Ontario is currently developing a plan to create its own pension system.
The provincial government first brought up the idea in November 2013, when Finance Minister Charles Sousa made his Fall Economic Update.
At the time, the province said it would prefer to enhance the current Canadian Pension Plan. But in a meeting of federal and provincial finance ministers in December 2013, federal finance minister Jim Flaherty ruled out such a move.
“Ontario is very disappointed that the federal government is standing in the way of a CPP enhancement,” said Scott Blodgett, spokesperson for Ontario finance minister Charles Sousa.
“We’re moving forward with a ‘Made-in-Ontario’ solution to provide the province’s hardworking people with the retirement security they deserve,” he said.
However, it is not clear what the plan would look like. Premier Kathleen Wynne said on Jan. 28 that she would reveal details in the spring, ahead of a widely anticipated provincial election.
Not everyone is onside with the province’s plans. Federal junior finance minister Kevin Sorenson is calling the proposal a job killer.
“Premier Wynne will disadvantage Ontario’s businesses with higher payroll taxes, killing jobs and deterring investment,” Sorenson said in a statement.
The provincial Progressive Conservatives opposed the idea. PC finance critic Vic Fedeli echoed his party’s federal cousins, arguing that any new mandatory pension system would hurt the province’s bottom line.
“It’s a job killer,” he said. “The Ontario Pension Plan idea is exactly the wrong way to go when Ontario’s economy is struggling.”
Michael Prue, NDP critic for finance, said while his party initially floated the idea of an Ontario pension plan, this may not be the time to create a plan reducing people’s take-home pay.
“My recommendation is to go slowly,” he said. “Also make sure it’s on a graduated scale so that it’s based on income, as CPP is.”
Having everybody pay the same amount may actually do more harm than good, as those on the lower end of the income scale would have less money in their pockets, he noted.
Representatives of student groups are taking a cautious approach on the issue of the proposed pension plan.
“It’s an interesting opportunity,” said Allison Williams of the Ontario Undergraduate Student Alliance. “It merits a good look at the impact it may have on students and faculty.”
Some advocate young people consider the issues raised by retirement, even if they are still in their twenties.
“The pensions of today will look very different in the future,” said Williams. “Young people need to think about the scope of what will be offered.”
Prue noted that it’s hard for young people to think 40 years in advance, but said if done right, a pension plan will benefit them in the future.
“Think about when you won’t be able to work,” he said. “Also, make sure you do your financial planning right. If you can get an RRSP, buy it, if you can get a tax-free savings account, get one.”