The Ontario Retirement Pension Plan

The following provides an overview of recent government decisions on the proposed plan design of the Ontario Retirement Pension Plan (ORPP). The plan has been modelled based on the strengths and principles of the existing Canada Pension Plan (CPP). To view the technical bulletin released by the Ontario Ministry Of Finance, click here.

ORPP Plan Design a brief overview

Comparability Thresholds

Defined Contribution (DC) Plans or Registered Pension Plan (RPP)

• A Defined Contribution plan is a registered pension plan that specifies the amount of contributions from employers and employees. Benefits are provided from accumulated contributions plus the return on the investment of these monies.
• An analysis was conducted and it was determined that the minimum comparability threshold for a DC plan would be a total contribution of eight per cent of base salary earnings. Employers will also be required to contribute at least 50 per cent of the total minimum contribution, being at least four per cent.

Comparable Plans and Phase-In of ORPP Enrollment

• The Ontario Retirement Pension Plan Administration Corporation (ORPP AC) will contact all Ontario employers in early 2016 in writing to verify their existing pension plans and assess the coverage offered by employers to their employees.
• Any employer with a registered workplace pension plan that exists on August 11, 2015, or that has begun the process of registering one, will be assigned to Wave 4. If the plan meets comparability thresholds by the time Wave 4 begins, the employer will not be required to enroll in the ORPP‎. (See below to reference the four waves)
• Any employer that does not have a workplace pension plan, but sets up a comparable plan prior to its entrance Wave, will not be required to enroll in the ORPP.
• Employers with a workplace pension plan who have employees who do not participate will be placed in Wave 4. By 2020, they will be required to have all employees participating in a comparable workplace pension plan, or have employees who are not in the comparable workplace pension plan, enrolled in the ORPP.

Enrollment in the ORPP will be staged in four waves

Wave 1 – Jan. 1, 2018: Employers with 500 or more employees without registered workplace pension plans
Wave 2 –Jan. 1, 2019: Employers with 50 to 499 employees without registered workplace pension plans
Wave 3 –Jan. 1, 2020: Employers with fewer than 50 employees without workplace pension plans
Wave 4 –Jan. 1, 2020: Employers with a workplace pension plan that’s not modified or adjusted to meet the comparability test as well as employees who aren’t member of the workplace’s comparable plan

Waiting Periods 

If a workplace pension plan has a waiting period provision before an employee can join the plan, both the employer and employee would be required to participate in the ORPP for the duration of the waiting period. To make things as easy as possible, you will likely want to consider a “No waiting Period” on the RPP.

Employee Eligibility

Definition of Employment and age

• This definition of employment in Ontario is consistent with the Pension Benefits Act (PBA), and aligns with the definition of “province in which person deemed employed” under the Canada Pension Plan (CPP). So if the employee falls under CPP, they will also have to be part of the RPP or ORPP.

Testing Comparability Threshold at Subset Level
A single pension plan often covers more than one group of employees and provides different benefit formulas, contribution rates and accrual rates for different groups of employees. A pension plan may provide for differences in contribution rates or benefit structures based on:

• The nature of the member’s employment;
• The terms of employment, years of service;
• Whether or not the member belonged to a union; and/or other objective distinctions.

Members who belong to a subset would be subject to the same contribution or benefit structure, a total contribution of eight per cent of base salary earnings. Employers will also be required to contribute at least 50 per cent of the total minimum contribution, being at least four per cent.

To help put into perspective how the new ORPP differs from existing RPP's Continuum II has put together a chart that compares the two savings plans. To view the chart, click here.


Want more information on the new ORPP and how it affects your retirement plan, contact us today.