Most companies with pension plans will be exempt from Ontario’s new provincial pension plan. The Ontario plan will require companies to pay premiums of 1.9% salary for each employee, up to $1,643 a year, and workers will pay an equal amount.

Premier Kathleen Wynne clarified the exemption rules, which will be phased in starting in 2017 with larger employers. Companies with pensions that deduct at least 8% of an employee’s salary would be exempt from the Ontario plan, as long as the employer contributes at least 4%.

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The Ontario Chamber of Commerce (OCC) says it’s encouraged by the government’s decision, as well as the news to have a longer phase-in period, which will help many Ontario businesses transition into the plan.

Still, employers remain wary of the introduction of a new pension plan at a time when the cost of doing business in Ontario continues to rise.

The OCC warns that in its current form, the ORPP will raise costs for the majority of businesses who operate in the province, including those employers that offer non-comparable plans like group RRSPs. Recent OCC survey data indicates that if faced with mandatory increased contributions under the ORPP, 44% of businesses would reduce their current payroll or hire fewer employees in the future.

“”We remain deeply concerned about the cumulative burden facing Ontario employers,” says Allan O’Dette, president & CEO of the OCC. “Rising electricity prices, the introduction of a cap and trade system, and the ORPP will further add to the cost of doing business in Ontario. This is why we have asked the government to conduct and publicly release the results of an economic impact analysis of their proposed pension plan.”

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Ontario passed legislation in April to create the provincial pension for more than three million people who do not have a workplace pension, but the federal government is refusing to help in any way.

Wynne and Prime Minister Stephen Harper have engaged in a war of words during the federal election campaign over Ontario’s pension plan, which Harper warns will kill jobs by increasing costs on businesses.

Wynne says Harper was playing politics and vowed to proceed without Ottawa’s help, but admits it will cost more to set up the provincial plan without federal assistance.

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