Prime Minister Elect Justin Trudeau has promised to do what Stephen Harper pointedly refused to do – help Premier Kathleen Wynne implement Ontario’s new pension plan.
But reconciling Trudeau’s long-term vision of enhancing the Canada Pension Plan (CPP) with Wynne’s “ready-to-go” Ontario Retirement Pension Plan (ORPP), could prove tricky.
Trudeau to help on short-term implementation issues
The Conservative government refused to change federal regulations to help establish and collect contributions for the Ontario Retirement Pension Plan (ORPP), which is due to start collecting premiums in January, 2017.
In fact, the pension issue had become a significant point of conflict between the federal Conservative government and the Ontario Liberal government. During the recent campaign, Mr. Harper went so far as to say that he was “delighted” that his decision not to help Ms. Wynne “is making it more difficult for the Ontario government to proceed.”
But what a difference an election makes! The two Liberal leaders had a brief meeting at Queen’s Park on Tuesday and there appeared to be a complete meeting of the minds on the pension issue – at least in the short term.
According to a statement issued after the meeting, the new federal Liberal government will “direct the Canada Revenue Agency and the Departments of Finance and National Revenue to work with Ontario officials on the registration and administration of the [ORPP].”
Registration refers to the fact that unless a pension plan is registered under the terms of the federal Income Tax Act, employee and employer contributions are not tax deductible. Once registered, pension contributions and investment earnings are tax-exempt until benefits are paid to a retiree.
Administration primarily refers to piggy-backing ORPP premium deductions on the existing CPP payroll contribution infrastructure. Ontario had issued a request for proposal for a third party to help administer the plan because of the outgoing Conservative government’s refusal to co-operate. Now it won’t need that third-party partner, which means the ORPP should be less expensive to operate. Continue reading