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Register a pension plan in 2016 to avoid ORPP contributions

Kathleen Wynn - source: The Toronto Star

Ontario Premiere Kathleen Wynn has made it clear that she is pushing ahead with the Ontario Retirement Pension Plan (ORPP), regardless of whether or not enhancements are made to the Canada Pension Plan (CPP). New details have been released today which includes the following information:

  • Indexing benefits for inflation;
  • Survivor benefits;
  • Maximums;
  • Part-time employees;
  • Waiting periods; and,
  • How the government will deal with surpluses or shortfalls.

What do employers need to know about the ORPP?

Without a registered workplace pension plan, employers will be required to start making new payroll deductions, with new matching requirements: 1.9% of earnings contributed by the employee, and matched by the employer of another 1.9% of earnings, for a total of 3.8% of earnings.

ORPP contribution schedule

 

 

 

 

 

 

 

Wave 1: Large employers (500 or more employees) without registered workplace pension plans. Contributions to start: January 1, 2017.

Wave 2: Medium employers (50- 499 employees) without registered workplace pension plans or a group RRSP. Contributions to start: January 1, 2018.

Wave 3: Small employers (49 or fewer employees) without workplace pension plans. Contributions to start: January 1, 2019.

Wave 4: Employers with a workplace pension plan that is not modified or adjusted to meet the comparability test, as well as employees who are not members of their workplace’s comparable plan. Contributions to start: January 1, 2020.

Source: Government of Ontario.

What can employers do today to delay or avoid contributions?

Register a workplace retirement plan before January 1, 2017. Contact your Beneplan advisor or preferred broker for help getting set up. Beneplan has helped hundreds of employers since 1989 navigate the group retirement landscape, between employers, unions, governments and regulators.

As we pen this article in 2016, the landscape of Canadian workplace pension providers has changed dramatically – there are now custodians of assets who charge highly competitive fees for asset management. Instead of the normal 2% to 3% management expense fees, there are many trusted Canadian asset managers who charge as little as 0.5% of total assets.

Contact Beneplan to learn more at 1-800-387-1670.