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ORPP Offers Efficient Retirement Security


The Ontario Retirement Pension Plan (ORPP) is an efficient, cost effective way to provide retirement security for Ontarians, says Mahmood Nanji, associate deputy director of the Ontario Retirement Pension Plan Implementation Secretariat. In the 'Preparing for the ORPP' session at the CPBI Forum, he said, however, while it is not a tax, it could result in taxes if the retirement saving issue in Ontario is not addressed. The other option facing government in terms of aging retirees with no savings is to support them with tax dollars and cutting back in areas such as healthcare spending. He disputed allegations that it is a tax saying the contributions accrue to become a benefit on retirement. Flávio Volpe, president of the Automotive Parts Manufacturers Association of Canada, said they were initially opposed to the ORPP. Its members looked at it as another cost to manage for Ontario-based operations of multi-national firms, an unavoidable new cost for Ontario-only firms, and a payroll killing tax. However, now while it may be a challenge to implement and cost mitigate, it may also provide a predictable cost retirement plan that allows contributors to not worry about investment returns and longevity risk. It may also help dissolve the need for an expanded Canada Pension Plan if other provinces create comparable regimes. However, the timing is also favourable for his members. The industry is in the midst of a real boom with supply and demand flirting with record levels. However, it is reaching a cliff for skilled labour and retention has become a high priority. This means most large firms will simply offer a comparable plan to meet their retention needs. However, this may be an issue for medium sized firms. 

Courtesy of Benefits and Pensions Monitor website News Alerts 

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