What was behind the ORPP and expanded CPP?

By MPP Toby Barrett

We all reach a time in our life when we simply cannot or do not want to work any longer, and must then draw on our savings.

But in today’s Ontario, it’s getting increasingly difficult to keep pace with the bills, let alone set money aside for retirement. A pension is a secure and efficient way to squirrel away savings.

Helping people save for retirement is a noble goal but it must be done in a way that benefits all members of society. Premier Wynne’s controversial Ontario Retirement Pension Plan (ORPP) is now dead. And plans are afoot to expand the Canada Pension Plan (CPP).

The ORPP was first and foremost a job-killing payroll tax. It would have cost Ontario employees and employers a combined 3.8 per cent from each employee’s paycheque, plus been very costly to administer and would have done nothing to help low income retirees.

What we got was the creation of an ORPP bureaucracy to the tune of nearly $20 million and the spending of $1.7 million on a provincial advertising campaign, coincidentally before the federal election.

My colleagues and I have called on the Ontario government to disclose the costs associated with the ORPP. The Premier has said she will reveal it on her own time. You may recall it took a report from the Auditor General to point out the Pan Am Games went over budget by $342 million even though the government had insisted the games were under budget. Ironically, $525,000 spent on the ORPP has gone to the former Pan Am Games CEO. He was also entitled to a 25 per cent discretionary bonus in spite of going over budget. Further, there was also the creation of a new Associate Minister of Finance for the ORPP which came with a salary of $165,750.

It goes without saying that whatever numbers the Premier presents to us, they too will need to be verified by the Auditor General. Some wonder if the Premier floated the ORPP to garner feel-good headlines and to give friends and insiders a nice salary for the past two years.

The Canada Pension Plan (CPP) is a defined benefit and is an earnings-related social insurance program. In short, beginning at 18, the more you work, earn and contribute to the CPP, the more you receive for your retirement pension — up to the maximum. It forms one of two major components of Canada’s public retirement income system, the other component being Old Age Security (OAS).

However, what’s troubling is some feel this deal to expand CPP is a way to prop up public-sector pension plans. A large portion of public sector pensions are funded by the taxpayer and not by the union members. While taxpayers experience the burden of saving for their own retirement, they are oblivious to supporting unfunded future benefits of who have a government job.

While Premier Wynne and the Prime Minister tell seniors that the extended CPP is a good deal, I am not convinced. Asking seniors to subsidize public servant pensions doesn’t seem fair and is not a noble goal. A fair pension plan should help those who truly need it, not push the gap between those who have a government job and those who don’t.