As readers of Focus will recall, in February of this year Ontario’s Minister of Finance announced that initial contributions to the Ontario Retirement Pension Plan (ORPP), originally slated to commence on January 1, 2017, would be delayed by a year in light of an agreement that had been reached with the federal government to collaborate towards the implementation of the ORPP (see Ontario delays implementation of Ontario Retirement Pension Plan in light of agreement with Federal Government).
On June 21, 2016, it was announced that the federal and provincial governments have reached an agreement-in-principle to enhance the Canada Pension Plan (CPP) and, on the same day, Ontario’s Finance Minister indicated that the province would be abandoning its plan to establish a provincial retirement pension plan. Under the federal-provincial agreement-in-principle announced last week, changes to the CPP would go into effect on January 1, 2019, and would be phased in gradually. The changes to CPP would, once fully implemented, result in an increase to income replacement from the current 1/4 of pensionable earnings to 1/3 of pensionable earnings. In addition, the maximum amount of income subject to CPP would be increased by 14%. The changes to the CPP that have been agreed to by federal and provincial finance ministers will be finalized at a meeting of the Council of the Federation scheduled for July 15, 2016.
Ontario’s Finance Minister identified the main advantages of an enhanced CPP over the proposed ORPP as being: (i) that it will apply across Canada; and (ii) that benefits are portable from province-to-province.