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Pause ORPP pending federal review of CPP: CME

Published by Bryant McNamara on May 17, 2016

MISSISSAUGA (May 17, 2016) - In light of the Federal government's commitment to review the Canada Pension Plan (CPP), the persistent fragile state of the economic recovery, and challenges that employers will face complying under the Ontario Retirement Pension Plan (ORPP) timelines, Canadian Manufacturers & Exporters (CME) is calling on the Government of Ontario to take a pause on the ORPP implementation until that federal review is finalized.

Administrating the ORPP will cost people living in Ontario and businesses untold hundreds of millions of dollars, costs that can be avoided by working with the Federal consultation process toward a national approach to retirement income security.

"Manufacturers play a key role in ensuring the strength of the Ontario economy," said Ian Howcroft, CME Ontario Vice President. "These changes need to make sense for them."

A recent survey of CME members revealed that the ORPP would increase payroll costs by $1,074 per employee for those companies without comparable plans. Sixty-eight per cent of those surveyed said that they would recover those costs by eliminating wage increases and bonuses; 35 per cent would lay off staff or cut wages to compensate for ORPP costs. That figure rises to 47 per cent for small business.

"Mandatory cost increases put manufacturers at a competitive disadvantage," said Howcroft. "Employers already offering pension plans should be exempt from further increases associated with either an ORPP or a CPP change."

If the ORPP is to continue on course, CME recommends further expanding the definition of "comparable" to include more defined contribution plans and other alternative capital accumulation plans that are reasonably comparable with appropriate offsets to avoid creating a competitive disadvantage. CME recognizes that the government has moved to include more defined contribution plans; however, the feedback received suggests that the definition is still very narrow.

Click here to read CME's submission to the Government of Ontario's Standing Committee on Social Policy.

Found in: Ontario Retirement Pension Plan

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