On June 20, 2016, Canada’s Finance Ministers reached an
historic agreement to improve core retirement income benefits under
the CPP. The agreement followed years of tumultuous pension
politics, including an outright refusal in December 2013 by the
Harper Government to consider any changes to the CPP.
Following the breakdown in federal-provincial CPP discussions,
the Wynne Government campaigned on a commitment to CPP reform or,
if Ottawa exercised its veto, to a made-in-Ontario “Ontario
Retirement Pension Plan” (“ORPP”).
Ontario did in fact introduce three pieces of legislation to
establish the ORPP. It created the ORPP Administration Corporation
(“ORPPAC”), appointed a Board of Directors, created a
plan text and a funding policy and commissioned an initial
valuation of the Plan. The ORPPAC Board hired a CEO and staff,
leased premises, issued RFPs for key services and prepared to bring
the ORPP on stream effective January 1, 2018.
In the meantime, the Canadian Labour Congress (CLC) and many
trade unions continued their decades long advocacy for CPP reform,
culminating in forceful media campaigns and a very effective
political lobby. By June 2016, and for some time before, Canadians
well understood the retirement income gap, and pressed for
Ultimately, the labour movement and the Province of Ontario
changed the conversation about public pensions in Canada. By June
2016, the status quo was no longer tenable. Either the
ORPP would proceed, or the CPP would be enhanced. Inaction was no
longer an option, and was no longer supported by Canada’s new
The outlines of CPP reform remain bare. However, the following
Ontario will not be going forward
with the ORPP;
the current CPP replacement rate,
which operates on income up to the “Years’ Maximum
Pensionable Earnings” (“YMPE”), will increase,
between 2019 and 2023, from 25% to 33.3%;
then, in 2024 and 2025, the YMPE will
be increased by 14% to an estimated $82,700 in 2025;
the enhanced CPP will be fully
funded, but decisions have not yet been announced as to how
enhanced CPP contributions will be managed and invested;
increased CPP contributions (roughly
1% for employees and matching contributions for employers) will be
tax deductible – an improvement over the current tax credit;
the working income tax benefit will
be enhanced, as a way to assist low-income earners with increased
Although CPP enhancement was agreed in principle on June 20,
2016, the Government of the Province of British Columbia has
initiated a public consultation about it, and did not formally
ratify the agreement by the July 15, 2016 deadline. It is widely
believed, however that British Columbia will confirm its agreement
to the enhancement.
We do not expect that CPP contributions will be subject to
limits on registered pension plan (RPP) or RRSP contributions, nor
will the RPP/RRSP tax rules be changed or limited to offset an
The precise schedule of contribution increases and accrual rate
improvements over the 2019-2023 period is yet to be specified.
Administrative, investment and governance decisions have not yet
Employer and trade union sponsors will no doubt consider the
economic impact of the CPP enhancement on existing retirement
benefits. They will decide whether to integrate the CPP enhancement
into existing benefit arrangements, or to add the enhanced benefit
to existing offerings. In some cases, plan terms may provide a
clear enough starting point for considering the impact of the CPP
enhancement on existing programs, while in other cases existing
provisions concerning the CPP will provide no guidance as to how
the enhancement will affect existing plan provisions.
We may expect additional details with respect to the CPP
enhancement in the coming weeks, and may also expect legislation to
be introduced in the Federal Parliament this autumn.
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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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.
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