Ontario Pension Plan in the works

A lot of people lose a lot of sleep over their retirement these days. Do you have enough money to retire? Or will you when you reach retirement age? The government of Ontario is also concerned. And it seems to be worried that the Canada Pension Plan won’t be enough to support the millions of us who don’t have pension plans at work. So Wednesday, the Wynne government floated the idea of creating an independent; Ontario Pension Plan to help supplement the federal plan.

Scot Urquhart spoke to several pension analysts, and has reaction to the Liberal’s proposal.

It seems everyone wants a piece of this discussion, and everyone seems to have different answers. Whether its organized labour, big business, banks, or individual taxpayers, there doesn’t seem to be a consensus on whether we need to improve the CPP or even whether we can afford it:

Nearly 80 percent of those who work in the private sector have no work-place pensions at all. And worse yet, most of us are not saving enough for retirement. With baby boomers retiring in larger numbers every year, politicians, like Premier Kathleen Wynne are concerned: “It’s a critical discussion about the future of the people, not just of Ontario, but of this country.”

The spectre of thousands of Ontario voters becoming elderly and poor has prompted the Liberal government to float the idea of an Ontario Pension Plan. Something that would supplement or top up the current benefits available under the Canada Pension Plan. At the moment, those benefits are limited to roughly $12,000 per year and any individual income earned above $50,000 dollars per year does not count in the calculation for how much the CPP will pay out. Organizations like the Canadian Labour Congress have been lobbying for an expansion of the plan, urging the government to increase mandatory payroll contributions, by 3% for both employees and employers: “if we change the CPP the way people want, Sophie can double her income by putting just 3% more of her salary into CPP savings, starting now. Does that sound unaffordable?”

Yes, says Vic Fideli of the Ontario Tories: “As always, the Liberal’s instant reaction; raise taxes. They want to raise taxes on employers and they want to raise taxes on employees.”

The Tories say business can’t afford that increased payroll cost, in a still-fragile economy. The Federal government seems to agree and for the moment has halted discussions with the Provinces, on sweeping reform.

Most analysts believe that the creation of an Ontario Pension Plan is unlikely. They say the Province is more likely trying to kick-start the stalled talks with Ottawa, and get the federal government to do something about pension reform. Provincial Finance Ministers are scheduled to meet November first and they hope to craft a more specific proposal that can be then discussed by Provincial Premiers when they meet in mid-November. And if that comes together the proposal will then be taken to Federal Finance Minister Jim Flaherty and his provincial counterparts in December.