Strengthening Retirement Security for Ontario Workers
Today, Charles Sousa, Ontario Minister of Finance, and Indira Naidoo-Harris, Associate Minister of Finance, issued the following statement:
“Our government won a majority mandate on a promise to improve retirement security for Ontario workers through the Ontario Retirement Pension Plan (ORPP).
Many Ontarians are unable to save enough to maintain their standard of living in retirement. Two-thirds of all workers don’t participate in a workplace pension plan and only one in four younger workers – aged 25 to 34 – takes part in a workplace pension plan. This can lead to a substantial savings gap for too many Ontario workers in retirement.
Since 2013, Ontario has advocated for an enhancement to the Canada Pension Plan (CPP). When the previous federal government refused to act, we moved forward in 2014 with the ORPP. Ontario’s determination to provide enhanced retirement security for workers by establishing the ORPP was a catalyst in reaching a national consensus on CPP enhancement.
The Ontario government made substantial progress in implementing the ORPP, including developing the plan design, introducing legislation and setting up the infrastructure needed to support the plan. In late 2015, the Ontario Retirement Pension Plan Administration Corporation (ORPP AC) was created by legislation to administer the plan.
During a period of uncertainty about whether CPP enhancement could be achieved, we took a responsible approach and continued our work on establishing the ORPP. The need to address the retirement savings gap was too important for us to sit idly by.
On June 20, 2016, we were thrilled when a historic agreement-in-principle to enhance the CPP was reached. CPP enhancement was always our first choice as a way to close the retirement savings gap, and will save millions annually in administrative costs.
Following the agreement-in-principle, the government and the ORPP AC moved immediately to freeze all spending and existing project work on the ORPP and to conclude operations of the ORPP AC.
Today we are fulfilling our ongoing commitment to openness and transparency regarding the costs involved in setting up the ORPP by releasing a comprehensive actuarial funding report of the ORPP, an independent assessment of the funding report and a comprehensive report on the activities of the ORPP AC.
Based on our assessment, the government and the ORPP AC spent up to $70 million between 2013 and 2016 to develop and begin implementation of the ORPP. This includes up to $15 million in contingency to cover any outstanding costs associated with concluding the ORPP. We have engaged the Office of the Auditor General of Ontario to review the financial statements of the ORPP AC and to validate the government’s overall cost estimate.
To ensure the timely launch of the ORPP, critical work was undertaken, including the procurement of specialized legal, technical, actuarial and economic analysis. All major procurements were carried out competitively and in a transparent manner.
Without Ontario’s investments and work to develop the ORPP and elevate the issue of retirement security nationally, CPP expansion simply would not have happened.
The final steps in the conclusion include the dissolution of the ORPP AC, which will occur with the repeal of legislation in the fall of 2016.
Ontario’s continued leadership on retirement security helped to realize the agreement-in-principle to enhance the CPP. Through CPP enhancement, our government is fulfilling its commitment to strengthen retirement security for Ontario workers.”