Ottawa will not co-operate with Ontario pension plan

TORONTO – Finance Minister Joe Oliver is telling Ontario the federal government will not co-operate in any way with the province’s move to create its own pension plan.

Oliver sent a letter to provincial Finance Minister Charles Sousa on Thursday saying the Conservatives “will not assist the Ontario government” in the implementation of the Ontario Retirement Pension Plan.

“This includes any legislative changes to allow the ORPP to be treated like the Canada Pension Plan for tax purposes, or to integrate the ORPP with the RRSP contribution limits,” wrote Oliver. “Administration of the ORPP will be the sole responsibility of the Ontario government, including the collection of contributions and any required information.”

The provincial Liberals passed legislation in April to create the provincial pension plan, which would effectively mirror the CPP for about three million workers.

Sousa called Ottawa’s position “extremely disappointing” in a statement Thursday evening.

ORPP: Half of Ontarians may not have to save for retirement »

“Like other arrangements between the federal and provincial governments, our expectation was to enter into a service agreement with CRA or Service Canada, something that would have tremendous advantages for businesses and employees,” said Sousa. “The federal government’s refusal to work with Ontario puts politics ahead of practicality.”

Ontario has said repeatedly its preference would be to enhance the CPP, but the Harper government has always rejected the idea so the province decided to act on its own.

Too many people are not saving enough for an adequate retirement income despite voluntary options such as tax-free savings accounts and registered retirement savings plans, said Sousa.

“After a lifetime of working hard and contributing to the economy, Ontarians deserve a secure retirement,” he said.

The Conservatives warn the Ontario plan will amount to a job-killing payroll tax because it will require contributions from employers and workers in any company that does not have a workplace pension.

Workers will have to contribute 1.9 per cent of their pay, to a maximum of $1,643 a year, which employers will have to match for every employee.

“The ORPP would take money from workers and their families, kill jobs and damage the economy,” warned Oliver. “Your government has not provided any assurance regarding what benefits, if any, would accrue to Ontarians.”

The mandatory contributions will be phased in over two years, starting with larger companies in 2017 before expanding to include small operations like convenience stores and dry cleaners.

The Liberals say the deductions for the ORPP begin at the same time the federal government is expected to reduce Employment Insurance premiums.