ORPP under renewed attack

ORPP’s are back in the spotlight after several groups issued their response to the retirement plan.

After a couple of months of reprieve the Ontario Retirement Pension Plan (ORPP) is back in the cross-hairs of several industry groups.

“The life and health insurance industry strongly urges the government to reconsider several of the key design elements of the ORPP in order to better promote the retirement income prospects of Ontario workers,” Frank Swedlove President of the CLHIA wrote in the organziation's submission paper to the provincial government.

A recent Environics poll indicates, if introduced as currently proposed, the ORPP could lead almost 80 per cent of Ontario employers to curtail contributions to existing Defined Contribution pension plans and Group RRSPs.

“As currently proposed, the ORPP would destabilize existing successful programs, force over-saving on low-income Ontarians and those already on track for retirement, and undermine the PRPP before it has even been implemented, to the detriment of small business and the self-employed. We believe that it will introduce unnecessary burdens on business, taxpayers and the economy,” said Swedlove.

Not to be left out, the Investment Funds Industry of Canada (IFIC) called on the Ontario government to scrap the ORPP, arguing that a well-designed Pooled Registered Pension Plan (PRPP) program can better address gaps in Ontario’s retirement savings framework.

“A well-constructed PRPP framework could directly address real gaps in retirement savings options currently available to employers and employees while avoiding the potential negative consequences posed by the ORPP,” said IFIC president and CEO Joanne De Laurentiis.

IFIC’s submission to the government notes several examples of potential enhancements to the currently contemplated ORPP model, including: a mandatory requirement that employers with a minimum number of employees offer a recognized retirement savings plan; allowing employers the ability to auto-enroll employees (with reasonable opt-out provisions), and locking-in of employer contributions (with limited employee contribution withdrawal options).

“Many of the assumptions in the consultation paper are flawed and bear revisiting. In addition to discounting the workplace regimes of 2.4 million Ontario workers and ignoring the small target group of under-savers, they ignore the high cost of setting up and running an ORPP,” said Swedlove.

Commenting on the ORPP’s proposed approach to qualifying comparable retirement plans, IFIC’s submission notes the growing body of stakeholder feedback and research indicating that the ORPP may not only fail in its goal of increasing retirement income, but may reduce retirement savings benefits for some workers.

“Should the government choose to proceed with the ORPP, at minimum, it must broaden its definition of “comparable” plan to capture all existing workplace savings plans, including Group RRSPs, DC pension plans, Pooled Registered Pension Plans (PRPPs), Deferred Profit Sharing Plans (DPSPs) and Group TFSAs,” said De Laurentiis.

The Ontario Chamber of Commerce (OCC) also got into the act, claiming only 26 per cent of businesses in the province believe they can shoulder the financial burden associated with the plan.

"Businesses consistently tell us that they cannot afford this new, mandatory cost on top of rising electricity prices and other cost pressures," says Allan O'Dette, President and CEO of the OCC. "To provide clarity to the business community and the public around the potential impact on jobs, investment, and the broader economy, the government must conduct a comprehensive and publicly available economic analysis of the new pension plan before it moves forward with implementation."



 

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