No need for ORPP now, province claims
Costs of Ontario pension plan were worth while because it forced the issue, Wynne says
Premier Kathleen Wynne is retiring the Ontario Retirement Pension Plan before it even started working.
In the wake of a landmark deal to boost Canada Pension Plan benefits, Wynne announced Tuesday there is no need for Ontario to proceed with the separate retirement scheme that was the cornerstone promise of her 2014 election victory.
“Had we not continued to put this issue on the table squarely with our colleagues across the country, I firmly believe that we would not be here today,” the premier told reporters at Queen’s Park.
“Quite frankly I was a thorn in the side of many of my colleagues. I kept bringing this up.”
However, Wynne said the money spent to start up the fledgling Ontario plan — which she would not put a figure on — “was absolutely worth the cost” because it forced most of the rest of the country along.
The Finance Ministry’s annual estimates show $14 million was budget- ed for the ORPP last year with another $1.53 million this year, including $860,000 for salaries.
“We had to make those investments in order to get here. There was a 50-50 chance we were going to have to implement the ORPP,” Wynne said. Saad Rafi, the former Pan Am Games CEO, was making $525,000 to run the Ontario Retirement Pension Plan Administration Corporation, and was paid annual performance incentives of up to 25 per cent.
Rafi turned down a $428,794 bonus to which he was contractually entitled after the 2015 multi-sport event, but it is unclear whether that will be calculated into his severance package as the ORPP is wound down.
There are between 40 and 50 people already working in the Ontario pension plan administrator’s office, including staffers seconded from ministries.
“We have to responsibly scale down the organization that has been put in place, but just to make it clear, the largest cost has not yet been incurred,” said Wynne.
Under the provisional agreement reached Monday in Vancouver to boost CPP, which must be approved by July 15, premiums for employees and employers will begin to rise in 2019, a year later than the ORPP’s start date.
CPP benefits, which currently pay out a maximum of $13,110 a year, will eventually rise to $17,478. Higher premiums will be fully phased in by 2026.
While the payout will not be as lucrative for contributors as the ORPP, which would have affected only the two-thirds of Ontarians who lack a workplace pension plan, Finance Minister Charles Sousa stressed he “always favoured a national solution to strengthening retirement security.”
Federal Finance Minister Bill Morneau, who served as an adviser to Sousa on the development of the ORPP before being elected last October, forged the deal with all of the provinces except Quebec and Manitoba.
Both opposition parties at Queen’s Park quickly endorsed the CPP deal.
“The Ontario PC caucus is pleased that the Wynne Liberals have listened to our calls that any retirement enhancement should be done through the Canada Pension Plan,” said Progressive Conservative MPP Julia Munro (York-Simcoe).
“By making the decision to co-operate with their provincial and federal partners on a national strategy, Ontario is avoiding implementation of the . . . ORPP, a job-killing payroll tax that would have eroded business competitiveness, reduced the takehome pay of workers, and by the government’s own estimates killed 54,000 jobs per year,” Munro said Tuesday. NDP Leader Andrea Horwath praised the “important agreement that will help improve retirement security for young Canadians.”
Horwath touted the role of the Canadian Labour Congress and the Ontario Federation of Labour for laying “the groundwork for this agreement.”
“However, there is still much more to do to help lift all Ontario seniors out of poverty and to help those who are on the cusp of retirement now, but who won’t benefit from these changes to the CPP,” she said.
In a statement, Ontario Chamber of Commerce president and CEO Allan O’Dette said the business group, which had expressed alarm at the potential impact of the ORPP, was “encouraged” a national solution was forged.
“A province-by-province approach would have increased regulatory fragmentation and thus administrative burden,” said O’Dette.
“Ontario is doing the right thing by moving away from the ORPP in order to support a co-ordinated solution,” he said, praising Wynne’s government for showing “courage by being an early and enduring advocate of reform.”
The United Steelworkers said the improvements fall short of the needed doubling in CPP benefits to give Canadians a “decent” retirement.
“Even the modest increases in CPP benefits projected under this deal won’t take full effect for another 10 years,” warned union director Ken Neumann.
Wynne spearheaded the ORPP after former Conservative prime minister Stephen Harper dismissed her calls for improving CPP benefits in 2013.