Kathleen Wynne says full-steam ahead with Ontario pension plan


mentalfloss
#1
Kathleen Wynne says full-steam ahead with Ontario pension plan

Ontario is forging ahead with its own provincial pension plan regardless of whether there is “a change of heart” — or government — in Ottawa, says Premier Kathleen Wynne.

With Prime Minister Stephen Harper’s refusal to enhance Canada Pension Plan benefits, Wynne said the new Ontario Retirement Pension Plan must be implemented.

“If we don’t get going right now we won’t be ready in 2017. We’re designing this plan so that it is consistent with the CPP,” she told reporters Thursday at Queen’s Park.

Asked what would happen if either NDP Leader Thomas Mulcair or Liberal Leader Justin Trudeau succeeds Harper in next year’s federal vote, Wynne refused to be drawn into a “hypothetical” scenario.

“We are not going to wait until the federal election to move ahead. We must move ahead,” the premier said.

“If there’s a change of heart or of government federally we may be able to have another discussion, but we’re not going to wait — we’re starting today, we’re starting right away to work to implement the new Ontario Retirement Pension Plan.”

Wynne made her comments flanked by Finance Minister Charles Sousa and her newly appointed Associate Minister of Finance Responsible for the Ontario Retirement Pension Plan Mitzie Hunter.

The three politicians had just finished a roundtable meeting in the cabinet chamber with the government’s technical advisory group on retirement security.

The new plan would mean an additional $788 deduction from the annual salary of someone earning $45,000, which critics claim is a payroll tax while proponents argue it’s a forced savings.

With only about one-third of Ontario workers covered by an employers’ pension plan, Wynne made the new public scheme a cornerstone of the Liberals’ successful re-election on June 12.

Sousa announced the pension plan in the May 1 budget that triggered the recent election. He will re-introduce the same spending plan on July 14.

http://m.thestar.com/#/article/news/...sion_plan.html
 
Walter
+2
#2  Top Rated Post
More bureaucracy to steal more of my $.
 
mentalfloss
#3
Unless you already have a pension plan.
 
taxslave
No Party Affiliation
#4
I can forsee lots of problems with a provincial pension program like when people move to another province to work, creating a whole new bureaucracy to duplicate an existing federal plan etc.
 
mentalfloss
+1
#5
I think it's important to note a possible side benefit to this is financial accountability. A lot of self employed individuals like to cheat on their taxes and this would make certain they are correctly reporting their income.
 
IdRatherBeSkiing
+1
#6
Quote: Originally Posted by mentalflossView Post

I think it's important to note a possible side benefit to this is financial accountability. A lot of self employed individuals like to cheat on their taxes and this would make certain they are correctly reporting their income.

So they can be taxed more? I suspect more income will go unreported.

Quote: Originally Posted by mentalflossView Post

Unless you already have a pension plan.

What type of plan qualifies?
 
mentalfloss
#7
Quote: Originally Posted by IdRatherBeSkiingView Post

So they can be taxed more? I suspect more income will go unreported.

It's getting harder and harder to deal exclusively in cash so if they want to avoid doing their taxes and risk avoiding a refund or getting audited, then they are playing with fire.

Quote: Originally Posted by IdRatherBeSkiingView Post

What type of plan qualifies?

You can be excluded if you already have a private pension plan.
 
mentalfloss
#8
Why we need an Ontario pension plan

Ontario has something like six million workers. And nearly half of them don't have pension plans.

That's right. Three million Ontarians are looking at retirement years where their only income will be the Canada Pension Plan which pays a maximum of $1,038 monthly. (The majority of Canadians don't receive the maximum — the average payout is a little more than $550 monthly.) Add to that Old Age Security benefits (which now don't kick in until age 67) of about $550 monthly. All in, that's less than $1,600 monthly.

Considering today's cost of living, never mind what that will be in five or 10 years, that's not enough. And that's why the Ontario government announced the Ontario Retirement Pension Plan in the budget defeated by the Conservatives and the NDP, and why the Wynne government needs to get to work on the plan sooner rather than later.

The ORPP is aimed at people earning up to $90,000 who don't already have a workplace pension plan. For someone earning the maximum, the ORPP would deduct about $133 monthly (someone earning $45,000 would pay out $66 monthly). Employers would match that contribution.

What would the ORPP do? It would add approximately $535 a month to the income of someone receiving CPP only. Add that to the $1,600 and you get $2,135 monthly income ($25,620 annually), still not robust but at least above the poverty line, approximately $20,000 income yearly.

Not everyone likes this idea.

The Canadian Independent Federation of Business says employers can't afford it. Critics, including the Harper government, call it a "payroll tax," which explains, in part, their refusal to reform the Canada Pension Plan so it's not capped at an out-of-date and unreasonably low limit.

But Ontario is not alone in being concerned. Prince Edward Island and Manitoba have joined the body designing the program. Alberta, British Columbia, Newfoundland, Northwest Territories and Nunavut are in negotiations with Ontario to do the same. What are the chances that all these provinces are wrong and the Harper government is right?

This is not just about improving the lots of thousands of retirees who haven't saved enough for their later life. Seniors who live on or below the poverty line are more likely to be frail or in ill health. They are less likely to live proactive, healthy lives and stay independent. They are more likely to have a poor diet. All those factors have a systemic impact on the health care and social services safety net, both of which are already strained by an aging population.

In a perfect world, the federal government would be a lead partner, but it's not at the table. So provinces like Ontario have little choice but to act independently.

The Spectator's view: Why we need an Ontario pension plan
 
taxslave
No Party Affiliation
#9
Quote: Originally Posted by mentalflossView Post

I think it's important to note a possible side benefit to this is financial accountability. A lot of self employed individuals like to cheat on their taxes and this would make certain they are correctly reporting their income.

Define cheating.

Quote: Originally Posted by mentalflossView Post

Why we need an Ontario pension plan

Ontario has something like six million workers. And nearly half of them don't have pension plans.

That's right. Three million Ontarians are looking at retirement years where their only income will be the Canada Pension Plan which pays a maximum of $1,038 monthly. (The majority of Canadians don't receive the maximum — the average payout is a little more than $550 monthly.) Add to that Old Age Security benefits (which now don't kick in until age 67) of about $550 monthly. All in, that's less than $1,600 monthly.

Considering today's cost of living, never mind what that will be in five or 10 years, that's not enough. And that's why the Ontario government announced the Ontario Retirement Pension Plan in the budget defeated by the Conservatives and the NDP, and why the Wynne government needs to get to work on the plan sooner rather than later.

The ORPP is aimed at people earning up to $90,000 who don't already have a workplace pension plan. For someone earning the maximum, the ORPP would deduct about $133 monthly (someone earning $45,000 would pay out $66 monthly). Employers would match that contribution.

What would the ORPP do? It would add approximately $535 a month to the income of someone receiving CPP only. Add that to the $1,600 and you get $2,135 monthly income ($25,620 annually), still not robust but at least above the poverty line, approximately $20,000 income yearly.

Not everyone likes this idea.

The Canadian Independent Federation of Business says employers can't afford it. Critics, including the Harper government, call it a "payroll tax," which explains, in part, their refusal to reform the Canada Pension Plan so it's not capped at an out-of-date and unreasonably low limit.

But Ontario is not alone in being concerned. Prince Edward Island and Manitoba have joined the body designing the program. Alberta, British Columbia, Newfoundland, Northwest Territories and Nunavut are in negotiations with Ontario to do the same. What are the chances that all these provinces are wrong and the Harper government is right?

This is not just about improving the lots of thousands of retirees who haven't saved enough for their later life. Seniors who live on or below the poverty line are more likely to be frail or in ill health. They are less likely to live proactive, healthy lives and stay independent. They are more likely to have a poor diet. All those factors have a systemic impact on the health care and social services safety net, both of which are already strained by an aging population.

In a perfect world, the federal government would be a lead partner, but it's not at the table. So provinces like Ontario have little choice but to act independently.

The Spectator's view: Why we need an Ontario pension plan

That is not a very good ROI for fourty years of work and contributions. You would do much better puting that $133 in the bank. Of courseknowing how governments operate the chosen will get to collect a soon as the program starts depending on thier grandchildren to carry the load.
 
SLM
No Party Affiliation
#10
Quote: Originally Posted by mentalflossView Post

I think it's important to note a possible side benefit to this is financial accountability. A lot of self employed individuals like to cheat on their taxes and this would make certain they are correctly reporting their income.

How exactly is it going to do that?
 
lone wolf
Free Thinker
#11
Quote: Originally Posted by SLMView Post

How exactly is it going to do that?

I'm wondering the same thing. I know a few self-employed people who do quite well on barter. Gov't still hasn't found a way to muscle in on that
 
SLM
No Party Affiliation
#12
Quote: Originally Posted by lone wolfView Post

I'm wondering the same thing. I know a few self-employed people who do quite well on barter. Gov't still hasn't found a way to muscle in on that

Beyond that, I'm wondering just what is so different about this that will make income reporting for self-employed individuals any different than it currently is. Everything I'm reading suggests it will be handled the same as CPP is now.

Either there is lack of knowledge on how self-employed individuals report income or there is something massively different about how this plan will be implemented that is eluding every Google search I've done.

Further still most self-employed individuals don't actually prepare their own taxes, as this is the point where returns can begin to get complicated. They'll at least take it to H&R Block if not an accountant.
 
IdRatherBeSkiing
+1
#13
Quote: Originally Posted by taxslaveView Post

Define cheating.



That is not a very good ROI for fourty years of work and contributions. You would do much better puting that $133 in the bank. Of courseknowing how governments operate the chosen will get to collect a soon as the program starts depending on thier grandchildren to carry the load.

Well, knowing how governments work I also suspect the program will be cancelled before you collect a dime from it. Money in it used to reduce the size of that years deficit. Just another tax.
 
lone wolf
Free Thinker
#14
Quote: Originally Posted by IdRatherBeSkiingView Post

Well, knowing how governments work I also suspect the program will be cancelled before you collect a dime from it. Money in it used to reduce the size of that years deficit. Just another tax.

I thought that's what Hydro One and its cheat-me billing was doing
 
IdRatherBeSkiing
+2
#15
Quote: Originally Posted by lone wolfView Post

I thought that's what Hydro One and its cheat-me billing was doing

I guess a government can never have too many forms of tax ... I mean revenue.
 
petros
+1
#16
If this is going to be set up like Sask Pension Plan which pays buttlodes and plenty of choices including P3 mutuals, risky venture or flow throughs it might be a good thing.

SPP did 15.77% last year...
 
SLM
No Party Affiliation
+1
#17
Quote: Originally Posted by petrosView Post

If this is going to be set up like Sask Pension Plan which pays buttlodes and plenty of choices including P3 mutuals, risky venture or flow throughs it might be a good thing.

SPP did 15.77% last year...

Have you seen the way this government manages money?
 
Nuggler
+1
#18
Quote: Originally Posted by SLMView Post

Have you seen the way this government manages money?

Yup; so far I'm not impressed.

Still wondering how much McLiar made out of the Hydro gas plant cancellations. Cost the bunchovus bout a billiion.

We ain't nevah gonna know.
 
petros
#19
Quote: Originally Posted by SLMView Post

Have you seen the way this government manages money?

True enough.
 
SLM
No Party Affiliation
+2
#20
Quote: Originally Posted by petrosView Post

True enough.

You know, I could accept paying a tax or having some other deduction from my paycheque to be used for the betterment of all of us, if the money was managed in a somewhat efficient manner. But the government isn't a money manager, they're just partisan players, and we just flip between one party and another and another and back again, and so on.
 
lone wolf
Free Thinker
+1
#21
Quote: Originally Posted by NugglerView Post

Yup; so far I'm not impressed.

Still wondering how much McLiar made out of the Hydro gas plant cancellations. Cost the bunchovus bout a billiion.

We ain't nevah gonna know.

pssst!.... careful with that McLiar thing... Lots of out-to-get-'em types don't read beyond the first couple of letters ... and some "Mulc" guy and the word "scandal" has come up on the same page's headlines.
 
petros
#22
Quote: Originally Posted by SLMView Post

You know, I could accept paying a tax or having some other deduction from my paycheque to be used for the betterment of all of us, if the money was managed in a somewhat efficient manner. But the government isn't a money manager, they're just partisan players, and we just flip between one party and another and another and back again, and so on.

Real money doesn't have any party affiliations.
 
SLM
No Party Affiliation
+1
#23
Quote: Originally Posted by petrosView Post

Real money doesn't have any party affiliations.

Of course the money doesn't, but the people who are the money caretakers certainly do.
 
petros
#24
When you hire people who can't follow party crap, it works.
 
damngrumpy
No Party Affiliation
+1
#25
Actually a Provincial plan is much better and up front has more problems but a plan
closer to the people is something that will be a benefit down the road. If each of the
provinces looked after their own citizens in the long run it would be cheaper and the
Province can reinvest the money actually it makes more sense to me.
Now if only BC would throw the Mounties out and establish our own police force we
could save money there too down the road. I used to oppose the idea but since the
police have behaved so badly its time we shook things up
Ontario is on the right track with the pension thing
 
Retired_Can_Soldier
+1
#26
Let's see. A small business employs five people they already pay huge fees to WSIB, they match CPP, they match E.I. contributions, some match RSP coontributions, some have drug and dental plans and now they'll have they'll have to match the employees contribution to the Ontario Cat Food Pension Plan.

I wonder where they will be able to make savings on that.

Cut matching RSP contributions?
Cut Drug and Dental Plans?
Layoff employees?

Good for Ontario eh...

Glad I'll be filing elsewhere.
 
JLM
No Party Affiliation
#27
Quote: Originally Posted by WalterView Post

More bureaucracy to steal more of my $.


Ironically a lot of people who are worried about getting their money stolen wind up at age 65 without a pot to piss in or a window to throw it out. - necessitating the rest of us to donate to the food bank.

Quote: Originally Posted by SLMView Post

You know, I could accept paying a tax or having some other deduction from my paycheque to be used for the betterment of all of us, if the money was managed in a somewhat efficient manner. But the government isn't a money manager, they're just partisan players, and we just flip between one party and another and another and back again, and so on.


Couldn't the Gov't. just have it automatically transferred over to one of the banks to manage so the Gov't.'s nose is entirely out of it?
 
mentalfloss
#28
Canada’s looming pension wars

As the City of Regina debated its largest tax hike in more than a decade, 76-year-old George Malish looked at his household balance sheet to see how he would pay for it all. Taxes were rising, along with utilities and phone bills. Yet Malish’s Old Age Security (OAS) cheque had gone up by just 55 cents a month. “I ask [city officials] to please put their heads together and decide how to divide 50 cents a month and forgo the other increases they are demanding,” he wrote in a letter to the local newspaper, suggesting that politicians and bureaucrats should also try limiting their own wage increase to 55 cents a month.

Despite what he sees as the growing demands on his meagre benefits, Malish considers himself one of the lucky ones when it comes to financing his retirement. Aside from income from CPP and OAS, he receives a company pension after retiring from what he calls “blue-collar work” in 1994. Two decades of inflation have steadily eroded his income, but at least Malish’s pension covers prescription benefits for himself and his wife. “Very few people have that,” he said in an interview. “That’s what’s giving us a very decent living.”

Like many of his generation, Malish is at the forefront of the coming pension wars, the growing divide between the haves, whose retirement is secured by guaranteed workplace pensions, and the have-nots, left to scrape by on their own meagre savings. It’s shaping up to be a battle between politicians and government bureaucrats armed with pensions that offer guaranteed payouts and the remaining 80 per cent of Canadians in the private sector who are preparing for retirement with a patchwork of different savings programs. With the first wave of  Baby Boomers heading into retirement, Canadians are only now starting to take stock of what kind of lifestyle they can afford with their savings and comparing that to their neighbours working government jobs. Many don’t like what they see.

Related: Why Tom Corbett and Stephen Harper no longer agree on ‘pension pigs’
“As people are becoming aware of the divide that exists, I think there is going to be resentment over the fact that some people are retiring much earlier and are going to have a much more financially secure retirement,” says Bill Tufts, a benefits consultant and founder of advocacy group Fair Pensions For All.

Already that resentment is starting to spill over into public policy. In Ontario, Liberal Premier Kathleen Wynne has staked her election hopes on voters’ angst over their retirement savings by promising a made-in-Ontario pension plan aimed at middle-class workers. Meanwhile her opponent, Progressive Conservative Tim Hudak, has attacked the plan as a job-killing payroll tax and is promising instead to cut spending by firing 100,000 government workers.

Public sector unions are pushing back against the growing threat of pension envy that is putting pressure on governments to cut back on their retirement benefits. The Public Service Alliance of Canada, the union that represents federal government workers, argues that at $25,000 the average pension payment for its members is hardly lavish.

Yet governments are struggling to afford even those benefits. This month, auditor-general Michael Ferguson warned the pension system for federal public servants was underfunded by more than $150 billion, representing Ottawa’s biggest liability next to the $668-billion federal debt. The federal government also paid $9.2 billion worth of interest payments on pension-related debt —nearly a third of the government’s total interest payments for 2012. Ottawa has also channelled another $1 billion into its pension fund from other tax revenues to help cover the roughly $15 billion in pension benefits it pays out every year, representing 5.5 per cent of all federal government spending.

Proponents of generous public sector pensions have traditionally argued that governments need better benefits in order to compete for workers who can find higher salaries in the private sector. Calgary Mayor Naheed Nenshi said as much this month when he warned that the Alberta government’s proposed public sector pension reform “could have a crippling effect on our labour force,” by encouraging an exodus of municipal workers to the private sector.

But it’s no longer the case that public sector workers are paid less than their private sector counterparts. A study by the Ontario Institute for Competitiveness and Prosperity (ICP), a government-funded think tank, found that for many jobs—particularly non-management positions—government workers now receive both higher salaries and better benefits than their private sector counterparts. Such generous guaranteed pensions make it difficult for politicians and bureaucrats to enact good policy because they can’t empathize with the struggles of average Canadians, says Gregory Thomas, federal director of the Canadian Taxpayers Federation. “You create a separate class of people who really identify with the government as opposed to the people they’re governing.”

Increasingly the anger over “gold-plated” public sector pensions isn’t focused on how much government workers are earning in retirement, but that they have access to a pension at all. Thanks to the decline of manufacturing jobs, the percentage of private sector workers enrolled in defined benefit pensions dropped from 35 per cent in 1970 to 12 per cent by 2010. Nearly all public sector workers in the largest provinces are covered by workplace pensions, regardless of whether they are junior secretaries or senior managers. By contrast, even the most skilled private sector workers have roughly a one-in-two shot of landing a job with a pension. Even then, most of the private sector pensions are defined contribution plans, where the benefit payouts depend on how a worker’s individual retirement account performs. The differences between the two types of pensions are huge. The ICP estimates the typical defined benefit plan for a manufacturing worker is worth $255,000 compared to $43,000 for a defined contribution plan.

That is the kind of discrepancy that riles taxpayers, who end up paying out more to fund public pensions than they get from their own employers. The ICP estimates that governments contribute an average of $4,530 a year for every worker, compared to an average contribution of $3,230 for private sector employers. Those are tax dollars not available to fund health care and infrastructure spending, says Tufts.

Yet others argue that growing pension envy is pushing policy-makers in the wrong direction, by encouraging governments to pare back their own pension benefits rather than expand benefits in the private sector. That will end up hitting taxpayers in other ways, such as through government programs like the Guaranteed Income Supplement for low-income seniors. A Boston Consulting Group study last year, funded by Canada’s largest public sector pensions, found that 15 per cent of pensioners with a defined benefit plan collect GIS compared to as many as 50 per cent of retirees without one. “If there’s not going to be the ability to bargain defined benefit plans then the pressure is going to come out somewhere else,” says Herb John, head of the National Pensioners and Senior Citizens Federation, who retired from Ford at age 49. “It’s like a bubble under a rug. You can’t get rid of it. You can push it around, but it’s always going to be there.”

Many worry that the grumblings of pension envy today will eventually explode in a full-blown crisis as young workers, saddled with student debt, mortgages and stagnant incomes, age into retirement. “The resentment becomes divisive,” says Alexandra Lopez-Pacheco. At 53, she’s a pensionless freelancer whose retirement wealth is tied up in the rising value of her Oakville, Ont., home. But she wonders what will happen to her three children. “When we start losing things that are really essential to society, we start resenting those who have [them],” she says. “We’re not helping ourselves or them. We’re bringing down the bar.” If anything, the pension wars are just getting started.

Canada's looming pension crisis
 

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