Andrea Horwath calls for publicly run Ontario Retirement Plan

Link

Sexy and Andrea and Pensions all in the same story! Good for her and good for us. Was hoping not to have to eat cat food when I get old(er)

Well, it said "unsexy" - but only in the context that it used to be an unsexy issue, but now it's right up there with real estate in small talk conversations.

BTW, love your alias, antsunited - welcome to babble. :)

Pensions are a huge issue.  I don't care whether they're addressed nationally or provincially, as long as they're addressed, and I'm happy to see the NDP at both levels of government focusing on it.

Few and far in between are people like Ms. Horwath who have the potential to see the bigger picture by linking with the workforce as a whole.

more details would help: what is this plan to be funded from? general provincial revenues? a new tax line?

what would be its relation to Canada Pension Plan -- like Quebec Pension Plan to CPP? complementary, or something different?

On what basis are its pension levels determined: not on income, if it's not employment/revenue-based.  Hence, on what?

Any foreign models?

 

 

Here's a cut and paste from a backgrounder that Caucus Research prepared (sorry, no link... Im got it by e-mail). No copyright issues with posting the whole thing, because they want people to see it.

BACKGROUNDER

January 11, 2010

Ontario NDP's Ontario Retirement Plan (ORP)

Context

On Dec. 18, 2009 federal, provincial and territorial finance ministers met in Whitehorse and agreed to study further options to enhance Canada 's pension plan system. The options target the estimated 65% of Canadians without workplace pension coverage. The ministers plan to meet again in May, 2010.

At the Whitehorse meeting, a paper by University of Calgary taxation expert, Jack Mintz, commissioned by Finance Minister Flaherty, played down the suggestion that there is a pension crisis - a controversial conclusion that conflicts with the opinion of the NDP, the CLC and CARP, among others.

In the absence of leadership from the federal government, the initiatives on the table come from the federal NDP, CLC, CARP, and a number of provinces and territories who feel they can no longer wait for a federal proposal.

In that environment, the Ontario NDP clearly had to develop a proposal on behalf of those without workplace pensions in that province.

Ontario NDP's Ontario Retirement Plan (ORP)

"The Ontario NDP supports federal action to enhance the existing CPP benefit along with the other elements of the CLC and federal NDP pension reform proposals. However, should the Harper government not show clear signs of significantly enhancing the existing CPP benefit in the next few months, the Ontario NDP strongly believes that the province of Ontario should implement the following proposal."

• The ORP is a voluntary CPP-style defined benefit plan paying a maximum benefit of $600-700 per month (partially indexed) designed for the approximately 65% of Ontarians without workplace pension coverage.
• Automatically enrols employees without a pension plan that matches or exceeds the ORP benefits, but employees can opt out within 3 months of enrolment. Locked in after that (with exceptions).
• It also allows for an opt-in at any time and purchase of past service credits, including use of an RRSP transfer for this purpose.
• The plan is portable from workplace to workplace.
• Employers are required to contribute as long as an employee chooses to belong.
• Employer and employee contribution rate is 3% (approximately equal to premium for doubling CPP). Contribution rate is phased in over 5 years for employees, longer for employers.
• Premiums pegged to same "pensionable" earnings as CPP ($3,500 - $46,300).
• Management by an existing public fund manager (eg. OMERS or OTPP).
• There is also the option for small pension plans to join the ORP, purchasing past service credits.

Commentary

• In the absence of federal leadership that focuses on improving the national, universal, portable, public option - a stronger CPP - this is a very good proposal, embodying many of the features of the reformed CPP advocated by Jack Layton's federal New Democrats.
• Our preference continues to be a plan for all Canadians wherever they live, but with so many Canadians needing action now to provide financial security for their retirement savings, it is understandable that the provinces cannot wait forever for Mr. Harper to act.
• We believe, nevertheless, that Canadians will not be as well served by a patchwork of provincial plans that supplement the CPP, and other less effective alternatives, than they would be with a stronger more flexible CPP.
• We will continue to advocate that national alternative - the pension equivalent to Medicare - alongside the CLC, CARP and others.

I like the sounds of this initiative but I would expect a huge reaction from the business "community" on this one: 

Quote:

• Employers are required to contribute as long as an employee chooses to belong.

Could a fall-back position allow employees to buy-in (at a higher rate I suppose), even if their employer is not offering this as a benefit? And I wonder how far back the buy-back would  extend? That could get expensive couldn't it? Would employee and employer share those buy-back costs? 

 

The costs won't be insubstantial, particularly for small business.  However, unlike some other spending it would be a direct right down against profits.  So in the end they would net out the same as without the plan. 

This is a good idea all around. 

Query for those in the know - would farmers be able to pay into this plan?  I don't know if you have seem the farmer pension plan, but it essentially amounts to a shovel, a bucket and a big mound of manure.

Another thing about RRSPs - they cost way, way more to administer than public plans or large group plans like the teachers' pension or whatever.  I heard a talk recently by an economist with the CLC, who was saying that the Canada Pension Plan, for instance, only costs a fraction of a percent in administration costs, whereas when you buy RRSPs individually, it's maybe two or three percent, somewhere around there (I think that's what he said) and this makes a huge, huge difference in the end.