An effort by the NDP to clamp down on exemptions from the Ontario Retirement Pension Plan went down to defeat yesterday as debate on the plan continued during hearings of the standing committee on social policy at Queen’s Park.
Noting concerns about the lack of universality in the ORPP, NDP pensions critic Jennifer French put forward seven motions aimed at ensuring membership in defined contribution, multi-employer, hybrid and pooled registered pension plans wouldn’t exclude an employee from participating in Ontario’s plan.
Defined contribution pension plans shouldn’t be comparable because they don’t “provide a steady stream of income,” French argued during the hearings.
The Liberal majority on the committee, however, vetoed all of the NDP motions during hearings on Bill 186, the Ontario Retirement Pension Plan Act.
Read: Make ORPP universal and nationwide, unions tell Queen’s Park
Under the ORPP, the Ontario government will exempt employers that offer defined contribution pension plans it deems comparable from participating and remitting premiums. Under the criteria, employers must contribute at least half of the minimum contribution of eight per cent of base salary.
In defence of the comparability rules, Liberal MPP Kathryn McGarry said “employers want flexibility” and noted “many good DC plans exist.” She referred to the Ministry of Finance’s consultations with pension experts that found defined contribution plans are comparable at a contribution rate of eight per cent of salary.
French, however, suggested otherwise. “While the government talks about flexibility, I would like to bring to the table stability,” said French, questioning whether other types of employer plans would provide the “steady and predictable benefit” that defined benefit pensions afford.
Read: Exclusive survey: Employers’ attitudes towards the ORPP
As for the Progressive Conservative perspective, MPP Gila Martow expressed concerns about the need to invest ORPP funds wisely and emphasized that the ORPP’s contribution rate of 1.9 per cent shouldn’t increase.
Actuarial consultations showed the 1.9 per cent rate would allow the plan to be “funded on a sustainable level,” McGarry responded, suggesting the rate would be “changed only in certain circumstances.”
While much of the debate revolved around ORPP eligibility, the committee also addressed questions about some of the definitions in the bill.
Read: Some businesses softening towards ORPP as exporters’ group calls for further delay
When it comes to determining employee salary for contribution purposes, McGarry proposed adding a definition of “annual remuneration” to the bill to mean “regular salary and wages as determined under the plan for the purposes of the plan.”
But, that definition “opens a loophole” for employers to potentially exempt employees from the plan, said French. “To leave out other forms of compensation is problematic.”
She asked whether advances, overtime pay or bonuses would qualify as annual remuneration, as they do under the Canada Pension Plan. McGarry, however, referred to the need for flexibility in the ORPP given that “not all employers have the same compensation package.”