Ontario to create administrative bodies for mandatory workplace pension plan, condo manager licensing

The Ontario government has yet to decide on key details of its mandatory pension plan, which is opposed by the Insurance Brokers Association of Ontario, but the ruling Liberals confirmed Thursday they are setting up an organization to administer the plan, scheduled to take effect in 2017.

The Ontario Retirement Pension Plan – first announced in May, 2014 – would mandate employee and employer contributions of up to 1.9% each, to a maximum earnings threshold of $90,000.

“We are moving forward by creating the ORPP’s administrative body,” Finance Minister Charles Sousa told the legislature Thursday in his budget speech in Toronto. “More than half of all Ontario workers do not have a workplace pension plan.”

In its budget document for 2015-16, the province also said it plans to establish mandatory qualifications for condominium managers.

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“The province will also be creating two administrative authorities to licence condominium managers and improve education and dispute resolution for condominium corporation boards and owners.”

Also in its budget document for 2015-16, the ruling Liberals Thursday noted that last December, it released a discussion paper on “key ORPP” design questions and held consultations early this year.

The government plans to “announce conclusions on the key design questions shortly,” the Liberals said Thursday in the budget document.

One of those design questions is the scope of the plan, and whether to exclude certain employees – such as those with defined benefit, defined contribution, multi-employer plans, pooled register pension plans, group registered retirement savings plans (RRSPs) or deferred profit sharing plans – from enrolment in ORPP.

In its consultations, “the benefits of a broad-based ORPP participation model, with no exemptions for existing workplace pension plans, were emphasized by many stakeholders” the government said Thursday in its 2015-16 budget document. That approach would “align closely” with the Canada Pension Plan, the government added.

“In contrast, other stakeholders focussed on the important features of capital accumulation plans (CAPs), including [defined contribution] plans and group RRSPs.”

Comments from the consultations “highlight the complexity of this issue,” the Ontario government said Thursday in the budget document. “They also highlight the need for further analysis and dialogue to determine how best to meet the government’s objective of strengthening the retirement income foundations for Ontarians through ORPP.”

IBAO president Michael Brattman told Canadian Underwriter earlier that IBAO members “have expressed quite loudly and clearly they cannot support the planned ORPP.”

One reason is the Ontario Automobile Insurance Rate Stabilization Act (AIRSA), which established in 2013 an “industry-wide target reduction,” by 15% over two years, of the average private passenger auto premium.

“The additional cost to the brokerage business in Ontario (of ORPP) will be particularly onerous, given the combined 15% auto rate reduction, the full effect of which is just now hitting the market,” Brattman told Canadian Underwriter earlier. “The hit to expenses from ORPP, combined with the hit to revenue from lower auto premiums could be devastating to brokers across Ontario.”

In a press conference Thursday, Progressive Conservative politicians slammed ORPP as a payroll tax.

“We asked (the ruling Liberals) to walk away from it as it will only increase costs for both employees and employers,” interim PC leader Jim Wilson told reporters – who got advanced copies and were locked up for the day – before Sousa tabled the budget.

The government is planning for revenues of $124.39 billion in 2015-16 and expenditures of $131.9 billion, for a deficit of $8.512 billion. In 2015-16, the government is projecting it will spend $11.4 billion, or 8.7% of expenditures, on servicing the debt.

This coming year’s deficit is projected to bring the accumulated deficit to $194.85 billion, or about $14,119 for every man, woman and child in the province. The net debt – which includes hospitals’ colleges’ and school boards’ debt – is projected to increase to $298.86 billion by the end of the 2015-16 fiscal year, or $21,657 for every man, woman and child.

The province has run a deficit every year since 2008-09. The surplus in 2007-08 was $600 million and the accumulated deficit at the time was $105.6 billion, or $8,315 for every man, woman and child at the time.

Of 2015-16 expenditures, 38.5% are projected for health and 19.1% are projected for education. Of 2015-16 planned revenues, 25.4% would be from personal income tax, 18.4% would be transfers from the federal government and 8.5% would be from sales tax.