. “While some modest enhancement of the CPP could be considered, we are of the view that private sector solutions such as the new PRPP structure can provide the necessary opportunities for Canadians who are not saving enough for retirement."
But until that meeting happens, the Wynne government has stated that it will proceed with mandatory payroll deductions starting Jan. 1, 2017 for the new ORPP – which has been designed as a complement for the existing CPP.
Wynne’s proposed ORPP was slammed by Stephen Harper, who called the Ontario pension a job killing payroll tax, going on the record that he was “delighted” to block any federal assistance to set up or administer the Ontario plan.
With the election of a majority Liberal government, Wynne is hoping that incoming prime minister Trudeau will persuade other provinces to agree to increase deductions and benefits under the CPP.
One financial planner, Jason Pereira, told LHP that an expansion of the CPP is inevitable.
“I’m a firm believer that there will be an expansion of CPP under the Liberals,” said Pereira. “I think the creation of the ORPP was a pressure tactic and now that there’s a new government I think the Ontario plan will disappear.”
In the meantime, the province will proceed as if it has to set up and administer its own pension without any federal help – which means that millions of dollars could be spent on a program that may ultimately be scrapped.
“We are going to continue to implement the ORPP until we know that there is a plan to enhance the CPP that will deal with the issue of the majority of people in the province not having a workplace pension plan, and the adequacy of their retirement security,” Wynne told The Canadian Press. “Those are the two issues that need to be dealt with, and it will take time.”
The Ontario Retirement Pension Plan will require mandatory contributions from employers and workers at any company that does not already offer a workplace pension. Companies will have to pay premiums of 1.9 per cent for each employee, up to $1,643 a year, and the workers would pay an equal amount.
The plan will be phased-in, starting Jan. 1, 2017 for companies with 500 or more workers, expanding to companies with 50-to-499 workers in 2018 and to employers with fewer than 50 workers in 2019.
“The industry believes that the Ontario government should put on hold any plans to proceed with the ORPP until it is clear what are the new Federal government plans for the CPP,” says Frank Swedlove, president and CEO of the Canadian Life and Health Insurance Association. “While some modest enhancement of the CPP could be considered, we are of the view that private sector solutions such as the new PRPP structure can provide the necessary opportunities for Canadians who are not saving enough for retirement."
But until that meeting happens, the Wynne government has stated that it will proceed with mandatory payroll deductions starting Jan. 1, 2017 for the new ORPP – which has been designed as a complement for the existing CPP.
Wynne’s proposed ORPP was slammed by Stephen Harper, who called the Ontario pension a job killing payroll tax, going on the record that he was “delighted” to block any federal assistance to set up or administer the Ontario plan.
With the election of a majority Liberal government, Wynne is hoping that incoming prime minister Trudeau will persuade other provinces to agree to increase deductions and benefits under the CPP.
One financial planner, Jason Pereira, told LHP that an expansion of the CPP is inevitable.
“I’m a firm believer that there will be an expansion of CPP under the Liberals,” said Pereira. “I think the creation of the ORPP was a pressure tactic and now that there’s a new government I think the Ontario plan will disappear.”
In the meantime, the province will proceed as if it has to set up and administer its own pension without any federal help – which means that millions of dollars could be spent on a program that may ultimately be scrapped.
“We are going to continue to implement the ORPP until we know that there is a plan to enhance the CPP that will deal with the issue of the majority of people in the province not having a workplace pension plan, and the adequacy of their retirement security,” Wynne told The Canadian Press. “Those are the two issues that need to be dealt with, and it will take time.”
The Ontario Retirement Pension Plan will require mandatory contributions from employers and workers at any company that does not already offer a workplace pension. Companies will have to pay premiums of 1.9 per cent for each employee, up to $1,643 a year, and the workers would pay an equal amount.
The plan will be phased-in, starting Jan. 1, 2017 for companies with 500 or more workers, expanding to companies with 50-to-499 workers in 2018 and to employers with fewer than 50 workers in 2019.
