Intense Pension Debate Continues

Ian McLean, President & CEO

Ian McLean, President & CEO, Greater KW Chamber of Commerce

The dominant current provincial issue for Ontario business is the proposed Ontario Retirement Pension Plan.

My column on Dec. 16 of last year discussed Bill 56, the legislation tabled by Assoc. Finance Minister Mitzi Hunter. Opposition from business has been growing, primarily in relation to the potential cost of a pension plan and its impact on provincial competitiveness in a relatively volatile post-recession business climate.

Last week, the Ontario Chamber of Commerce forwarded a submission to the Ministry of Finance that was co-signed by 50 Chambers and Boards of Trade across the province, including Greater Kitchener Waterloo. A recent survey of chamber members across Ontario showed that only one-quarter believe they can afford the costs associated with increased employer pension contributions. The major concern is the overwhelming majority, or 75 percent, who cannot afford the new plan.

The business community has also asked the province to consider the cumulative impact of the pension plan on the Ontario economic climate. Over the past few years, the cost of doing business has been escalating primarily due to high electricity prices, rising Workplace Safety and Insurance Board rates and an uncompetitive regulatory burden.

With businesses unable to absorb the additional costs of pension contributions, the provincial government must consider the impact on employment levels and wages. Also, what will be the impact on foreign direct investment and job creation?

The OCC survey of the membership indicated that 44 percent of respondents will reduce their current payroll or hire fewer employees in the future if the plan is implemented.

A provincial stand-alone mandatory pension plan will add complexity to the regulatory environment for Ontario businesses, particularly organizations that operate in multiple provinces and countries. With the added cost of business, we must consider the possibility of investment not coming to Ontario.

In the context of a large provincial deficit and debt, with limited funding available for essential services such as health care and education, the provincial government should be considering the allocation of scarce resources to a pension bureaucracy. At a minimum, a comprehensive economic analysis is required before proceeding further.

With many effective workplace retirement savings plans available to Ontario residents provided by world class organizations such as Manulife and Sun Life, the ORPP may be detrimental to employers and employees who have been contributing to strong private sector plans.

This is a major issue for all Ontarians. The margin for error, in a tight fiscal environment, is very small.

Originally published in the Waterloo Chronicle, February 25, 2015