The ORPP is Back On

election promises

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!



Joe Nunes
Joe Nunes
Joseph Nunes, Co-founder and Executive Chairman of Actuarial Solutions Inc., has practiced in the area of pensions and retiree health plans for over 30 years. He has experience with many types of plans including single-employer, multi-employer, private sector, government, unionized, non-unionized, as well as registered and non-registered executive plans.


  1. Avatar Mark Newton says:

    Thanks Joe. Good commentary. I agree with your comments. Another stupid notion that the federal government has is to eliminate or cut back on the TFSA, as though this is a plan for the rich. As though the wealthy care about the TFSA. It is a plan for everyone, not just the wealthy. It encourages savings, which would solve part of the problem we are now in. RRSPs, on the other hand, provide a graduated tax deduction, so they benefit those at the highest marginal tax rate. Savings are best deposited to the TFSA in which assets can accumulate for retirement, without being taxed upon withdrawal.

  2. Avatar Randy Bauslaugh says:


    Can I add a couple of other guesses? Guess #3: Negotiation 101 — don’t release your position until the counterparty commits. Having passed legislation requiring the ORPP to be implemented on the basis that it is urgently needed to address issues of retirement income adequacy, does Ontario just hit an indefinite pause button and cross its fingers? Guess #4: Negotiation 201. Should Ontario remain at the mercy of Ottawa in the future? Maybe the government feels it should have a concrete plan of its own to fall back on for the long term, no matter who is in charge in Ottawa.

    I don’t think the feds will be running the plan. But there is discussion about pre-approving plan documents for tax registration purposes before the ORPP goes live, assisting with information and contribution collections, and doing the kinds of things relevant federal departments would do for any plan “sponsor”, including the government of Quebec.

    I agree employers should be planning now. We seem to know enough about the shape of things to come, other than possibly the YBE. And Ontario has said it would have a plan drafted by the end of this year or early next — so we should know all details soon.


  3. Avatar Bob says:

    While I agree the ORPP is not a good idea, the federal liberals can show their support in provincial initiatives, hope other provinces jump in to an ORPP solution and then they do not have to enhance the CPP.

    If ORPP does not work out well, from a fed prospective, it was a provincial initiative.

    The fear in creating a comparable plan will be that the governments figure out they can collect more money by making mandatory for all, s those building a comparable plan should ensure the communication is that it will be discontinued if the CPP is expanded for all.

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