Report shows Ontario employers favour Pooled Registered Pension Plans (PRPPs)
Apr. 28, 2014
In its recently released report, An Employer Perspective on Fixing Ontario’s Pension Problem, the Ontario Chamber of Commerce and the Certified General Accountants of Ontario outlined several significant reasons Ontario employers favour introducing Pooled Registered Pension Plans (PRPPs) over expanding the government-run Canada Pension Plan (CPP) or introducing a new, government-run provincial program called the Ontario Pension Plan (OPP).
According to the report – a synopsis of the findings of a province-wide survey and several focus groups – there are several reasons why an expanded CPP or a new OPP are not in Ontario’s best interests.
Reasons employers do not support an expanded CPP:
- It fails to target only those who require additional pension support, unnecessarily increasing pension contributions and imposing additional financial burdens on those already well served by existing savings and pension frameworks
- CPP assets do not transfer to beneficiaries upon death, beyond a one-time, $2,500 death benefit. Those who live longer benefit more, while those who die prematurely benefit less
- Higher CPP premiums would increase the cost of labour, deter hiring and hurt the province’s overall economic competitiveness
Reasons employers do not support a new OPP:
- Potential financial and administrative costs and an additional layer of pension bureaucracy
- Other provinces - B.C., Alberta, Saskatchewan and Quebec – and the federal government have done the due diligence and are committed to PRPPs
- An idiosyncratic Ontario approach would further fragment Canada’s pension landscape, adding complexity and costs for employers, particularly for those who operate in more than one province.
The report concludes that employers are, “…heavily in favour of PRPPs over the enhancement of government-managed programs. PRPPs are targeted to the population group who needs pension most, will take advantage of and help build additional critical mass in our world-leading financial services sector, and enable a greater degree of choice for employers and employees, who may or may not need additional pension assistance. Employers urge the province to act quickly and to join the other jurisdictions in Canada that have legislation in place that enables PRPPs. The longer we wait, the bigger the gap between Ontario’s ‘pension haves’ and ‘pension have-nots’ will widen.”
“Our research found that employers want solutions that support rather than impede our long-term competitiveness, that are targeted to those groups that require additional pension support, and that build on the province’s status as a global leader in financial services. Weighed against these and other objectives, employers are firmly in favour of PRPPs,” said Allan O’Dette, president and CEO of the Ontario Chamber of Commerce.
Manulife congratulates the Ontario Chamber of Commerce and the Certified General Accountants of Ontario for consulting with the province's employers on this key policy issue. Employers can play a significant role in helping Ontarians save for retirement, and they have indicated clearly why the PRPP is the best and most preferred method of improving Ontario’s pension system.
Visit the Ontario Chamber of Commerce website to review the entire report.