The introduction of a proposed Ontario Registered Pension Plan (ORPP) could see changes to existing pension plan setups, according to a survey released by the Canadian Life and Health Insurance Association (CLHIA).
More than three-quarters (78 per cent) of employers — with 37 per cent very likely and 41 per cent somewhat likely — with defined contribution (DC) pension plans or group registered retirement savings plans (GRRSPs) are likely to reduce contributions under their existing plans with a mandatory ORPP.
And two-thirds would consider eliminating their existing plans altogether, found the survey of 401 Ontario employers.
“The Ontario government's proposal threatens the viability of existing plans and could negatively impact the retirement savings of millions of Ontario workers," said CLHIA president and CEO Frank Swedlove.
The Ontario government should consider the unintended consequences of its proposal, he said, citing research by McKinsey & Company that found 83 per cent of Canadian households are financially on track for retirement.
“It is clear that the proposal, as it now stands, not only undermines existing retirement savings but would force additional contributions on a large segment of the population who are already on track for retirement."