The Ontario Government has made two major announcements in the
last two months regarding the Ontario Retirement Pension Plan
("ORPP"): a one-year delay of enrolment and first phase
of contributions, and further design details of the ORPP.
On February 10, 2016, the Ontario Government announced the delay
of phased-in enrolment to January 1, 2017 (from January 1, 2016)
and the delay of the first phase of contributions to January 1,
2018 (from January 1, 2017). The delay will give "big"
employers (i.e., an employer with 500 or more employees) more time
to arrange their affairs and more time for the federal and
provincial governments to explore possible enhancements to the
Canada Pension Plan ("CPP").
Further Design Details and Funding Policy of the ORPP
As the Ontario Government will likely proceed with the ORPP
unless the CPP is enhanced, employers need to continue to be on the
watch for key developments on the ORPP. On January 26, the Ontario
Government provided more information about the ORPP design features
and the ORPP funding policy.
Membership: The Ontario Government clarified a number of
uncertainties regarding ORPP membership:
An employer is required to enrol
those of its employees who are "employed in Ontario" in
the ORPP. An employee is "employed in Ontario" for ORPP
purposes if the employee reports to work at the employer's
establishment in Ontario or the employee's salary or wages are
paid from an Ontario-based employer (if the employee is not
required to work at the employer's place of business). An
employee who is not a Canadian resident but works in Ontario with
earnings above the minimum threshold and who has income which is
taxable for Canadian and Ontario income tax will be included,
unless the employee is exempt from tax under a tax treaty.
The ORPP would have a religious
exemption mirroring the CPP.
If a comparable workplace pension
plan has a waiting period before an employee is eligible to join
the plan, the employee must participate in the ORPP during the
Employers with comparable workplace
pension plans can opt in to the ORPP from January 1, 2020.
On-reserve First Nation employers and
their employees can voluntarily participate in the ORPP.
Comparability: An employer is not required to enrol employees
who are participating in a "comparable" workplace pension
plan. The Ontario Government has released more information on the
A pension plan which has subsets of
members with different benefits will be subject to a
"comparability" test at the level of each subset of
The "comparability" test
will be applied to the employer's collective bargaining or
employee agreements at the subset level in respect of a
multi-employer pension plan and employers have the option to be
evaluated using the defined benefit or the defined contribution
Voluntary contributions to a
workplace defined contribution pension plan will not be included to
determine whether the plan is "comparable" to the
Benefits: The ORPP is designed to provide members with a 15%
income replacement rate after they contribute to the ORPP over 40
years, using average earnings over the years of making
contributions to the ORPP.
Benefits are subject to
pre-retirement indexation (according to the average growth of wages
and salaries outlined by Statistics Canada) and post-retirement
indexation (based on the Consumer Price Index).
If an ORPP member dies before
retirement, the actuarial value of pension will be paid to the
member's spouse (or beneficiary or estate, as the case may
If an ORPP member dies after
retirement, the post-retirement death benefit payable depends on
whether the ORPP member has a spouse at retirement. If there is a
spouse, the member will receive an adjusted pension over their
lifetime and the surviving spouse will receive a survivor benefit
equal to 60% of the member's adjusted pension. If the member
does not have a spouse or the spouse has waived the survivor
benefit, the member will receive a full pension with a 10-year
guarantee period (and if the member dies within the guarantee
period, the remaining value will be paid to the member's
beneficiary or estate).
Funding Policy: A funding policy has been established, based on
sustainability over the next 100 years, subject to adjustments.
There are prescribed sets of action for a funding shortfall
(including reduction of benefit indexation and increase of
contribution rates by up to 0.2%).
Fundamental Changes to ORPP: A fundamental change to the nature of
the ORPP that would impact plan members' benefits substantially
(not as a direct result of funding policy adjustments) would
require the consent of at least 60% of ORPP members.
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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