Our Ontario Retirement Pension Plan will provide 3 million people with retirement security they deserve after working all their lives
Friday, May 9, 2014
1. The middle-class isn’t saving enough for retirement.
Not saving enough means a significant portion of the population is facing a diminished quality of life in retirement.
Only 35% of Ontarians have a workplace pension plan.
Voluntary measures are not enough. There is $260 billion in unused RRSP contribution room in 2012 in Ontario.
CPP benefits are not sufficient – the maximum benefit is $12,500 – the Ontario average is $6,800 – and it only requires contributions and pays benefits up to an income threshold of about $52,500.
A new research paper by David Dodge, former Governor of the Bank of Canada, stresses that Canadian households need to save more now to support future economic growth and maintain a satisfactory standard of living in retirement.
2. Enhancing the CPP is our preferred option.
The federal government unilaterally shut down discussion on CPP enhancements.
Their own economic analysis shows that a CPP enhancement would benefit the economy in the long run.
Retirement security is too important to do nothing.
3. The Ontario Retirement Pension Plan (ORPP).
We will move forward with a Made-in-Ontario solution to the emerging retirement income crisis.
We appointed Michael Nobrega, former CEO of OMERS, as a Special Advisor on the design of the plan, and created a Technical Advisory Group.
A start date of 2017 coincides with expected reductions in Employment Insurance premiums, lowering the impact on business.
The plan will be professionally administered at arm’s length from government.
Enrolment of employers would occur in stages, beginning with the largest employers. Contributions will be phased in over 2 years.
4. Contributions will not exceed 1.9% each.
The ORPP will require equal contributions by employers and employees, not exceeding 1.9% on earnings up to $90,000.
Maximum earnings threshold would increase each year consistent with the CPP.
5. The ORPP will be as similar to the CPP as possible.
When combined with CPP benefits, the ORPP would provide income replacement of approximately 30-40% for middle income earners. A worker earning $45,000 would have a replacement rate of about 40% and a worker earning $90,000 would have a replacement rate of about 30%, receiving a benefit that is about double the current maximum CPP benefit.