Statement from Associate Minister Hunter Regarding the Cost-Benefit Analysis of the Ontario Retirement Pension Plan
The following statement was issued today by Mitzie Hunter, Associate Minister of Finance (Ontario Retirement Pension Plan), in response to the cost-benefit analysis prepared for the Ontario Legislature by the Conference Board of Canada on the Ontario Retirement Pension Plan (ORPP):
"For years now, our government has taken a leadership role on retirement security. We know that people are not able to save enough for retirement. This has the potential to create serious long-term challenges, as future generations retire with low or inadequate savings. It's why we are developing the Ontario Retirement Pension Plan (ORPP) -- to shrink the gap between what people will need and what they will have for retirement.
Today, we fulfilled our legislative requirement to table a cost-benefit analysis of the ORPP. The report is clear-- accounting for all factors, it shows Ontarians and the economy will be better off under the ORPP.
The report reinforces earlier analyses from experts like former Bank of Canada Governor, David Dodge. It reiterates that, over the long-term, the ORPP would add billions to the Ontario economy by ensuring that future retirees have adequate savings for retirement. What's more, it notes that the ORPP is a cost-effective means of helping individuals save, through shared market risk, lower management fees and higher rates of return. In fact, as the Conference Board shows, members of the ORPP could see higher rates of return than if they invested on their own.
While the report acknowledges there will be a small short-term impact to the economy, it also shows that real disposable income will be $19.4 billion higher and real GDP will increase by $9.6 billion over the long term under the ORPP.
Further, the Conference Board notes that it expects a portion of ORPP contributions to be invested in the Ontario economy--just like other large pension plans--resulting in an increase to domestic capital.
As well, the analysis found that expected reductions in Employment Insurance and Workplace Safety and Insurance Board (WSIB) premiums would mitigate the impact of ORPP contributions. ORPP contributions will also be tax deductible, further reducing the impact on employers and employees.
The ORPP is not being introduced in isolation. I am continuing to work with my colleagues in Cabinet and businesses across this province to strengthen our economy. Our investments in infrastructure, post-secondary education, economic development and our competitive tax system are just a few examples.
Our government is continuing to show leadership, working with other provinces to find a national solution to the retirement savings challenge. Last week, I was in Alberta and British Columbia meeting with senior officials on what our provinces can do together to enhance Canada's retirement income system. Following yesterday's meeting of the Federal, Provincial, and Territorial Finance Ministers, our government looks forward to ongoing collaboration with all of our national partners on strengthening retirement security.
I want to thank the Conference Board of Canada for preparing this report. It is an important step towards achieving our goal of ensuring that every Ontarian is part of the ORPP or a comparable workplace pension plan by 2020."