Ontario's pension plan could have negative consequences for businesses, a new survey reports.
On Feb. 19, the Ontario Chamber of Commerce (OCC) released a survey that indicated the Ontario Retirement Pension Plan (ORPP) could cost jobs and hurt the economy.
According to the report, only 26 per cent of businesses in the province believe they can shoulder the financial burden associated with the pension program. If faced with mandatory increased contributions under the ORPP, 44 per cent of surveyed businesses noted they would reduce their current payroll or hire fewer employees in the future.
“Businesses consistently tell us that they cannot afford this new, mandatory cost,” said Allan O’Dette, president and CEO of the OCC, an independent organization that represents businesses. “To provide clarity to the business community and the public around the potential impact on jobs, investment and the broader economy, the government must conduct a comprehensive and publicly available economic analysis of the new pension plan before it moves forward with implementation.”
Premier Kathleen Wynne introduced the ORPP after the federal government balked on expanding the Canada Pension Plan, saying Ontarians need another option to secure their nest eggs.
Under the provincial pension rubric, employers and employees without a company pension plan will each make matching contributions of up to 1.9 per cent. Employers that provide defined benefit retirement plans will be exempt.
The OCC noted most Ontarians are on track to maintain their standard of living in retirement and that the ORPP will punish employers and employees who are already contributing to their secure retirement fund through non-defined benefit pension plans.
“The ORPP is a blanket solution to a problem that requires a targeted approach,” O’Dette explained. “A better approach would be to target the minority of households that are under-saving, such as pooled registered pension plans.”
The ORPP will be introduced in 2017, and phased in over two years.