Ontario says pension plan would cost a cup of coffee

Ontario’s Liberal government says its proposed Ontario Retirement Pension Plan would cost contributors about the same amount a day as a cup of coffee.

Premier Kathleen Wynne announced details today about the design of the Ontario Retirement Pension Plan (ORPP), which she said the province is moving forward with in order to close a retirement savings gap for the two-thirds of Ontarians who do not have a secure workplace pension plan.

The province aims to bring the ORPP into effect on Jan. 1, 2017, expanding pension coverage to 3.5 million workers. It would be administered by something called the Ontario Retirement Pension Plan Administration Corporation, an arm’s length organization.

Employees and employers would each contributed 1.9 per cent toward the person’s plan, for a total of 3.8 per cent. So, someone making $45,000 a year would pay $2.16 a day, matched by their employer, to earn $6,410 a year after age 65 (after 40 years of contributing).

Contributions would be phased in, reaching the 1.9 cap by 2021. Payments for those eligible could start as early as 2022, the province said.

The ORPP would aim to replace 15 per cent of an individual’s earnings, up to $90,000 (in 2014 dollars).

Ontario has created a graphics-heavy information page to answer questions about the plan. You can find it here.