The Ontario Government today provided its first update in just over 5 months (since August 10, 2015) on rules for the forthcoming Ontario Retirement Pension Plan (ORPP). While many of the announced measures are related to the benefits side of the ORPP (e.g., survivor benefits) or to plan administration, there are several new announcements that will be relevant to retail businesses.
The first is the definition of employment in Ontario, which applies to all employees who report to work at an employer’s establishment in Ontario or whose wages are paid to an Ontario resident by an Ontario-based employer for work conducted in Ontario (e.g., home offices, work sites in Ontario). It remains unclear whether and under what circumstances this would extend to work performed outside Ontario and we will be seeking further clarification on this point.
The government has also defined pensionable earnings to include both cash and non-cash earnings, including amounts beyond base salary such as bonuses and commissions.
The ORPP would include non-resident workers (unless they are exempt under a tax treaty) who earn above the minimum earnings threshold of $3,500.
The remaining new provisions deal with comparability of existing workplace pension plans. The government notes that some employers have subsets of employees enrolled in the same plan but with differential benefits. The government will assess comparability at the level of each subset, which subset must be clearly identified in the employer’s registered pension plan or collective bargaining agreement.
As noted in our earlier notice of August 11, 2015, contributions to a plan must be mandatory in order for that plan to be assessed for the purposes of comparability. Employers with Registered Retirement Plans (RPPs) that are currently voluntary (or voluntary in part) will have until January 1, 2020 to ensure that the mandatory minimum contribution rate attains 8% (joint employer-employee) for defined-contribution plans.
If your comparable plan prescribes an eligibility waiting period for some employees, those employees will be required to be enrolled in the ORPP until the end of the waiting period.
Those employers who have comparable workplace plans will be able to opt-in to the ORPP at any time after January 1, 2020. There does not seem to be a parallel opportunity to opt-out.
There are also measures relating to assessment of the comparability of Multi-Employer Pension Plans (MEPPs). Please see the announcement for greater detail.
Our additional take on the announcements made today is that the Ontario government clearly intends to proceed with implementation of the ORPP, notwithstanding the ongoing discussions with Ottawa and other provinces about potential enhancement of the Canada Pension Plan. This is not news, given the Premier’s statements in December and January but does signal that employers, especially those coming on stream as early as January 1, 2017, may face the prospect of adapting systems and benefits to the ORPP, only to potentially have to change them again if a CPP enhancement deal is reached. This is an issue that we will continue to raise in our discussions with government.
If you have any questions or concerns, please don’t hesitate to contact: Karl Littler, Vice President, Public Affairs at: [email protected] or 416-467-3783