Federal and Ontario Government Fighting over New Ontario Retirement Pension Plan
Last Thursday the Federal Finance Minister, Mr. Oliver, formally advised the Province of Ontario that it will not help administer the new Ontario Retirement Pension Plan (ORPP). The Province has requested assistance from the Federal Government regarding the collection of contributions and legislation changes required to treat the ORPP like the Canada Pension Plan (CPP) for tax purposes.
The Federal Position:
The Federal Government does not support the new Ontario mandatory plan and believes it will have a negative impact on workers and business and may even result in job losses. The Federal Government is advocating for a voluntary approach to pension reform using the existing Canada Pension Plan (CPP).
Ontario’s Position:
Last year Ontario attempted to work with the Federal Government and the other provinces and territories to expand the CPP. No agreement could be reached with the Federal Government, so Ontario decided to move ahead with its own plan. The Ontario Retirement Pension Plan (ORPP) became law May 5, 2015. Mr. Sousa, the Ontario Finance Minister, responded to the announcement made Thursday by stating the province was “incredibly disappointed” and indicated that the lack of cooperation would mean higher costs for Ontario Businesses.
There seems to be agreement that a long term retirement solution is needed for Canadians.
- CPP will not provide an adequate retirement income for most Canadians.
- 2/3 of Canadians do not have an employer sponsored pension plan.
- Canadians have billions of dollars in unused RRSP Contributions.
- There appears to be a lack of financial literacy among many Canadians regarding retirement planning, particularly among younger workers.
Is this pension dispute politically motivated? What do you think about a mandatory plan versus a voluntary plan? What pension solutions do you think will work for Canadians?
Need more information about Pension Plan Reform? Read the Fusion Career Services Blog – Pension Plan Reform from June 2, 2015. Note: Since this Blog was posted: Bill 57, Pooled Registered Pension Plan Act also became law on May 28, 2015.
