Ontario Retirement Pension Plan Could Cost Jobs and Hurt Economy, According to New Survey
TORONTO, February 19, 2015: A new survey of businesses from the Ontario Chamber of Commerce (OCC) shows that the implementation of the Ontario Retirement Pension Plan (ORPP) could have negative consequences for employment.
The survey indicates that only 26 percent of businesses in the province believe they can shoulder the financial burden associated with the ORPP. If faced with mandatory increased contributions under the ORPP, 44 percent of surveyed businesses indicate that they would reduce their current payroll or hire fewer employees in the future.
In light of these findings, the Chamber is calling on the Government of Ontario to reconsider its proposed approach to boosting Ontarians’ retirement savings and assess the extent to which the implementation of the ORPP will negatively impact Ontario’s economy.
“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.”
The ORPP, which aims to boost Ontarians’ retirement savings, will require employers to match employee contributions to the new plan. Employers that provide defined benefit pension plans will be exempt from these contributions, but the majority of employers in Ontario will have to pay into the ORPP, regardless of the retirement savings plans they currently provide to their employees.
In a recent submission to the Government of Ontario, the Chamber points to evidence that the vast majority of Canadians are on-track to maintain their standard of living in retirement and that the ORPP will punish employers and employees who are already contributing to their secure retirement future through non-defined benefit workplace retirement savings plans.
“The ORPP is a blanket solution to a problem that requires a targeted approach,” adds O’Dette. “A better approach would be to target the minority of households that are undersaving, like Pooled Registered Pension Plans.”
The Chamber is concerned that the ORPP could cause employers to reduce their contributions to offset the new cost, or scrap their existing plans altogether.
“Employers that already offer viable workplace retirement savings plans, like defined contribution pension plans and group RRSPs, should not have to pay into the new pension plan. Let’s focus the solution on the group of people who really need a boost in their future retirement income.”
The OCC survey was conducted in late January and early February 2015 and had 1,136 respondents.
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Download the OCC’s submission to the Government of Ontario on the proposed ORPP.
For more information:
Manager of Communications
Ontario Chamber of Commerce
t. 416.482.5222 ext. 2410