As has been widely reported throughout the year, the Ontario
government intends to introduce the Ontario Retirement Pension Plan
(the "ORPP") as a supplement to the Canada Pension
The ORPP will apply to every Ontario employee who is not a
member of a "comparable" workplace pension plan and will
be phased in between January 1, 2017 and January 1, 2020.
The main features of the ORPP are as follows:
The ORPP will apply to Ontario employees in eligible
employment. "Eligible employment" has yet to be defined
and depending on how "Ontario employees" is defined,
employees who are not resident in Ontario and do not report to work
at any particular establishment of their employer but are paid from
Ontario may be required to contribute to the ORPP.
Employees who participate in a "comparable" workplace
pension plan will not be required to contribute to the ORPP.
According to information released by the Ontario government
in August 2015, a "comparable" workplace pension plan
will be a defined benefit registered pension plan that matches or
exceeds the benefit being provided through the ORPP or a defined
contribution registered pension plan with a minimum total
contribution of 8% of base salary earnings, at least 4% of which
must be employer contributions. Other retirement savings plans
commonly offered by employers, such as Group RRSPs or DPSPs, will
not be considered comparable workplace pension
plans. Employers who only offer and employees who only participate
in Group RRSPs or DPSPs will be required to
contribute to the ORPP.
Participating employees and employers will be required to
contribute an equal amount to the ORPP. The required contribution
rate for both employees and employers will be 1.9% of an
employee's annual earnings up to $90,000; prior to January 1,
2020, contribution rates will be phased in. The minimum earnings
threshold has not yet been announced.
The start date for contributions to the ORPP will vary
depending on the size of the employer's workforce and whether
the employer had a registered workplace pension plan in place (it
does not have to be a "comparable" workplace pension plan
for these purposes) as of August 11, 2015.
What should employers do now?
In anticipation of the roll-out of the ORPP, employers should
review existing retirement savings arrangements sooner rather than
later. Will your plan be considered a "comparable"
workplace pension plan or will you be required to contribute to the
If an employer's plan is not a "comparable"
workplace pension plan or has elements that are not
"comparable" (i.e., a waiting period for eligibility),
employers would be well advised to take time now to consider the
impact of the ORPP on their overall compensation and benefits
package and whether any changes should be made. Employers in
unionized sectors should also consider discussing the ORPP in
current or upcoming negotiations in order to ensure that the ORPP
is properly addressed in any collective agreement.
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.
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