Province’s Pension Legislation Still Has Questions to Answer

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

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

Last week, legislation was tabled at Queen’s Park that is the first major step in creating a public pension system for Ontario.

For the Ontario business sector, particularly small and medium enterprises (SMEs), a series of issues need to be addressed before this legislative initiative proceeds.

If passed, Bill 56 will require Ontario employers to match employee pension contributions.

In the case of a business that employs 10 people who earn $45,000 each, the employer will pay $8,000 in additional annual pension contributions.

Both associate Finance Minister Mitzi Hunter, who has responsibility for managing passage of the bill through the Legislature, and Finance Minister Charles Sousa have stated they would prefer that Ottawa strengthen the existing CPP rather than introduce a new provincial system.

Businesses across Waterloo Region and Ontario have expressed concerns that by making it more expensive to hire and increasing the cost of doing business, the new pension plan will negatively impact job creation and competitiveness.

Combined with increases in electricity prices and higher WSIB rates, a new pension plan will inflate the burden on small- and medium-sized businesses already struggling to meet rising costs.

According to a recent survey conducted by the Ontario Chamber of Commerce (OCC), 72 per cent of businesses across the province believe that pension reform should be a priority for government.

However, the same businesses are also concerned about Ontario’s economy as it recovers from the recent recession.

In this same OCC survey, only 23 per cent of the nearly 1,000 responding businesses could afford the costs associated with increased employer pension contributions.

The critical questions that remain to be answered by Queen’s Park for the provincial business sector include the impact of a fully-implemented pension system, consequences for businesses unable to meet their financial requirements, the costs of a standalone provincial pension plan, and which employers/employees will or will not participate.

As a result of these outstanding issues, our chamber has asked the province to defer legislation until they have been adequately resolved.

The retirement income challenge needs to be addressed. However, we need to ensure that any changes to the pension system are made with a full understanding of the impact they will have on Ontario’s business climate.

Overall, the business sector believes these issues have not been examined to date and the introduction of new payroll taxes is not advisable.

Originally printed in the Waterloo Chronicle, December 16, 2014