CPP Reform

In 2016, the Ontario government formally ended implementation of the Ontario Retirement Pension Plan (ORPP). This is as a result of the provincial-federal agreement to enhance CPP. We are monitoring changes to the CPP and what impact it may have on the CAAT Pension Plan and its members. We will update this page as more information becomes available.


 

CPP Update – February 2017

On December 15, 2016, An Act to amend the Canada Pension Plan, the Canada Pension Plan Investment Board Act and the Income Tax Act (Bill C-26) received Royal Assent. Plan staff continue to monitor the implementation of this Act and will continue to post updates to this web page.


CPP Update - December 2016

Since the last update, the Ontario government formally ended implementation of the Ontario Retirement Pension Plan (ORPP). This is as a result of the provincial-federal agreement to enhance CPP.

On October 6, 2016, Minister of Finance Bill Morneau introduced Bill C-26, An Act to amend the Canada Pension Plan, the Canada Pension Plan Investment Board Act and the Income Tax Act, into the House of Commons. The Bill is now before the Senate. This bill was introduced after British Columbia signed on to the agreement to enhance CPP, following the end of its consultation period.

The bill is consistent with previously-released proposals for CPP enhancement. There is no exclusion for comparable pension plans. Of interest to Plan members and employers, the Year’s Maximum Pensionable Earnings (YMPE) measure will not be changing. Instead, a new measure will be introduced – the Year’s Additional Maximum Pensionable Earnings (YAMPE). The bill also confirms that tax deductions will be provided for CPP contributions; however, it is not clear whether such contributions will be subject to pension-adjustment (PA) reporting. Existing PA reporting requirements are contained in the Income Tax Act regulations, so it may follow that final confirmation on this point will have to wait until regulations are posted.

The Plan will continue to monitor these implementation details as they are released and post developments to this web page.


CPP/ORPP Update

On June 29, 2016, Ontario Minister Charles Sousa and Associate Minister of Finance Indira Naidoo-Harris confirmed Ontario’s approval of the agreement in principal to enhance the Canada Pension Plan (CPP). It was approved by the Cabinet of the Government of Ontario. The CAAT Plan reported on the original June 20, 2016 announcement of an agreement in principle, and the details of the proposed enhancements, below.

Eight provincial finance ministers signed the agreement in principle by July 15. British Columbia did not meet the target date because it is holding public consultations on the proposed CPP enhancements before signing the agreement.

On July 15, 2016 Federal Finance Minister Bill Morneau announced that the process remains on track for the federal government to table legislation in the fall. Minister Morneau’s statement is available on the Department of Finance website. The Ontario Ministry of Finance announcement is available on the Government of Ontario website.

The CAAT Pension Plan continues to monitor this process and will continue to post developments on this web page.


CPP Announcement

On June 20, 2016, the federal finance minister along with finance ministers from a majority of provinces and territories reached an agreement in principle to enhance the Canada Pension Plan (CPP). Following the finance ministers’ meeting, the Government of Canada and the Government of Ontario issued a joint statement affirming that the agreement in principle must be approved by all signatories no later than July 15, 2016.

Details of the proposed enhancements include:

  • The new agreement will be phased-in over a seven-year period, starting in 2019.
  • The CPP maximum earnings threshold will increase to $82, 700 – up from $54,900 (the 2016 Year’s Maximum Pensionable Earnings).
  • The enhanced CPP will cover 33% of earnings up to the maximum as compared to the current design which covers 25% of earnings to the maximum.
  • Contribution rates will rise by 1% for employees and employers once the plan is fully phased in (up to 5.95% each).
  • There was no indication of whether comparable pension plans will be excluded from the enhanced CPP.

Ontario Finance Minister Charles Sousa stated that the Ontario Retirement Pension Plan (ORPP) will not proceed if the enhanced CPP plan is finalized on July 15, 2016, as is widely expected.

The CAAT Pension Plan will continue to monitor developments and post them here.


ORPP Bill introduced

On April 14, 2016, the Hon. Mitzie Hunter introduced Bill 186, Ontario Retirement Pension Plan Act (Strengthening Retirement Security for Ontarians), 2016, into the Legislative Assembly of Ontario for its First Reading.

Implementation Timeline

With the introduction of this bill, the government has set out a timeline for the implementation of the Ontario Retirement Pension Plan (ORPP):

  • 2016: Employer verification will begin, categorizing employers into waves 1-4;
  • 2017: Wave 1 employers will enrol in the ORPP;
  • 2018: Phased-in contributions begin for some employers.

It is expected that forthcoming regulations will affirm previous announcements that Wave 4 employers, such as those participating in the CAAT Pension Plan, will not be required to participate in the ORPP until 2020. At that point, only employees not enrolled in the CAAT Plan – such as part-time employees who have not elected to join the CAAT Plan – would be required to join the ORPP.

The regulations, which will provide further details, are expected to be released this summer.

New Details

The bill describes ORPP features previously announced by the government as well as a few new details, including:

  • Eligible employees include “holders of an office.” This includes: directors of a corporation; those who hold a judicial office; and those who hold a position that is elected by popular vote, election or appointment in a representative capacity. The person who pays the holder of the office a stipend or remuneration is considered to be the employer. These employees must participate in the ORPP unless an exemption applies (for example, they participate in a comparable pension, they are under the age of 18 or over the age of 70, etc.);
  • The forthcoming regulations will likely clarify employers’ obligations when they have employees working at multiple employers;
  • The Administration Corporation is authorized to request and collect information required to administer the ORPP. The bill specifies that employers can be asked by the ORPP Administration Corporation or the Ministry of Finance for information regarding their employees and also sets out deadlines for compliance;
  • The bill also contains enforcement mechanisms, including penalties for employers that fail to remit contributions, information or keep records. The maximum administrative penalty is $10,000.

Education Campaign Scheduled

Separately, it was announced that the ORPP Administration Corporation will begin an extensive education campaign this summer to help employers understand their obligations before the enrolment and contribution phases.

The CAAT Plan will continue to follow the progress of this bill, its accompanying regulations, and upcoming education campaign. We will continue to post updates here.

You can read the bill here.

You can also read a summary of the proposed legislation here


Province announces one-year delay in ORPP implementation

On February 16, 2016 Ontario Finance Minister Charles Sousa announced that the start of the implementation of the Ontario Retirement Pension Plan (ORPP) will be delayed by a year. Large employers, without a comparable workplace pension plan, will be required to register with the ORPP at the start of 2017, but will not be required to remit contributions until January 1, 2018. The Minister said the delay will give those employers in the first wave of implementation time to adjust to the new plan. Minister Sousa also announced that Ontario will work with the federal government and the other provinces to explore the creation of a national solution, using the CPP. The federal government has agreed to streamline ORPP administration by using the existing CPP payroll infrastructure.

There is no change to the 2020 enrolment date for employees of CAAT Plan participating employers who are not members of the CAAT Plan (i.e., other than regular full-time employees who have not opted to join the CAAT Plan).

The Ontario Budget will be tabled on February 25.

Read the announcement here.


Government announces design details of ORPP – confirms exemption for comparable workplace pension plans

On January 26, 2016, the Ontario government provided more information about the Ontario Retirement Pension Plan (ORPP). It also emphasized its continuing commitment to implement the ORPP according to its previously-announced schedule.                                       

Of particular interest to CAAT Plan members and participating employers, the government reconfirmed that members of comparable workplace pension plans, such as the CAAT Pension Plan, will not be required to participate in the ORPP. However, employees of CAAT Plan participating employers who are not members of the CAAT Plan (i.e., other than regular full time employees who have not opted to join the CAAT Plan) will be required to participate in the ORPP starting in 2020 provided they are between age 18 and 71.

The government did, however, announce that starting with the forth wave of implementation in 2020 employers who already provide a comparable pension plan will have the ability to voluntarily opt-in to the ORPP so employees may accrue an ORPP pension in addition to their existing workplace pension.  If an employer decides to opt in to the ORPP, their employees would be required to contribute to the ORPP in addition to any required member contributions under their workplace pension plan and the employer would be required to match such ORPP contributions. However, in situations where the existing workplace plan provides benefits resulting in minimal pension adjustment room under the Income Tax Act, the benefits that may be so accrued under the ORPP may be limited.

Read more

Employees participating in the ORPP will be required to contribute based on the ORPP contribution rates and member contributions must be matched by their employers. Currently, contribution rates are set at 1.9% of annual earnings over $3500 up to $90,000.

The government announced that the benefit accrual rate for the ORPP would be 0.375% per year. On this basis, the ORPP is designed to provide its plan members with a 15% income replacement rate after contributing to the plan over 40 years. It also noted that when a plan member retires, their ORPP pension benefit would be calculated using their average earnings over the all the years they contributed to the plan.

In providing more details about the ORPP design the government has confirmed its intention that: “The ORPP will provide members with a predictable, reliable and inflation-indexed stream of income in retirement.”  And that “The government has designed the plan, after extensive actuarial modelling, to be sustainable over the long term.”

As part of its commitment to ensuring a sustainable ORPP for the long-term, the government announced that the ORPP will have a funding policy that will address steps to be taken in the event of a funding shortfall.  These steps could include scaling back indexation to a set limit, reversing previous actions taken during a surplus, or increasing contributions up to 0.2%. 

The ORPP will be administered by an arms-length organization: the ORPP Administration Corporation (ORPP AC). Recently, the Initial Board of the ORPP AC appointed Saäd Rafi CEO of the ORPP AC. The government intends to establish an Office of the Chief Actuary to conduct actuarial valuations of the ORPP. The Chief Actuary will also provide advice and analysis.

The CAAT Pension Plan supports the principles behind the ORPP and is pleased to see the government’s continued recognition of the pressing need for better retirement income for those who do not already have access to a workplace pension.  The CAAT Plan is also pleased to see the commitment to develop a funding policy for the ORPP, as the CAAT Plan believes funding policies are an essential component of good governance.  We will continue to monitor developments and assess details about the administration of the ORPP, such as enrolment processing and contribution remittance, as they become available.

Click here to review the entire announcement.


Ontario government remains committed to the ORPP

On November 26, 2015, the Government of Ontario provided more details about the ORPP in its Fall Economic Statement. It confirmed that it is moving forward with its previously-announced implementation schedule. As reported in August, this schedule would require part-time employees in the college system who are not enrolled in the CAAT Plan to participate in the ORPP starting in 2020.

In the Fall Economic Statement, the Ontario government also reinforced its support of a CPP enhancement if it is consistent with the ORPP’s retirement income adequacy and coverage objectives. The government notes that any enhancement to the CPP will take time as any changes to the CPP require the agreement of two-thirds of the provinces representing two-thirds of the Canadian population. The Government of Ontario also announced the appointment of the initial board of the ORPP Administration Corporation (ORPP AC), which will oversee the start-up activities of the ORPP AC. The three-member board comprises: Susan Wolburgh Jenah (Chair), Murray Gold and Richard Nesbitt.

Finally, the government noted its intention that the ORPP minimum earnings threshold will be $3,500 for eligible employees (ages 18-70). This aligns with the current CPP minimum earnings threshold.

The CAAT Plan will continue to monitor and report on ORPP developments.

For a summary of ORPP-related announcements in the Fall Economic Statement, click here: http://www.fin.gov.on.ca/en/budget/fallstatement/2015/bk5.pdf


CAAT Plan members exempt from ORPP

August 2015 – CAAT Plan members will be exempt from participating in the ORPP. The Ontario government released ORPP design details confirming that employees in comparable pension plans and their employers offering such plans will not be required to participate in the ORPP.

Part-time employees in the college system not enrolled in the CAAT Plan will be required to participate in the ORPP, but not until the final wave of implementation beginning in 2020. This enables the CAAT Plan and its participating employers enough time to continue educating non-members so they can make an informed choice between joining the ORPP or the CAAT Plan.

Read more

In our submission to the government regarding the ORPP made earlier this year, we argued that part-time employees with immediate access to a comparable pension plan be exempt from participating in the provincial plan. We further proposed that if this were not possible, then ORPP should be focused first on Ontarians without access to a comparable pension plan.  

The phase in for the ORPP begins on January 1, 2017 with larger employers without a comparable pension plan, and would be overseen by an arm’s-length administration corporation with a strong governance structure. College system employers would not be affected until the final of four implementation waves to begin on January 1, 2020.

According to the government’s news release, “a comparable plan is one that provides a predictable stream of replacement income and an adequate standard of living in retirement similar to the benefit that would be provided by the ORPP.”

When fully implemented, contributions to the ORPP would be 1.9% each from employees and employers. The ORPP would aim to replace 15 per cent of an individual’s earnings, up to $90,000. The costs of administering the ORPP would be covered by the plan. Contributions and investment funds would be held in trust for ORPP beneficiaries.

 


 

ORPP moves a step closer to implementation

June 2015: The Ontario Legislature has passed An Act to Require the Establishment of the Ontario Retirement Pension Plan and the Ontario Retirement Pension Plan Administration Corporation Act on May 6 and June 3, 2015, respectively. These acts enable the Ontario government to continue to move forward with the design and implementation of the ORPP.  We anticipate that in the coming months details on the design and implementation of the ORPP will be announced by the government.  The CAAT Plan continues to monitor developments and to assess the impact the ORPP will have on the postsecondary education sector in Ontario.

Read more

“There are many sensible reasons why a financially secure retired population is good for Ontario and Canada, including better health, lower reliance on social programs, a solid deferred tax base, and  strong participation in the consumer economy,” says Derek W. Dobson, CAAT Pension Plan CEO and Plan Manager.

“Most Canadians recognize that they are not financial experts and would welcome an efficient and well-run workplace savings program. In the absence of widely available workplace pensions, the ORPP can play an important role in Ontario, and the establishment of the administration corporation is a positive step forward,” added Dobson. “It is clear that the needs of tomorrow will be different than those of today.  Employers, employees, and society will all benefit over the longer term by having efficient and well-run pension plans that cover a large proportion of the workforce.”


ORPP Update

February, 2015: The Province is continuing to develop the Ontario Retirement Pension Plan (ORPP), and the Plan continues to monitor and report on these developments. In the last newsletter we outlined the proposed Ontario Retirement Pension Plan (ORPP), a ‘made-in-Ontario’ retirement solution being developed by the Province. The ORPP is being designed to target “those most at risk of under saving, particularly middle-income earners”.

Read more

In November 2014 the Province published the discussion paper “The Ontario Retirement Pension Plan: Discussing a Made-in-Ontario Solution.” Most recently, it published a consultation paper on the Ontario Retirement Pension Plan. The paper looks at three design questions and gives the government’s preferred option for each:

  • Definition of “comparable workplace pension plan” – the government has currently limited the definition to Defined Benefit plans, like the CAAT Pension Plan, and Target Benefit Multi-Employer Pension Plans.
  • The minimum earnings threshold after which contributions to the ORPP would start – the government has stated that the ORPP should mirror the CPP’s $3,500 minimum threshold.
  • How to address the needs of the self-employed – the government is seeking feedback about whether it should lobby the federal government to change federal tax law to allow the self-employed to participate in the ORPP.

The CAAT Plan supports the principles behind the ORPP and is also pleased to see the recognition of the pressing need for better retirement income security, especially for those without access to a workplace pension. In addition, the Plan applauds the government for recognizing the superior efficiency of pooling in defined benefit and target benefit plans. These Plans deliver predictable retirement income that fosters the wellbeing of the elderly and their families, while easing pressure on government healthcare and social programs by providing a source of deferred taxes and healthier retirees.

Under the proposed legislation, Ontarians participating in a defined benefit or target benefit pension plan would be exempt from mandatory participation in the ORPP. This exemption is provided because these types of plans are comparable to the ORPP principles in that they deliver predictable retirement income for the lifetime of the member.

The Plan’s submission argues that the exemption from mandatory participation in the ORPP should be extended to part-time employees of CAAT Plan employers because these employees have immediate access to a comparable workplace pension plan upon hire. (In the CAAT Plan, full-time employees join upon hire, while part-time employees have the option to do so at any time during their employment.) As a jointly-sponsored plan, CAAT Plan participating employers and members share responsibility for the design, stability and security of the Plan (including the cost).

Members’ interests are represented in every Plan design decision, including the approach to immediate membership eligibility for part-time employees. Implementing the ORPP based on participation rather than access would interfere with the collaborative decision-making process inherent in the jointly-sponsored governance model.


CAAT Plan presses for ORPP exemption

January 2015: The CAAT Pension Plan has urged the government to exempt part-time college employees from mandatory participation in the Ontario Retirement Pension Plan (ORPP) because they already have immediate access to a “comparable” plan.

Download our submission "Response to the paper: Ontario Retirement Pension Plan: Key Design Questions" at the bottom of this page.


Ontario government discussion papers

December 2014: The Ontario government has made formal its desire to establish the Ontario Retirement Pension Plan no later than January 1, 2017. On December 8, 2014, the Hon. Mitzie Hunter, Associate Minister of Finance, introduced Bill 56, Ontario Retirement Pension Plan Act, which provides the framework for creating the administration of the ORPP and the investment management of its assets. The Act, however, does not contain any new detail on the design of the ORPP.

Read more

The ORPP is an initiative of the Ontario government for a “go-it-alone” or “made-in-Ontario solution” for a supplemental pension plan following the lack of consensus among other Provinces and the federal government to implement modest increases in the Canada Pension Plan (CPP). The 2014 Ontario Budget, passed on July 24, 2014, set out the Ontario government’s commitment to establish the ORPP. The government’s intention is that the ORPP would build on CPP and could be integrated into the CPP in the future. The ORPP is envisioned as “targeting those most at risk of under saving, particularly middle-income earners.” Please see below for our earlier update on the ORPP, which includes an overview of the intended design of the ORPP.

The government has recently started to consult on the design of the ORPP.  In November 2014 it published the discussion paper “The Ontario Retirement Pension Plan: Discussing a Made-in-Ontario Solution.

Most recently, it published a consultation paper on the Ontario Retirement Pension Plan (Ontario Retirement Pension Plan: Key Design Questions). The paper looks at three design questions and gives the government’s preferred option for each:

  • Definition of “comparable workplace pension plan” – the government prefers that this definition be limited to Defined Benefit plans, like the CAAT Pension Plan, and Target Benefit Multi-Employer Pension Plans
  • The minimum earnings threshold after which contributions to the ORPP would start – the government prefers the ORPP to mirror the CPP’s $3,500 minimum threshold
  • How to address the needs of the self-employed – the government is seeking feedback about whether it should lobby the federal government to change federal tax law to allow the self-employed to participate in the ORPP.

Given the most recent comments from the government, it is not anticipated at this stage that the ORPP will have any direct impact on CAAT Plan members as they would neither be required to join nor would it be available to them while members of the CAAT Plan. Similarly for CAAT Plan participating employers, the ORPP would have no impact vis-à-vis employees who are members of the CAAT Plan.

There may, however, be an impact on non-members and for participating employers in respect of such non-member employees. This depends on whether the ORPP would be mandatory for employees who elect not to join the CAAT Plan. If it is mandatory, then non-members and participating CAAT Plan employers would be required to contribute in respect of the ORPP.

Requiring employees who elect not to join the CAAT Plan to join the ORPP could be seen as inconsistent with the jointly-sponsored nature of the CAAT Plan wherein the sponsors of the CAAT Plan have designed and agreed upon enrolment criteria (mandatory for full-time, optional for part-time employees) that is consistent with the Pension Benefits Act and that best suits the CAAT Plan sponsors (i.e., employers and employees). Plan staff will be continuing to meet with government officials to convey the potential impacts of the ORPP on the CAAT Plan, its stakeholders and members.  


The impact of the ORPP

August 2014: In its 2014 Budget, passed on July 24, 2014, the government of Ontario re-affirmed its commitment to establish an Ontario Retirement Pension Plan (ORRP).

While the ORPP is envisioned as a provincial pension plan, the Ontario government has also indicated that it views an enhanced CPP as its preferred option for addressing retirement security. As a result, it is possible that the ORPP could be absorbed into the CPP at a later date.

Read more

Government Proposals

The 2014 Budget outlines the government’s vision for the ORPP to assist individuals most at risk of under saving for retirement, in particular middle-income earners without a workplace pension. According to the Budget, the ORPP will have the following design features:

  • Individuals already participating in a “comparable workplace pension” would not be required to enrol in the ORPP.
  • Earnings below a certain threshold would be exempt from contributions. (That threshold has yet to be determined.)
  • A target replacement rate of 15% of an individual’s annual earnings, up to a maximum annual earnings threshold of $90,000.
  • Equal contributions shared between employers and employees, not exceeding 1.9% each (3.8% combined) on earnings up to the maximum annual earnings threshold of $90,000. (This maximum would increase each year consistent with increases to the CPP’s maximum earnings threshold.)
  • An arms-length public administrator with a strong governance model that would be responsible for managing the investments associated with annual contributions.
  • ORPP benefits would be earned on future service only.

The Ontario government plans to have staggered enrolment beginning in 2017, starting with larger employers. Once implemented, contributions will be phased in over two years. The government has appointed Michael Nobrega, retired CEO of OMERS, to chair the Implementation Committee. We understand that the government is also planning to consult with the public and the pension industry as it works out the details of the ORPP and its implementation.

We are monitoring the development of the ORPP and what impact it may have on the CAAT Pension Plan and its members. We will update this page as more information becomes available.


Frequently Asked Questions

Q: I am a member of the CAAT Pension Plan. Will I also have to contribute to the ORPP?

A: The government has stated that those participating in a “comparable workplace pension plan” will not be eligible for the ORPP. We expect that the CAAT Pension Plan would be considered a “comparable workplace pension plan” and that our members would therefore not be eligible to join the ORPP.

Q: Can an active member of the CAAT Plan participate in the ORPP as well?

A: The government has stated that those participating in a “comparable workplace pension plan” will not be eligible for the ORPP.  The government has stated its intention that defined benefit plans, such as the CAAT Pension Plan, be considered comparable. It should also be noted that participating in a comparable workplace pension plan and the ORPP simultaneously may raise some issues under the federal Income Tax Act. For example, a person may not be able to participate in both the ORPP and their workplace pension plan if they do not have sufficient pension adjustment (PA) room.

Q: Can a CAAT Plan member join the ORPP instead of participating in the CAAT Plan?

A: No. Once you become a member of the CAAT Pension Plan, you must participate in the CAAT Pension Plan until you terminate your employment or retire. All full-time employees are required to become members of the CAAT Pension Plan when they start work at a participating employer. Part-time employees at participating employers have the option to join the CAAT Pension Plan at any time during their employment.

Q: I work part-time and am not a Plan member. Will I have to join the ORPP if I don’t join the CAAT Plan?

A: As a part-time employee of a participating employer, you have the option to join the CAAT Pension Plan. At this stage it is not known if solely having the option to join a comparable workplace pension meets the government’s requirements for exemption from mandatory participation in the ORPP, or whether you must actually be enrolled in the workplace pension plan to be exempt from participation in the ORPP.

Q: I work part-time and am not a member. If I am able choose to join the ORPP, can I change my mind and join the CAAT Pension Plan at a later date?

A: Under the terms of the CAAT Pension Plan, you have the right to join the CAAT Pension Plan at any time during your employment. What impact this would have on your ORPP participation is not known at this stage.


 

Submissions and discussion papers

January 2015: CAAT Pension Plan response to the paper: Ontario Retirement Pension Plan: Key Design Questions (PDF)

December 2014 -  Ontario government consultation paper: Ontario Retirement Pension Plan: Key Design Questions (Government of Ontario website.)

November 2014 - Ontario government discussion paper: The Ontario Retirement Pension Plan: Discussing a Made-in-Ontario Solution (Government of Ontario website.)

 

To learn more, visit the Government of Ontario's ORPP website.