BACKGROUNDER — November 14, 2016
Strengthening retirement security by modernizing workplace pension plans and making available new opportunities for savings are key components of the government’s plan to build Ontario up. Ontario’s leadership in the pursuit of an agreement to enhance the Canada Pension Plan (CPP) will significantly improve retirement security for future generations.
- Providing leadership that resulted in the federal government and nine provinces reaching a national agreement on a CPP enhancement that reflects many of the principles and features of the planned Ontario Retirement Pension Plan. The agreement will help Ontarians be more financially secure in retirement by:
- providing a meaningful increase in future retirement incomes and helping address the retirement savings challenge; and
- ensuring that workers experiencing temporary periods of low earnings, part-time employment or multiple jobs would benefit.
An Ontario worker with steady career earnings of $40,000 per year over a 40-year period would receive an extra $3,185 annually in retirement income from the enhanced CPP.
a worker earning
receives an extra
a year in retirement income from CPP enhancement
- Implementing a framework for Ontario businesses to offer pooled registered pension plans (PRPPs) to their employees, as well as make PRPPs available to the self-employed. PRPPs are a voluntary, low-cost, tax-assisted option to increase retirement savings.
The government will continue to improve the retirement income system for all Ontarians by:
- Working with governments across the country on the next steps required to implement the agreement to enhance the CPP, which would start in January 2019 and be phased in over a seven-year period to give businesses time to adapt to increased contributions.
- Consulting with stakeholders through the review of the current solvency funding framework for defined benefit (DB) plans to develop a balanced set of solvency funding reforms that would focus on plan sustainability, affordability and benefit security.
- Engaging with stakeholders on all aspects of a new target benefit multi-employer pension plan framework and considering how it would align with a revised solvency funding framework for DB pension plans before finalizing a new approach.