Canadian Payroll Reporter

3 Canadian HR Reporter, a Thomson Reuters business 2014 News CPR | June 2014 CPR CPR | June 2014 June 2014 see OTHER on page 5 IT PAYS TO KNOW Professional Development Mark your calendar for payroll education! With more than 190 federal and provincial regulations and changes each year, staying payroll compliant is one of the biggest challenges employers face. Improve compliance and reduce the risk of audits and penalties with help from Professional Development seminars from Canadian Payroll Association. Seminars are offered for all levels from beginner to advanced. A variety of topics are available, including Learning Payroll, Taxable Benefits, Employment Standards, Pensions and more. Check our calendar for a seminar in your area. Learn more at payroll.ca. Become a Canadian Payroll Association member and get preferred rates on seminars. Stay Current Stay Compliant payroll.ca The ORPP would be struc- tured much like the CPP. It would be funded by mandatory contributions from employers and employees. The contribu- tions would be invested by a board operating at arm's length from the government. Individu- als covered under the plan could start collecting pension benefits at age 65. The benefits would replace about 15 per cent of earnings, up to an annual maximum. In- dividuals would earn benefits as they contribute. The govern- ment says the plan could be in- tegrated with the CPP at a later point if there is an agreement to enhance the CPP. The ORPP would not be man- datory for everyone. It would not apply to employers or workers in federally regulated industries in Ontario. Enrolment in the plan would not be required for em- ployers with a comparable work- place pension plan or for the em- ployees who work for them. For other employers and workers, mandatory enrolment would occur in stages, beginning in 2017. The contribution rate would be 1.9 per cent for both employers and employees, for a combined rate of 3.8 per cent, up to an annual maximum earnings threshold of $90,000. The con- tribution rates would be phased in over two years. There would be an exemption threshold for lower-income workers similar to the $3,500 CPP exemption. Business groups have ex- pressed concerns about the ORPP. The Ontario Chamber of Commerce says it worries that, "the plan will create administra- tive duplication with the CPP, further fragment Canada's pen- sion landscape and potentially deter job creation." Dan Kelly, the president of the Canadian Federation of Inde- pendent Business (CFIB), took to Twitter to call the plan "one of the largest, most unnecessary provincial payroll tax hikes on small (business) in history." Some labour leaders have ap- plauded the government for pro- posing it. Sid Ryan, the president of the Ontario Federation of La- bour (OFL), calls the plan a bold move that "would be a historic gain for millions of Ontarians without a workplace pension." The reality of the ORPP may be somewhere in the middle. "It's not perfect. I'm not sure there is a perfect plan, but there are a number of good design el- ements," says Scott Clausen, a partner in the Retirement Risk and Finance group at the con- sulting firm Mercer. "It looks towards profession- ally managed investments. It talks about the pooling of lon- gevity protection. It will be ad- ministered arm's length from the government. It's designed (so that) benefits will accrue as contributions are made so that there is no intended generation- al transfer of costs. So, there are some very good design elements there." Clausen cautions, however, that the plan could be complex to administer, depending on how it is implemented, and there are still many unanswered ques- tions about it. One detail missing is a defi- nition of "comparable" when talking about company pen- sion plans, he says. Information released so far does not specify which types of company plans would exempt employers from the ORPP. Would only regis- tered pension plans be exempt or would group registered retire- ment savings plans (RRSPs) also qualify? The initial outline for the ORPP does not address tax is- sues. "The tax treatment is really not described. Will contribu- tions be tax deductible like a Proposed ORPP would replace 15% of earnings from ONTARIO on page 1

• Cover