Opponents of the Ontario Registered Pension Plan say that it’s just a blanket approach, and one advisor piled on, saying the plan will her hurt small to medium business owner-clients and could cost jobs and force hiring delays.
“They are indeed concerned about the higher costs,” Rona Birenbaum told WP. “Some with small companies are deferring putting a group RRSP into place because of the coming ORPP while others may have to reduce the contributions that they make to existing group RRSPs as a result of the ORPP.”
“This is going to reduce your capacity to save outside of these plans and that’s why advisors need to be aware of the fact that their clients are going to see less money on their regular pay. It could impact the plans they’ve set up.”
Her comments come as a number of organizations and interest groups have spoken out against Premier Kathleen Wynne and the Liberal government’s plan to introduce a controversial mandatory contribution plan in recent weeks.
The Canadian Federation of Independent Business (CFIB) stepped up to deliver a message of their own to the Premier: small business owners shouldn’t be forced to make additional pension contributions.
The Portfolio Management Association of Canada (PMAC) also chimed in, saying they are many flaws in the current layout of the ORPP and president Katie Walmsley, said that there should be more of a cost-benefit associated with the plan to get business owners to digest the new policy.
“The PRPP plan that we see in other provinces carries a more targeted approach and could also help to fill the gap for the self-employed,” she told WP. “The ORPP is a bit of a blanket approach so it’ll be interesting to see what happens after the government (does their due diligence).”
The Investment Funds Industry of Canada (IFIC) also made similar assertions last month in an article by WP.
“Ontario’s proposed PRPP framework follows the federal voluntary model; however, as other provinces have demonstrated, PRPPs easily can be easily adapted to achieve provincial public policy goals,” said CEO Joanne De Laurentiis, IFIC CEO and president, in the article.
“A well-constructed PRPP framework could directly address real gaps in retirement savings options currently available to employers and employees while avoiding the potential negative consequences posed by the ORPP.”
As opposed to what the Liberals are proposing, the PMAC instead prefers that the Province follows the lead of B.C. and Alberta by introducing pooled registered pension plans (PRPP). The plan would be low-cost and face less hurdles to implementation than the mandatory ORPP, according to PMAC.
The government has maintained that workplaces with defined benefit pension (DB) plans will not be required to provide the ORPP. However, this means that employers who provide defined contribution (DC) plans and group registered retirement savings plans would have to implement the ORPP.
“It’s going to be important for advisors to be able to illustrate to the client what potential income will be derived from their contributions,” said Birenbaum. “It’s not a panacea; it won’t bail out individuals who underfunded on their retirement savings overall.”