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Public pensions: CPP deal puts an end to ORPP

August 18, 2016

Change is coming to public pensions in Canada. After winning the 2014 election on a plan for improved retirement security, the Ontario government introduced the Ontario Retirement Pension Plan (ORPP). But a deal struck between all provinces and the federal government to improve the existing Canada Pension Plan means that the ORPP is unnecessary and will be shut down.

Unlike the ORPP, the planned CPP enhancement is both national and universal, making it by far the preferred option of labour organizations across the country, including The Society and the Canadian Labour Congress.

It is clear, however, that the CPP enhancement will be more modest in scope than the ORPP. The deal, inked on June 20, increases the income replacement level from one-quarter to one-third of covered income, and increases the limit on covered earnings by approximately 14% by 2025 (from $54,900 to $62,586 in 2016 dollars).

If the deal receives final approval, both employers and employees will continue to contribute equally to the CPP. Contributions and coverage will go up starting in 2019.

It appears almost certain that CPP enhancement will take place and the ORPP will be scrapped. But it is not quite a done deal. The governments of Ontario and Canada have issued a joint release stating that the agreement in principle to enhance the CPP must be approved by all signatories. The deal was expected to be ratified by July 15 but British Columbia has delayed signing. That province anticipates doing so by the end of the summer.

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