Canadian Payroll Reporter

3 Canadian HR Reporter, a Thomson Reuters business 2016 News CPR | June 2016 Ontario bill provides new details on ORPP Legislation sets out requirements for contributions, calculation of benefits, employer responsibilities and penalties for non-compliance BY SHEILA BRAWN RECENTLY TABLED legislation provides more details on how the Ontario Retirement Pension Plan (ORPP) will operate. Bill 186, the Ontario Re- tirement Pension Plan Act (Strengthening Retirement Se- curity for Ontarians), 2016, sets out requirements for who have to contribute or would be ex- empt, how contributions and benefits would be calculated, employer responsibilities, and penalties for not complying. The government says it will begin enrolling employers next January. Contributions will be phased in, beginning in 2018. "Bill 186 brings us one step closer to achieving our goal that all eligible Ontarians are part of the ORPP or a comparable plan by 2020," Associate Finance Min- ister Mitzie Hunter said during a debate. She said the ORPP is necessary because two-thirds of Ontario workers do not have a workplace pension plan and Ontarians are not saving enough for retirement. Here is a look at some of the key provisions in the bill: Who has to contribute: ORPP contributions would be manda- tory for employees aged 18 years to 70 years who are employed in Ontario and who do not take part in a workplace pension plan that is comparable to the ORPP. Employment in Ontario refers to employees required to report to their employer's establish- ment in the province or paid from their employer's establish- ment in Ontario. It would not in- clude federal government work- ers or self-employed individuals. For a defined benefit pension plan to be comparable to the ORPP, its annual benefit accrual rate would have to be at least 0.5 per cent of an employee's annual remuneration for a pension at the plan's normal retirement date. For a defined contribution pension plan to be comparable, the plan's total mandatory con- tribution rate would have to be at least eight per cent of an em- ployee's annual remuneration and the employer's contribution rate would have to be at least half of that. Voluntary contributions and contributions that employ- ers are required to make on vol- untary employee contributions would not be included. Who is exempt: Employees covered by a workplace pension plan that the ORPP Administra- tion Corporation deems com- parable, and their employers, would not have to contribute to the plan. However, the bill would allow these employers to opt in. The bill would prohibit con- tributions from employees un- der 18 years old and older than 70 years old, as well as employ- ees receiving an ORPP pension other than a pension for a surviv- ing spouse. The bill would allow employees under the age of 70 who are receiving an ORPP pen- sion to suspend the pension pay- ments so they can make more contributions to the plan. Employees whose earnings are exempt under a tax treaty Canada has signed with another country would be exempt, as would tax-exempt First Nations employment unless an employer or an employee opts in. The bill would also allow individuals to opt out on reli- gious grounds after applying to the ORPP Administration see AIMS page 8

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