Ontario Retirement Pension Plan Accomplishments and Costs
Ontario's determination to provide enhanced retirement security for workers by establishing the Ontario Retirement Pension Plan (ORPP) was a catalyst in reaching a national consensus on Canada Pension Plan (CPP) enhancement. CPP enhancement provides many benefits to Ontarians, including portability across the country and cost effectiveness, while providing coverage to more people. This approach will save millions annually in administrative costs.
Throughout the development of the ORPP, the government and the ORPP AC have been committed to transparency and accountability. Ontario is fulfilling this commitment by releasing the costs associated with the development of the ORPP.
Ontario is pleased with the national consensus reached with its federal and provincial counterparts and looks forward to federal legislation to formally enhance the CPP in fall 2016.
Since 2014, Ontario accomplished the following ORPP milestones:
- Passed three pieces of legislation to establish the ORPP and the ORPP AC: the Ontario Retirement Pension Plan Act, 2015; the Ontario Retirement Pension Plan Administration Corporation Act, 2015; and the Ontario Retirement Pension Plan Act (Strengthening Retirement Security for Ontarians), 2016
- Designed the ORPP from scratch and actively consulted stakeholders across Ontario on the design of the plan. Released key design details of the ORPP (August 2015 and January 2016) as a long-term sustainable pension plan
- Appointed the initial board of directors for the ORPP AC (November 2015), the CEO (January 2016) and the Nominating Committee members for the ORPP AC board (May 2016)
- Fulfilled the legislative requirement to table a cost-benefit analysis of the ORPP (December 2015) demonstrating that the plan would benefit Ontarians in the medium to long-term.
The government and the ORPP AC incurred up to $70 million in costs to develop the ORPP. These costs included:
- Developing the plan design and legislation
- Establishing and operationalizing the Administration Corporation
- Informing Ontarians about the ORPP
- Preparations to launch the ORPP by the ORPP AC
- Contingency costs associated with the ongoing wind-down of the ORPP AC
Specialized expertise from within and outside the government was required to effectively design and launch the ORPP. The retention of external advisors was undertaken and was consistent with procurement policies, which includes ensuring value for money, transparency, fairness and responsible management. The majority of the services were for actuarial, legal, technical, business process outsourcing and economic analysis.
We have engaged the Office of Auditor General of Ontario to review the financial statements of the ORPP AC and to validate the government's overall cost estimate.
The government incurred approximately $25 million in costs, between 2013 and 2016, to consult with Ontarians, develop the ORPP plan design and legislation and establish the ORPP AC governance structure.
This total figure includes:
- Procurement of Services: In total, the Ministry of Finance spent $7 million on procurements for actuarial, legal, and pension expertise, economic analysis and call centre support.
- Advertising and Market Research: An estimated $8 million has been spent on research and public education to raise awareness and inform Ontarians about the ORPP and retirement security. This includes upcoming marketing efforts to inform Ontarians about the changes to the CPP.
- Compensation: Between 2013 and 2016, the government spent approximately $9.5 million on compensation.
In total, the ORPP AC spent approximately $30 million to develop the administrative framework to launch the ORPP, including:
- Establishing an organization and executive leadership team
- Procuring a pension administration service provider using a business process outsourcing model
- Developing a registration and compliance regime for enrolling employers
- Acquiring information technology infrastructure and systems
- Starting the process of creating a corporate website and supporting communications
- Establishing a portal for employers to verify their plans
- Securing office space for the ORPP AC
This total figure includes:
- Procurement of Services: In total, the ORPP AC spent $23 million on procurements, including business process outsourcing, legal, financial and systems management, executive and staff recruitment and communications.
- Compensation: There were 48 employees at the ORPP AC. The ORPP AC's compensation framework was designed to attract high-quality talent with the skills, expertise and experience required to build a pension plan from the ground up. This framework aligns with industry standards.
- The total salaries, benefits, severance and damages for the ORPP AC were $6.3 million. This includes compensation paid to staff that were seconded from the government. No individual received more than 12 months of severance.
The government's total estimates include an additional $15M in contingency that may be incurred as the ORPP AC concludes operations. The government is taking all available actions to mitigate these costs. Among other things, this could include cost for leased office space, which the government proposes to transfer to its realty portfolio to meet needs within the Ontario Public Service.