The Ontario Finance Ministry introduced legislation to create a mandatory provincial defined benefit plan to supplement the C$234.4 billion (US$204.8 billion) Canada Pension Plan, Ottawa, and a separate pooled provincial defined contribution retirement plan.
The supplemental DB plan, the Ontario Retirement Pension Plan, was introduced Dec. 8. If passed by the Ontario Parliament, it will commit the provincial government to introducing the plan by 2017.
Details on the supplemental plan will be released in a consultation paper from the government “in the coming weeks,” according to a statement on the website of Finance Minister Charles Sousa.
In the original proposal, which was part of the province’s 2014-’15 budget that passed in July, the new DB plan would supplement pension coverage to 3 million people in Ontario who now rely on the CPP, along with social security and personal savings for retirement.
The proposed new plan would pool longevity and investment risk, index benefits to inflation similar to the CPP, and require equal employer and employee contributions of up to 1.9% of pay each up to an annual threshold of C$90,000, according to the July proposal. The maximum earnings threshold would rise each year, consistent with increases to those of the CPP.
Details of the plan will come from a government-appointed panel led by Mitzie Hunter, associate minister of finance, and that includes Jim Keohane, president and CEO of the C$51.6 billion Healthcare of Ontario Pension Plan, Toronto; Keith Ambachtsheer, director emeritus of the Rotman International Centre for Pension Management; and Paul Martin, former Canadian prime minister.
The defined contribution plan, called the Pooled Registered Pension Plans, if passed would allow businesses to create privately administered defined contribution plans with automatic enrollment for employees. Workers would be allowed to opt out.
The Canadian government in October authorized PRPPs to be offered to Canadian businesses and employees working in federally regulated industries as well as residents of Canadian territories. Individual provinces are required to pass their own legislation to allow other businesses to offer them.