The C.D. Howe Institute has issued a new paper by Keith
Ambachtsheer: "Helping Canadians Save for Retirement: How
the Province Could Adapt the Canada Supplementary Pension
Plan." The paper argues for a government run, defined
contribution plan with a member opt out, and an opportunity for
conversion into annuities.
Mr. Ambachtsheer is a member of the Technical Advisory Group on
Retirement Security advising the Ontario government as to the
design of an Ontario Pension Plan.
Rationally, if it were implemented a government run pension plan
should be tied closely to the CPP for economies of scale in
investments and plan administration. A defined contribution
component to the CPP is an idea that has been around for a number
of years, having been proposed before, by Mr. Ambachtsheer and
others, including the federal Liberals. It has been however
dismissed by the federal and provincial governments in favour of
the PRPPS or perhaps a "modest" increase to the CPP on a
defined benefit basis.
There is another view. At a recent event hosted by the
Healthcare of Ontario Pension Plan, the Boston Consulting Group
advocated employer-sponsored defined benefit plans as benefiting
not only individual plan members, but also the economy. Defined
benefit plans, especially high quality defined benefit plans such
as HOOPP and other government or quasi-government sponsored plans,
are superior retirement vehicles to DC plans or RRSPs, and the
assured income of retirees serves many communities well.
This writer believes however, that the horse has long since left
the barn. Employers will not establish new defined benefit plans
for a number of reasons, including accounting rules,
over-regulation, and surplus rules.
If private sector employers will not sponsor defined benefit
plans, whether shared risk or jointly governed or both, the logical
response to the HOOPP advocacy of defined benefit plans is a fairly
substantial increase of the CPP on a defined benefit basis.
So what should we do? Expand the CPP on a mandatory defined
benefit basis? Expand the CPP on a defined contribution basis, with
an opt out for employees? Encourage PRPPS but make them mandatory?
We have to remember that a material increase in benefits from CPP
or any provincial or private sector pooled pension plan on either a
defined benefit or a defined contribution basis is twenty or thirty
years away, assuming the funding burden is placed on those who will
On what basis should a pension reform decision be made? Is it an
issue of paternalism versus individual responsibility? Is it an
issue of minimizing the drain on the GIS through mandatory
retirement savings? The discussion continues.
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Unfortunately, reasonable accommodation for employees in the workplace continues to be the source of significant litigation and even today we continue to see outrageous examples of employers behaving badly.
We are now beginning to see reported cases involving charges and subsequent fines laid against employers for failing to provide information, instruction and supervision to protect a worker from workplace violence.
On October 13, 2016, the Supreme Court of Canada denied leave to appeal an Ontario Court of Appeal decision which ordered an employer to pay a former employee 37 months of salary and benefits following termination.
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