Ontario Pension Plan Act changes welcomed
Ken Renshaw has already tucked away an RRSP for his retirement.
But news that the new Ontario Retirement Pension Plan Act (ORPP) – Strengthening Retirement Security for Ontarians – passed at Queen's Park last week gives Renshaw and his generation reason to be optimistic about their future.
“Overall I think I would like it, but I worry about how it will affect my taxes,” Renshaw said at a recent company barbecue.
Renshaw, 30, who admits he has an additional $10 taken off each paycheque so he doesn't discover he has underpaid at tax time, said he wonders if government parties change, if the amount the government contributes will fall before he retires.
These questions and more will be ironed out during the next four years, as the province works with businesses to implement the pension plan to cover the more than four million workers currently without adequate workplace pensions.
ORPP was created to bring financial security and drive economic growth by giving Ontario workers a predictable stream of income in retirement. ORPP is also constructed to offer survivor benefits for all plan members.
“Workplace pensions used to be the norm, but that’s no longer the case,” said Barrie MPP Ann Hoggarth. “The ORPP fills that gap, and will help millions of Ontarians – especially our young people – save for their retirement. With government, businesses and citizens coming together, we can ensure a more secure future for workers and our economy.”
Along with regulations expected to be written this summer, the legislation gives employers and employees the information they'll need to prepare for the launch of the provincial plan forecasted to be rolled out by 2010.
The ORPP is expected to provide a pension of up to 15% of a worker's pre-retirement income, with employers and employees contributing an equal amount, which would be capped at 1.9% on an employee's earnings up to $90,000.
Two-thirds of Ontario workers do not have a workplace pension, said Minister of Finance, Charles Sousa.
“Our main objective is to intensively look at ways to meet the goals of the ORPP through an enhanced CPP framework, while preserving our ability to implement the ORPP, should that not be possible,” Sousa said.
Mitzie Hunter, ORPP's associate minister of finance, said the province's pension plan is the most significant improvement in retirement security since the introduction of the Canada Pension Plan in 1966.
“This legislation will expand workplace pension access to more than four million Ontario workers, meaning greater security and confidence in retirement for current and future generations,” Hunter said.
Due to a language barrier – his parents immigrated from Sri Lanka – Sam Nathan said he's cognizant of his parent's financial status.
“For someone in my parent's shoes, it's definitely something they would look into,” said the 23-year-old. “For myself, I can see the less time you have to save now, the less you'll have to live on later on.”