On August 11, the Provincial Government provided some decision points on the ORPP. They did not provide any decision on our request to raise the contribution age to 25, however we were told that it is still being considered.
Restaurants Canada has pointed out to the government that the timeline they originally set was extremely aggressive and did not allow employers time to adequately implement the plan. The government listened to those concerns and provided an extended timeline for the implementation of the ORPP. Originally, the timeline stated that the regime would be fully implemented by 2018. Now, full implementation will not take place until 2021.
The new timeline has been set out in four “waves”.
Wave 1 – large employers with more than 500 employees will be required to begin contributions as of January 1st, 2017. Combined contributions (50% employer, 50% employee) will be phased in at 1.6% in 2017, 3.2% in 2018, and 3.8% by 2019.
Wave 2 – medium employers with 50-499 employees will be required to begin contributions as of January 1st, 2018. Combined contributions will be phased in at 1.6% in 2018, 3.2% in 2019, and 3.8% in 2020.
Wave 3 – Small employers with fewer than 50 employers will be required to begin contributions as of January 1st, 2019. Combined contributions will be phased in at 1.6% in 2019, 3.2% in 2020, and 3.8% in 2021.
Wave 4 – Employers who have a workplace pension plan that is or could be comparable under the ORPP but may require modifications or be extended to cover all employees have until 2020 to ensure that all employees are enrolled in a comparable plan.
Another area of concern was the government’s narrow definition of a comparable plan. This would hurt employees with pension plans that are as good or better than the ORPP. The government reconsidered this and expanded the criteria for plans that would be considered comparable under the ORPP.
The criteria for what would be considered as a comparable plan were laid out. As expected, a Defined Benefit plans that meet the equal or exceed the ORPP benefits will qualify as a comparable plan, and those employees will not fall under the ORPP scheme.
The government now says that they will recognize Defined Contribution plans as long as they meet a total contribution rate of 8 percent of base salary, 50% coming from the employer.
Clarification about the requirements for a wide variety of other plans was also announced. Technical details about comparable plans can be found at http://news.ontario.ca/mof/en/2015/08/the-ontario-retirement-pension-plan.html.
The Ontario Retirement Pension Plan Administration Corporation (ORPP AC) will begin contacting employers in early 2016 to collect information on existing pension plans and to assess the coverage in your workplace. A separate announcement is intended to provide information about this process.
Restaurants Canada welcomes the intended change that would see delayed implementation for some employers and the phase-in of contributions.
We are still against implementing additional payroll taxes, and are concerned about the effect that this will have on youth employment and first-time job seekers.
More information about our campaign to fix the ORPP can be found at FixtheORPP.ca.