Canada: ORPP Consultation Period Deadline Ends Next Week

Last Updated: February 9 2015
Article by Lorraine Allard

Most Read Contributor in Canada, September 2018

On December 8, 2014, Mitzie Hunter, the Ontario Associate Minister of Finance tasked with developing the Wynne government's promise of the Ontario Registered Pension Plan (ORPP), tabled Bill 56 for first reading.

Bill 56 does not establish the ORPP but rather describes some of the main features that it is expected to have. It is therefore tellingly entitled An Act to require the establishment of the Ontario Retirement Pension Plan.[1]

On December 17, the government issued a consultation paper entitled Ontario Retirement Pension Plan: Key Design Questions (Consultation Paper). Public consultation on the ORPP began earlier this year, and submissions must be received by the end of next week, February 13, 2015. The eventual enacting legislation, in fleshing out the ORPP, will take its cue in part from the results of this consultation.

The ORPP is slated to come into effect on January 1, 2017.

The ORPP Framework

Bill 56 sets out a number of ORPP features, while the Consultation Paper describes the government's preferences with respect to other ORPP features. Here is what Bill 56 tells us about the ORPP's framework:

  • Employees who are between the ages of 18 and 69 and employed in Ontario will be eligible to contribute to the ORPP if their "salary and wages" are above a prescribed threshold.
  • Employees who are in exempted employment — similar in nature to excepted employment under the Canada Pension Plan (CPP) — and those participating in a "comparable workplace pension plan" will not be required to participate in the ORPP.
  • Eligible employees will contribute up to 1.9% of the portion of their salary and wages below $90,000, and their employer will contribute the same amount, for a maximum rate of 3.8%.
  • The contribution rate will be phased in, and the $90,000 maximum threshold will be adjusted to reflect increases in the year's maximum pensionable earnings under the CPP between 2014 and 2017.
  • The ORPP will pay lifetime benefits which will begin at age 65 but may begin as early as age 60 and as late as age 70, subject to prescribed actuarial adjustments.
  • The benefits payable will be indexed to inflation and will include survivor benefits to surviving spouses.
  • An administrative entity to be established will provide for the ORPP's administration and investment.
  • The Ministry of Finance will be authorized to collect information, including personal information, from public bodies and the federal government, as well as from employers.

Here are the Ontario government's preferences, as set out in the Consultation Paper:

  • Comparable workplace pension plans would be limited to registered pension plans (RPPs) that are defined benefit (DB) plans or target benefit (TB) multi-employer pension plans (MEPPs).
  • The minimum contribution threshold would mirror the CPP's Year's Basic Exemption of $3,500.

Planning

Since fewer and fewer employees are covered by DB RPPs, and TB MEPPs apply only to unionized employees, the key issue for most employers during the consultation phase will be whether the definition of comparable workplace pension plans should be expanded to include other retirement programs.[2]

One of the main drivers behind the Consultation Paper is clearly the desire to design the ORPP so that it can later be integrated with an enhanced CPP. Since the CPP is, in fact, a TB plan, comparable workplace pension plans should presumably consist of retirement arrangements that the government believes Ontarians need. According to the Consultation Paper, these would, or have the capacity to, manage longevity risk, protect against inflation, mandate employer contributions, pool investment risk and lock in savings. The only retirement arrangements other than DB RPPs and TB MEPPs which could include some of these requirements would be defined contribution (DC) plans with a combined contribution rate of at least 3.8% of salary and wages. Because of the ORPP's indexing feature and given the higher cost of delivering pensions through a DC arrangement, it is likely the minimum DC contribution rate would be set higher than that applicable to DB arrangements.[3]

It may be too early to do much planning with respect to the ORPP, but it is not too early to keep the ORPP in mind when planning new retirement programs or changing existing programs, particularly in the context of collective bargaining. Employers who wish to be exempted may wish to review their retirement programs now in order to determine whether they cover all employees who would otherwise be eligible for the ORPP and are likely to meet the minimum thresholds for exemption. They might also want to ensure that any new or changed plans can be revised to integrate with the ORPP.

Employers also know that they will be asked to provide information in order to benefit from the exemption, and may start gathering such information, which will include information about their employees employed in Ontario and their RPPs, their membership requirements, the level of benefits they provide and the contribution rates.

Finally, employers who wish to have the Ontario government expand its notion of comparable workplace pension plans should consider having their voices heard by making a submission before the February 13 deadline.

Please call me with any questions you may have concerning the ORPP. My colleagues and I can also help you with any other benefit-related questions or issues you may have.

Footnotes

[1] Its short title is the Ontario Retirement Pension Plan Act, 2014. Bill 57, the Pooled Registered Pension Plans Act, 2014, was introduced by the Ontario Minister of Finance, Charles Sousa, on the same day. Bill 57 is also framework legislation, calling for the creation of pooled registered pension plans (PRPPs).

[2] One piece of good news is that DB RPPs and TB MEPPs with waiting periods would apparently not be required to eliminate the waiting period. Also, the jurisdiction of registration of an RPP that otherwise meets the exemption requirements is not expected to be a factor.

[3] As contemplated in the Consultation Paper, such plans might also be closer to the ideal, if they were not required to provide portability rights but, instead, required that savings be converted to an annuity.

To view original article, please click here.

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.

Authors
Similar Articles
Relevancy Powered by MondaqAI
Gowling WLG
McCarthy Tétrault LLP
Osler, Hoskin & Harcourt LLP
 
In association with
Related Topics
 
Similar Articles
Relevancy Powered by MondaqAI
Gowling WLG
McCarthy Tétrault LLP
Osler, Hoskin & Harcourt LLP
Related Articles
 
Related Video
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
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).
 
Email Address
Company Name
Password
Confirm Password
Position
Mondaq Topics -- Select your Interests
 Accounting
 Anti-trust
 Commercial
 Compliance
 Consumer
 Criminal
 Employment
 Energy
 Environment
 Family
 Finance
 Government
 Healthcare
 Immigration
 Insolvency
 Insurance
 International
 IP
 Law Performance
 Law Practice
 Litigation
 Media & IT
 Privacy
 Real Estate
 Strategy
 Tax
 Technology
 Transport
 Wealth Mgt
Regions
Africa
Asia
Asia Pacific
Australasia
Canada
Caribbean
Europe
European Union
Latin America
Middle East
U.K.
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.

Disclaimer

The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.

General

Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions