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Ontario Plan May Impact Pay


The Ontario government’s proposed provincial pension plan could cost individual Ontarians up to $3,420 a year or nearly $7,000 for a working couple, says Philip Cross, former chief economic analyst for Statistics Canada. In an analysis by the Fraser Institute, ‘Evaluating the Proposed Ontario Pension Plan’ He says the government’s proposal to “mandate higher household saving with more mandatory pension taxes will cost millions of Ontarians thousands of dollars.” The proposed plan requires workers to contribute 1.9% of their earnings up to $90,000, matched by a 1.9% contribution from employers. But the cost to employees doesn't stop there. Economic theory and extensive literature on pension trends suggest employers will cut future wages or other benefits to pay for their half of the mandatory contribution. He also suggests there could be flaws in the proposed plan’s pension fund, which will be very large, with investments concentrated in fewer areas than an individual’s portfolio. “Its sheer size and concentration will leave the fund vulnerable to a spectacularly poor investment decision, like what happened to the Quebec Pension Plan in 2007, potentially offsetting any gains made by low fund management costs.” 

Courtesy of Benefits and Pensions Monitor website News Alerts 

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