Even though many decide that December is the time to focus on
holiday festivities and other matters, Ontario legislators have
been busy in early December on various initiatives, including new
pension legislation. On December 8, 2014, the Government introduced
both Bill 56 and Bill 57. If the legislation comes in effect, then
in addition to CPP, Ontario residents will be potentially
considering both Ontario Retirement Pension Plan (ORPP) and Pooled
Registered Pension Plan (PRPP) alternatives.
Bill 56 establishes the ORPP. This is the mandatory Ontario
version of the Canada Pension Plan. The ORPP would require all
Ontario employers and employees to make equal contributions on
earnings between a threshold and a maximum. The maximum earnings
level is set by Bill 56 at $90,000. The minimum threshold in the
government's Consultation Paper released on December 16, 2014
is proposed to be $3,500. The legislation contemplates the combined
employer and employee contributions will be at a total amount not
to exceed 3.8% of earnings.
The PRPP legislation in Bill 57 is Ontario's (reluctant?)
tagging along with the Government of Canada scheme for PRPPs
introduced in late 2010. PRPPs are not mandatory and are
essentially defined contribution pension plans that are to provide
lower cost management investment fees. The stated purpose of PRPPs
is to be attractive to employers because the operation and
administration of the plan is the responsibility of the financial
institution. Under the PRPP structure, all that an employer is
required to do is remit the contributions.
Participation in the ORPP will not be required if an individual
participates in a "comparable workplace pension plan"
which would be as determined under the final ORPP enactment
legislation. While this looks to be a simple concept, this will be
a case of the devil being in the detail, and should be of concern
The ORPP Consultation Paper identifies the comparable plan
definition as one of three key plan design issues. The
government's starting proposition is that defined contribution
pension plans and group RRSPs are not comparable because even with
contribution rates of at least 3.8% the benefit is not fixed, which
is unlike the ORPP benefit. The Consultation Paper does recognize
that employers who sponsor DC type plans will be forced to examine
the future of such plans in their total compensation package. If
defined contribution arrangements are not comparable, any new
employer PRPPs will not exempt employers and their employees from
ORPP contributions. This of course then begs the question of why
any employer would even consider operating a PRPP if such plans are
ultimately trumped by the ORPP.
There are a number of political questions which are swirling
about in Ontario and the announced pension changes touch on some of
them. One key point of context is the strained relations between
the current Ontario Premier and Canada's Prime Minister. There
is also the challenging question of whether or not it is the role
of government to "force" individuals to save more
aggressively for retirement than they are currently doing. Added
onto all of that is the various questions about what structure is
most appropriate to achieve relevant policy objectives. While the
exact outcomes are difficult to predict, particularly in light of
the current uncertain political dynamic in Ontario and Canada, one
modest thought is that Ontario's consultation sessions in early
2015 are likely to produce additional ideas, structures and
acronyms before there is any settled consensus on the way
The foregoing provides only an overview and does not
constitute legal advice. Readers are cautioned against making any
decisions based on this material alone. Rather, specific legal
advice should be obtained.
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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