ORPP – Ontario Retirement Pension Plan Implementation Details Announced
The Ontario Government recently announced implementation details for the new ORPP – Ontario Retirement Pension Plan.
Overview of ORPP
- Ontario Retirement Pension Plan Act received royal assent in May 2015
- Mandatory participation
- Applies to eligible Ontario workers aged 18 to 70 years of age
- By 2020, every employee in Ontario will either participate in the ORPP or a comparable workplace pension plan
- Maximum contribution rate of 3.8% shared equally between employee and employer
- Earnings will start to be paid out to members in 2022
What Employers Need to Know about Implementation?
What is a Comparable Workplace Pension Plan:
Employers, and their employees, who do not have a workplace pension plan or have a plan that does not meet the “comparable workplace pension plan” definition will be required to participate in the ORPP. Employers, and their employees, who have a “comparable workplace pension plan” will not be required to participate in the ORPP.
The government has defined a “comparable workplace pension plan” to include only registered pension plans (RPPs) which meet the comparability test. Registered pension plans can be either defined benefit (DB) or defined contribution (DC) plans. Plans not considered “comparable” include group RRSPs and other savings plans such as tax free savings or profit sharing plans.
Phase In Dates:
- Wave 1: Large employers (500 or more employees) without a registered workplace pension plan; contributions begin January 1, 2017
- Wave 2: Medium employers (50 to 499 employees) without a registered workplace pension plan; contributions begin January 1, 2018
- Wave 3: Small employers (50 or less employees) without a registered workplace pension plan; contributions begin January 1, 2019
- Wave 4: employers who have a workplace pension plan that does not meet the comparability test and employees who choose not to participate in their registered workplace pension plan; contributions begin January 1, 2020
Wave 4 gives employers time to modify their registered workplace pension plans to meet the minimum requirements of the ORPP comparability test.
Contributions
Employee and employer contributions will also be phased in over a period of time depending on which Wave applies.
Read more about the ORPP implementation and the comparability test for registered workplace pension plans.
