Could the Ontario Retirement Pension Plan hurt the province’s economy?
We recently provided a submission to the Government of Ontario on its proposed Ontario Retirement Pension Plan (ORPP). Co-signed by leaders from nearly 50 chambers of commerce and boards of trade, the submission expresses our collective concern that the government’s proposed approach to tackle the so-called “undersaving challenge” could have unintended negative consequences for the province’s economy.
In particular, we question whether a blanket solution like the ORPP is the most effective means of boosting retirement savings for the minority of Ontarians who need it most. Recent analysis from McKinsey & Company and others suggest that a more targeted approach that focuses specifically on undersavers would be most effective.
We also highlight the findings of our recent survey, which indicates that businesses cannot afford the costs associated with a new mandatory pension plan. Only 26 percent of businesses in Ontario believe they can shoulder the financial burden that would result from 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.
With these factors in mind, our submission contains two broad recommendations for the government:
1. Provide clarity to Ontario’s business community and the public around the potential impact the ORPP could have 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.
2. Revise the definition of a “comparable” workplace pension plan to include other workplace retirement savings plans, such as Defined Contribution pension plans, Pooled Registered Pension Plans, Group Registered Retirement Savings Plans, Deferred Profit Sharing Plans, and group Tax Free Savings Accounts.