ONTARIO is moving ahead with a first-of-its-kind mandatory provincial pension plan that would build on the strengths of the Canada Pension Plan (CPP) and support long-term economic growth.
The province said on Wednesday that in light of the federal government’s ongoing refusal to enhance CPP, the Ontario Retirement Pension Plan would take a balanced approach to support workers in the province. It would especially help middle-income earners without workplace pension coverage and would be cost-effective, responsible and designed to meet the needs of a 21st century workforce.
The ORPP would:
* Provide a predictable stream of income that is indexed to inflation and paid for life in retirement.
* Be mandatory for the more than three million Ontarians without a workplace pension plan, and require equal contributions from employees and employers.
* Operate at arm’s length from government and be responsible for managing investments associated with annual contributions of approximately $3.5 billion.
* Support long-term economic growth as pension payments from the ORPP would help people maintain their standard of living in retirement and continue spending.
* Be developed in consultation with pension experts, business, labour, individuals, families and communities across the province in order to ensure that a broad range of perspectives is heard.
The province said that despite federal inaction, Ontario is committed to building a strong and secure retirement income system to help ensure that people in the province are better able to enjoy their retirement years.
* Despite consensus among provinces and territories to continue talks on an enhancement to the CPP, the federal government unilaterally shut down discussions.
* The CPP pays the average Ontarian only about $6,800 a year in retirement.
* More than two thirds of Ontario workers are without a workplace pension plan.
* Increased life expectancy and low personal savings rates add pressure when preparing for retirement.
* The ORPP is being developed with input from the Technical Advisory Group on Retirement Security, consisting of a group of experts with a range of perspectives, including participants from other provinces.