Don’t have a workplace pension plan? That’s about to change!
A bill has been passed that will put in play a workplace pension plan for businesses that do not already have one starting January 01, 2017. The Liberal government has pushed this legislation in order to put in place an Ontario Retirement Pension Plan (ORPP) in an effort to counteract the Conservative party’s decision to not improve the Canada Pension Plan.
Currently, approximately two thirds of provincial workers do not have a pension plan; thus these individuals will be forced to join the Ontario Retirement Pension Plan. Many individuals without a workplace pension plan are saving up for their retirement via RRSP’s while others have no savings at all. Baby boomers have expressed their concerns about very late retirement and in some cases lacking the option to retire all together due to their lack of savings.
According to the ORPP, employers and employees will be required to contribute 1.9% over the course of two years. This initiative will come into play in January of 2017 and continue to expand thereafter. The bill will first tackle bigger companies and eventually trickle into smaller businesses such as dry cleaning services.
What are the consequences?
Business assemblies are forewarning that this plan is problematic. This bill would require employees to make an annual contribution of $1,643 for each employee. Furthermore, employers would have to match that amount each employee. Consequently, this is likely to result in less jobs due to higher costs for businesses. Unemployment and a lack of employment opportunities is a pre-existing issue for many youths today, without the ORPP in place.
New Democrats argue that this is the best option to enhance the CPP while Conservatives argue that this bill will result in less jobs and more taxes.
Small business workers are concerned that they will be laid off as their employer will not be able to contribute to their pension plans. Individuals belonging to smaller businesses are also concerned about wage cuts and still being able to make ends meet. For instance, daycare owners are concerned that their business will likely come to a halt as they will not be able to pay their employees retirement costs.
Conversely, individuals working in more stable and larger corporations feel the bill is an effective way to address the future issue of retirement for many baby boomers. However, small business workers are suggesting that the optimism on behalf of larger corporation workers is fuelled by the minimal impact it will have on their income and overall lifestyle.
Points of Discussion:
What are your concerns?
How does retirement work in your country?
I’d love to read your comments below.
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