On February 16, 2016, Finance Minister Charles Sousa announced that implementation of the Ontario Retirement Pension Plan (“ORPP”) would be delayed by one year. As set out in our previous update on the ORPP, the ORPP was scheduled to be implemented in four “waves”, beginning with large-sized employers who did not have a registered pension plan as of August 11, 2015. The first wave was originally slated to begin on January 1, 2017. The Ontario government’s announcement means that large employers who did not have a registered pension plan as of August 11, 2015 will not be required to begin making contributions to the ORPP until January 1, 2018. All other implementation dates remain unchanged at this time, so employers in the first wave will begin making contributions at the same time as medium-sized employers with 50 to 499 employees who do not have a registered pension plan. The implementation dates are as follows:
- Wave 1: Large employers (500 or more employees) without registered workplace pension plans. Contributions to start January 1, 2018.
- Wave 2: Medium employers (approximately 50-499 employees) without registered workplace pension plans. Contributions to start January 1, 2018.
- Wave 3: Small employers (50 or fewer employees) without registered workplace pension plans. Contributions to start January 1, 2019.
- Wave 4: Employers with a workplace pension plan that is not modified or adjusted to meet the comparability test, as well as employees who are not members of their workplace’s comparable plan. Contributions to start January 1, 2020.
The Ontario government indicated that the delay in implementation will allow time for a “national dialogue” on CPP reform prior to the Federal-Provincial-Territorial Finance Ministers’ meeting in June 2016. If provincial agreement on enhancements to the CPP is not reached, implementation of the ORPP will move forward. The federal government has agreed to provide administrative support for the ORPP, such as facilitating plan registration and data-sharing, and has indicated that it will co-operate with Ontario on issues such as the collection of employer and employee contributions. This represents a significant change from the previous federal government’s position on the ORPP.
Although this announcement provides large employers with some much-needed breathing room with respect to the commencement of ORPP contributions, employers should nevertheless begin planning for implementation as soon as possible.