Ontario approves launch of ORPP in 2017

TORONTO – Ontario has passed legislation to create a provincial pension plan for people who do not currently have a workplace pension plan, starting Jan. 1 2017.

The Liberal government used its majority to give final reading to the bill to create an Ontario Retirement Pension Plan, insisting the province must take action because the federal Conservatives refuse to enhance the Canada Pension Plan.

Associate Finance Minister Mitzie Hunter says about two-thirds of Ontario workers do not have a workplace pension, and virtually all of them will be forced to join the provincial plan.

Mandatory 1.9 per cent contributions from employers and workers will be phased in over two years, starting with larger companies in 2017 before moving to smaller operations like convenience stores and dry cleaners.

Business groups warn that forcing workers to pay up to $1,643 a year for a provincial pension — and mandating that employers match those contributions for every employee — will drive up costs and result in fewer jobs.

The Progressive Conservatives call the Ontario Provincial Pension Plan a job-killing payroll tax, but the New Democrats say it’s the “best option” for workers until the Canada Pension Plan is enhanced.

Ontario wants to mirror the CPP as much as possible, and Hunter says the province still would prefer to enhance the CPP instead of creating its own provincial plan. Contributions would be ”locked-in” just like CPP contributions, prohibiting people from cashing them out before retirement.