TORONTO

The Ontario government continues to push us all to a place we don’t want to go.

The now-infamous Ontario Retirement Pension Plan (ORPP) is moving forward despite growing opposition, and against the wishes of Ontarians, who have repeatedly said they cannot afford to save more than they already do for their retirement.

Recent polls by Forum Research and Mainstreet Technologies indicate that more employees, (i.e. future ORPP plan members), oppose this pension scheme now than a year ago, when the idea was first floated.

Add to that the results of a CFIB survey which shows 90% of small business owners also reject the ORPP. Clearly the more Ontarians learn about the ORPP, the less they want it. So this seems like a good time to tally up what we currently have in our ORPP knowledge bank.

The basics are that an employee making $45,000 a year would pay $788 toward the ORPP. Their employer would kick in a matching amount. That’s where it gets a little more complicated.

Employers react to price shocks in a number of ways. While larger employers might absorb the added cost, smaller businesses would be forced to reduce the size of their workforce by shedding hours, positions and pay increases. Given that 98% of Ontario businesses are small and medium-sized, the immediate consequence of ORPP introduction would be job losses.

Of course our provincial government doesn’t talk about the disastrous economic impact of the ORPP. Nor do their TV and radio ads tell you how much you will be on the hook for. It’s all about comfortable and secure retirement and the good ORPP benefits you’ll get after you retire. Excited? Not so fast…

The ORPP will give you 15% of your pre-retirement income: if you made $45,000/year, for your $788/year in contributions, you would get $6,410/year in retirement. But here is the catch: To receive such benefits you would have to pay into the ORPP for 40 years!

If you contribute for 20 years, you would get only half of the maximum benefit. It gets worse … if you are 55 years old when ORPP starts, you would pay full contributions for 10 years, but you would be eligible to get only a quarter of the maximum benefit.

By comparison, putting $788 annually in contributions into a Tax Free Savings Account could reasonably be expected to yield a much higher return. The ORPP could be robbing Ontarians to the tune of thousands of dollars every year. In addition, if you die early, your family gets next to nothing — all your contributions, gone. If you had put the same amount of money into an RRSP or TFSA, everything would pass to your estate upon your death.

And that’s not all.

The ORPP’s administrative costs are expected to be in the range of $130-$200 per year per plan member, so if you were to contribute $800 your first year, you’re looking at 25% coming off the top just in fees. Forget about investment returns, you are losing a quarter of what you put in as soon as you pay it.

This entire pension plan design was ill-conceived and ideologically driven from the start. And the math doesn’t add up in Ontarians’ favour. Since it takes 40 years of contributions, younger Ontarians — age 25 and under — are the only ones who will see full ORPP benefits, however meager, in their lifetime. This is clearly not the social segment calling for safer and more comfortable retirement. The seniors and soon-to-be-seniors who truly want better pensions, won’t see more than a nickel.

Some pension plan. Those who will get it, don’t want it; those who want it, won’t get it.

— Plamen Petkov is the Ontario vice-president of the Canadian Federation of Independent Business (CFIB)