Ok, I fell for it. I really thought the ORPP was in our rear-view mirror. I thought that by now everyone knew that although it was a great sounding idea in its simplicity it was actually enormously complicated and virtually unworkable in its details. I thought that the Ontario government had been given an easy out on the subject. After all, Ontario’s premier and her elected co-workers have all been singing from the same choir sheet – ‘what we really want is an expanded CPP, but if we can’t get that our very own ORPP is the next best option’. At the same time, our new Prime Minister campaigned promising “to work with the provinces and territories, workers, employers, and retiree organizations to enhance the Canada Pension Plan”.
So slam dunk right? The ORPP is cancelled and won’t be resurrected unless our Prime Minister fails to live up to his promise – right? Wait, not so fast. I have admitted before that I don’t really understand or care for politics. My logic above was just that – logic. What I totally forgot is that politicians often do things that either aren’t logical or at least don’t appear logical to those of us that can’t see the hidden agenda.
So imagine how my heart sank when I heard reports that Ontario intends to proceed with the ORPP implementation for January 1, 2017 unless the Feds get an agreement with the provinces to expand the CPP before that time. What is happening here? I have two guesses – but I am going to be honest, I really don’t know. Guess #1, the Ontario Liberals have put all sorts of friends on the payroll to develop the ORPP and they don’t want to turn off that tap until they have to do so. The posturing around not waiting for the expanded CPP is just a ruse to get more taxpayer money in the hands of friends before they close the thing down. Guess #2, our new Prime Minister has already polled the other provinces to find out there isn’t enough appetite to expand the CPP in the current economy. So rather than pulling back the curtain on the empty promise that he can’t deliver, he would like to distract us by saying he is going to support Ontario in getting started on expansion until the rest of the provinces are ready to join in.
Either way, Ontario taxpayers lose as we pay for this nonsense.
So what can taxpayers do? Not much at this point – the votes have been counted and the people running Ontario have a wide-open highway to ram this thing through before being called to account. What can employers do? Quite simply, employers need to make sure that they are offering what Ontario has declared a ‘comparable plan’. It doesn’t matter if it is a DB plan, a DC plan or some sort of hybrid. All that is important is that it meets the definition of comparable, which was nicely spelled out by our friends at Hicks Morley – get your copy here.
Some employers will argue that paying 1.9% to Ontario is cheaper than paying 4% to their own program – but consider that 4% is just scratching the surface of the savings that we all need to be making if we want to retire before age 70, then it suddenly doesn’t seem like such a bad idea for employers to step up to the plate and pay the 4%. The one thing the ORPP is going to do is increase the visibility on the importance of retirement savings and the competitiveness of every employer’s retirement plan.
A couple years ago I first started fighting the bad idea of expanding the CPP and then the much worse idea which introduced the ORPP. A lot of my readers are listening – but having gone down to Queen’s Park to speak a couple times I now have to admit that our current government isn’t listening to me at all (other than to catch on to the idea that they need the Feds to run the plan for them as I first told them here). It is time to turn our attention to employers and encourage them to refocus on delivering to employees a solid baseline pension plan. Employers should want to do the right thing for their employees – the ORPP has just given them a clear timetable to get it done.
Let’s get going!