PRPP offers more targeted solution to retirement savings gap than ORPP – IFIC
Toronto, ON – February 13, 2015 – The Investment Funds Industry of Canada (IFIC) has called on the Ontario government to scrap its planned Ontario Retirement Pension Plan (ORPP), arguing that a well-designed Pooled Registered Pension Plan (PRPP) program can better address gaps in Ontario’s retirement savings framework. IFIC made its comment in response to the Ministry of Finance consultation on the proposed ORPP, which closed today.
“There is ample empirical evidence that the gaps in retirement savings are centred on specific subsets of the population,” said IFIC president and CEO Joanne De Laurentiis. “Ontario’s proposed PRPP framework follows the federal voluntary model; however, as other provinces have demonstrated, PRPPs easily can be easily adapted to achieve provincial public policy goals. A well-constructed PRPP framework could directly address real gaps in retirement savings options currently available to employers and employees while avoiding the potential negative consequences posed by the ORPP.”
IFIC’s submission notes several examples of potential enhancements to the currently contemplated Ontario PRPP model, including: a mandatory requirement that employers with a minimum number of employees offer a recognized retirement savings plan; allowing employers the ability to auto-enroll employees (with reasonable opt-out provisions), and locking-in of employer contributions (with limited employee contribution withdrawal options).
Commenting on the ORPP’s proposed approach to qualifying comparable retirement plans, IFIC’s submission notes the growing body of stakeholder feedback and research indicating that the ORPP may not only fail in its goal of increasing retirement income, but may reduce retirement savings benefits for some workers.
“Ontario has the opportunity to take a comprehensive approach to its retirement savings system through targeted design of its PRPP legislation. The PRPP can constitute a truly complementary product, whereas the ORPP may be both redundant and counter-productive,” said De Laurentiis. “However, should the government choose to proceed with the ORPP, at minimum, it must broaden its definition of “comparable” plan to capture all existing workplace savings plans, including Group RRSPs, DC pension plans, Pooled Registered Pension Plans (PRPPs), Deferred Profit Sharing Plans (DPSPs) and Group TFSAs.”
The IFIC submission can be viewed here.
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The Investment Funds Institute of Canada is the voice of Canada’s investment funds industry. IFIC brings together 150 organizations, including fund managers, distributors and industry service organizations, to foster a strong, stable investment sector where investors can realize their financial goals. IFIC is proud to have served Canada’s mutual funds industry and its investors for more than 50 years.
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