On December 8, 2014, the Ontario Government introduced two
significant pieces of pension legislation: (i) Bill 56, the
Ontario Retirement Pension Plan Act, 2014; and (ii) Bill
57, the Pooled Registered Pension Plans Act, 2014. In
doing so, the Ontario Government is following up on previous public
commitments and implementing a plan laid out in its 2014
There are numerous mechanisms aimed at helping individuals in
their retirement, including the Canada Pension Plan (CPP), Old Age
Security, employer-sponsored pension plans and personal savings
vehicles. Despite these mechanisms, only slightly more than
one-third of Ontarians participate in a workplace pension plan, and
many individuals are not saving enough and are likely to suffer a
decreased standard of living throughout retirement.
Ontario Retirement Pension Plan Act, 2014
If passed, Bill 56 would commit the Ontario Government to
establishing the Ontario Retirement Pension Plan (ORPP) by January
1, 2017. The ORPP, as currently proposed, will have several key
mandatory participation of eligible employees employed in
exemptions from participation for employees with a
"comparable" workplace pension plan or who are similarly
exempt from contributing to the CPP;
equal contributions from employers and employees not exceeding
1.9% each on employee earnings up to the maximum annual income
threshold of $90,000;
providing a defined benefit income stream for life, which will
be indexed to inflation; and
administration by an arm's-length entity with "a strong
While Bill 56 does not speak to benefit levels, the government
indicates that the aim of the ORPP is to replace 15% of an
individual's earnings, up to the maximum threshold.
The Ontario Government released a consultation paper on December
17, 2014 seeking feedback on various components of the ORPP,
including the definition of a "comparable" workplace
pension plan, the minimum earnings threshold, and the proper
approach to take with respect to the self-employed.
The paper proposes that only defined benefit pension plans and
target benefit multi-employer pension plans (TB MEPPs) would be
included in the definition of a "comparable" plan.
Therefore, employers with defined contribution pension plans or
other capital accumulation plans (CAPs) may not be exempt from
contributing to the ORPP. In addition, the self-employed and those
earning less than $3,500 would not be required to contribute to the
ORPP, but the self-employed may potentially have the ability to
opt-in. The Government is inviting responses until February 13,
Pooled Registered Pension Plans Act, 2014
In late 2012, the federal Pooled Registered Pension Plan
Act came into force and created a legislative framework that
allows individual provinces to enact parallel legislation governing
pooled registered pension plans (PRPPs). Bill 57 is Ontario's
parallel legislation. If it is adopted, Ontario will join Alberta,
British Columbia, Nova Scotia, and Saskatchewan, which have already
passed legislation to implement PRPPs.
PRPPs are large-scale defined contribution plans, and work much
like registered retirement savings plans. Participation in a PRPP
would be voluntary for both employers and employees. If an employer
decides to offer a PRPP, all of its employees will be enrolled, but
individual employees will be able to opt out. PRPPs are intended to
be a low-cost option for both members and employers by pooling
funds for investment purposes.
In introducing Bill 56 and Bill 57, the Ontario Government moves
forward with its pension agenda. It will be interesting to see the
outcome of the Ontario Government's consultation process on the
ORPP. In particular, employers who sponsor CAPs should monitor the
consultation process to see if the proposed restriction on the
definition of "comparable" plan to defined benefit
pension plans and TB MEPPs holds.
If you have any questions on bills 56 and 57, please contact the
authors or any other member of Torys' Pension and Employment
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
To print this article, all you need is to be registered on Mondaq.com.
Click to Login as an existing user or Register so you can print this article.
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.
A former teacher at Bodwell High School has learned a valuable lesson from the B.C. Human Rights Tribunal— it is not discriminatory for an employer to offer child-related benefits to only employees with children.
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.
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).