On August 11, 2015, the Ontario government released further details about the Ontario Retirement Pension Plan (ORPP) that will be relevant to employers with employees in Ontario.
Employers and employees who participate in a comparable workplace pension plan will not be required to participate in the ORPP. “Comparable Plan” will be defined as a registered pension plan (registered under provincial or federal pension standards legislation), which will include both defined benefit and defined contribution pension plans that meet certain requirements. Comparable defined benefit plans must meet a minimum benefit accrual rate of 0.5 per cent. For a defined contribution plan to be considered comparable, it must have a minimum annual contribution rate of eight per cent and require at least 50 per cent matching of the minimum rate from employers. Further details are to be provided on the comparability of other types of plans, such as defined benefit/defined contribution hybrid plans.
Enrolment in the ORPP will be staged in four waves between 2017 and 2020. Large employers with 500 or more employees without registered workplace pension plans will begin contributions to the ORPP January 1, 2017. Medium employers with 50 to 499 employees and small employers with 50 or fewer employees without registered workplace pension plans will begin contributions January 1, 2018 and January 1, 2019, respectively. Any employer with a registered workplace pension plan that exists on August 11, 2015, or that has begun the process of registering one, that does not meet the comparability test by January 1, 2020, will begin contributions on January 1, 2020. The Ontario government has also said that any employer that does not have a workplace pension plan, but sets up a comparable plan prior to the date that it was to begin contributions to the ORPP will not be required to enroll in the ORPP. Contribution rates will be phased-in for employers without a registered workplace pension plan as indicated in the chart provided in the backgrounder document to which we have included a link above. The Ontario Retirement Pension Plan Administration Corporation will begin contacting Ontario employers in early 2016 regarding their existing pension plans and coverage offered to employees.