More than three-quarters (78%) of Ontario companies are likely to reduce contributions under their existing workplace plans with the introduction of a mandatory Ontario Registered Pension Plan (ORPP), according to an Environics survey commissioned by the Canadian Life and Health Insurance Association (CLHIA).
Two-thirds (66%) indicated that they would even consider eliminating their existing plans.
The survey, conducted in January, covered 401 workplaces with DC plans or Group Registered Retirement Savings Plans (GRRSP).
“Environics’ survey shows that the Ontario government’s proposal threatens the viability of existing plans and could negatively impact the retirement savings of millions of Ontario workers,” says CLHIA president and CEO Frank Swedlove.
This data follows a detailed analysis of retirement readiness released by McKinsey & Company, which found that 83% of Canadian households are financially on track for retirement. McKinsey’s data shows that the problem of inadequate savings is limited largely to mid to high-income households that do not have an employer plan or do not make sufficient contributions to their plans.
“We strongly urge the Ontario government to consider the unintended consequences of their proposal,” states Swedlove. “If you consider the Environics survey along with the McKinsey analysis, it is clear that the proposal, as it now stands, not only undermines existing retirement savings but would force additional contributions on a large segment of the population who are already on track for retirement.”