Pension money well-spent
On the face of it, $70 million seems like an outrageous price to pay for the now-defunct Ontario Retirement Pension Plan. The fledgling ORPP, which would have covered the two-thirds of Ontarians who lack a workplace pension plan, was axed in late June as a result of an agreement among Ottawa and the provinces for an enhanced Canada Pension Plan.
It’s no surprise, then, that the Ontario government’s release of costs associated with the start-up and wind-down of the ORPP was met with howls of outrage from opposition critics.
Progressive Conservative MPP Julia Munro called the expenses “yet another example of Liberal waste and mismanagement at the expense of Ontarians’ hard-earned tax dollars.” And New Democrat MPP Jennifer French criticized the $3.7 million in severance fees for executives and staff as “an insult to people in this province who can’t afford to retire.” They are both wrong. First, the severance fees, as guilt-laden as they may seem, are a necessary part of doing business. They were needed to attract top-flight talent who had to work long hours on tight deadlines to create an ORPP from scratch — and who are now out of a job.
Second, and more important, $70 million is a small price, in the end, for Ontarians to pay for an enhanced CPP — embraced, by the way, by both opposition leaders. And it’s a plan that arguably never would have happened had Premier Kathleen Wynne not played her hand so forcefully with Ottawa and other provinces by threatening and then starting to establish an independent provincial pension plan.
Indeed, when the country’s finance ministers met in Vancouver, it seemed almost unbelievable that an enhanced CPP, which Wynne had pursued relentlessly both before and after coming up with her plans for an Ontario pension, would garner the necessary support needed for any amendments.
Nevertheless, the new plan garnered the required tough-to-get agreement of Ottawa plus seven provinces representing two-thirds of the population. As the Star pointed out after the deal was reached: “Perfection, we know well, is elusive in areas of shared responsibility and conflicting interests. Inaction, on the other hand, is all too common.”
But Wynne would not settle for inaction. It was her dogged determination in the face of open hostility from former prime minister Stephen Harper and recalcitrance on the part of some provincial premiers that helped move public opinion on pensions to the forefront so that other political leaders could see the shifting landscape and sign onto the changes.
Indeed, the enhanced CPP is a big win with the public, as she predicted. Just two weeks after the agreement was announced a Forum Research survey found more than two-thirds of polled Canadians — 68 per cent — approved of the expansion, while in Ontario it was supported by 72 per cent.
Under the enhanced plan, CPP payouts, which currently max out at $13,110 a year, will rise to $17,478. Higher premiums will be fully phased in by 2026.
It may not seem like much, but it can be the difference between retired Canadians living in poverty and living with dignity. And that’s worth more than $70 million.
Province’s work on its now-defunct pension plan led to federal pension enhancements