Letter from Tom Reid: What the Ontario Retirement Pension Plan means for you and your members

January 21, 2015

Dear Colleague,

I'm writing to bring an important issue to your attention – the potential impact of the Ontario government's proposed Ontario Retirement Pension Plan (“ORPP”) on your organization and your workplace retirement and savings plan members.

The issue: what plans are exempt
When the ORPP was first announced, the government stated that employers who offered a “comparable” retirement plan would be exempt from participation. At that time, what qualified as a comparable plan remained undefined.

Since then, a consultation paper released by the government on December 17, 2014 has proposed that “comparable” be limited to a defined benefit pension plan or a target benefit multi-employer pension plan only.

If this proposed definition remains, no Capital Accumulation Plan would qualify as a comparable plan – including defined contribution pension plans (DCPPs) and group retirement savings plans (Group RRSPs) and some of the plans you currently extend to your employees today.

This will result in both direct and indirect costs to your organization:

  • Direct costs. You would be required to participate in the ORPP – and be required to contribute 1.9% of wages up to $90,000, with a matching amount being contributed by your employees. This would be over and above the contributions you now make to your Capital Accumulation Plan arrangements.
  • Indirect costs. Employees would be faced with an additional 1.9% contribution to the ORPP, and many would undoubtedly reduce their workplace plan contributions to cover this additional amount. This means they would contribute less to your organization’s plan, forego matching contributions in many cases, and derive less value overall from your plan.

Add your voice – DC plans and Group RRSPs should be exempt
Capital Accumulation Plan sponsors like you are committed to the financial well-being of their employees in retirement and that should be recognized under the ORPP legislation. We believe that employees who are already contributing to a workplace plan – where contributions are equal to or greater than that required by the ORPP – should be exempt from ORPP coverage. By not including DCPPs and Group RRSPs in the definition of comparable, the government would be significantly jeopardizing the health and viability of these plans as employers across Ontario reflect on their options.

The government has requested feedback on its consultation paper by February 13, 2015 and I urge you as an important stakeholder to add your voice to the debate – and demand that the government include an exemption for DC plans and Group RRSPs just as they have for DB plans. Sun Life and the industry at large are also contributing feedback. Here is a link to a draft letter that you can personalize, along with the email addresses for reaching Premier Kathleen Wynne (premier@ontario.ca), Associate Minister of Finance Mitzie Hunter (ORPP@ontario.ca) and Minister of Finance Charles Sousa (charles.sousa@ontario.ca).

If you have any questions or comments about any of the ORPP issues, we'd appreciate hearing from you. Please email me at Thomas.Reid@sunlife.com. In the meantime, we'll continue to monitor ORPP developments and will continue to keep you informed.


Thomas G. Reid
Senior Vice-President, Group Retirement Services
Sun Life Financial