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Ontario Government releases ORPP details in advance of federal election

Kathleen Wynn announced more details of the Ontario Retirement Pension Plan (ORPP) today, piggybacking on the government’s Wednesday announcement. Some employers will be able to opt-out of the ORPP if their pension plans meet certain requirements.

There will be a phased-in approach for other employers who are not eligible to be exempt.

Defined Contribution (DC) plans will be considered comparable and allow an employer to opt-out of the ORPP if they are locked in, regulated by existing provincial pension standards, and meet a minimum contribution threshold (an annual contribution rate of 8% and the requirement of at least 50% matching of the minimum rate from employers).

Defined Benefit (DB) plans will be considered comparable if they are at minimum equal to benefits offered through the ORPP. The minimum comparability threshold that earnings-based DB plans will need to meet is an “annual benefit accrual rate of at least 0.5%.”

Enrollment in the ORPP will be staged in four waves:

  • Wave 1, effective Jan. 1, 2017: Employers with 500 or more employees without registered workplace pension plans.
  • Wave 2, effective Jan. 1, 2018: Employers with 50 to 499 employees without registered workplace pension plans.
  • Wave 3, effective Jan. 1, 2019: Employers with fewer than 50 employees without workplace pension plans.
  • Wave 4, effective Jan. 1, 2020: Employers with a workplace pension plan that’s not modified or adjusted to meet the comparability test as well as employees who aren’t member of the workplace’s comparable plan.

For Waves 1–3, employer and employee contribution amounts will be phased in starting at 0.8% each in the first year, 1.6% each in the second year, and 1.9% each in the third year. For Wave 4, employer and employee contribution amounts will be 1.9% each.
The ORPP Administration Corporation will contact all Ontario employers in early 2016 to verify their existing plans. Employers with a a registered workplace pension plan that exists on Aug. 11, 2015 or that’s begun the process of registering one will be assigned to Wave 4.

“If the plan meets comparability thresholds by the time Wave 4 begins, the employer will not be required to enroll in the ORPP,” the government says.
Any employer that doesn’t have a workplace plan but sets up a comparable plan prior to its entrance wave will not be required to enroll in the ORPP.

Published with some excerpts taken from Smallbizadvisor.ca and BenefitsCanada.com.