[projekktor id=’13965′]

When the budget does pass — it means a made in Ontario Pension Plan will become a reality for employees across the province who don’t already have a plan at work. But will the Ontario Retirement Pension Plan be affordable to businesses who must now contribute?

There is a mandatory contribution of 1.9% for both employees and employers who currently do not offer a plan. And today, small business owner were saying that regardless of it’s intention, this is one of a couple of large cost increases for business owners who need to adjust accordingly.

Small orders like coffee and bagels keep places like Democracy in business. The small but mandatory contribution to an Ontario Pension Plan does not.

Alice Repei, owner of Democracy Coffee House: “As a small business owner, it hits us hard on the bottom line”.

The mandatory contribution would be the same as each employee’s mandatory contribution, 1.9 percent of all wages, for all 15 employees. This comes a few months after the minimum wage increased 75 cents to $11 an hour.

The increases have owner Alice Repei in a tough spot — she is in favour of workers having a livable wage and benefits, but wants to make sure her business survives: “Every time the government puts on tax or something to small business, somewhere along the line it’s going to increase prices and it’s going to go back to the consumer, because we’re going to have to pay for it somehow”.

While the mandatory contribution may be hitting employers hard, experts say that they are necessary because, the Canada Pension Plan has become outdated and because the general population has not been diciplined in their own savings.

Marvin Ryder: “See if we were smart, we could use things like RRSP’s and tax free savings accounts, and do this ourselves”.

Marvin Ryder from the DeGroote School of Business says that fewer than 65% of people contribute to a retirement plan, and less than 12% contribute the max. When this new plan is introduced, he expects that it will collect over $3 billion a year. And if well managed, it could do very well: “It’s my belief that this pension fund is going to be a great benefit to many people, probably a better benefit than if you took your own money and invested it”.

Currently, benefits from the Canada Pension Plan pay a maximum of $12,500 per year. That is below the poverty line. But the provincial plan mentioned in today’s budget, would increase that maximum to just under $20,000.

Another of the important notes for this plan is that it is based on how much you have contributed over your lifetime, so it will not cost the government a huge amount in the short term.