Officials spent up to CA$70 million ($53.5 million) preparing a pension plan for Ontario that will never be activated because a subsequent agreement will enhance Canada’s national pension program, according to a newly released estimate.
Ontario formally adopted the Ontario Retirement Pension Plan Act (Strengthening Retirement Security for Ontarians) on June 2, which would have mandated that employers and employees without a comparable workplace defined benefit or defined contribution plan participate in the plan.
The plan, spurred by concerns that Ontarians were not saving enough for retirement, would have left tough choices for employers with employees in the province about their existing pension plans.
But later in June, Canada’s finance ministers agreed to work on a Canada Pension Plan enhancement starting Jan. 1, 2019, that would increase income replacement from one-quarter to one-third of pensionable earnings. In response, Ontario officials decided not to move forward with the provincial plan after years of preparations.
“Since 2013, Ontario has advocated for an enhancement to the Canada Pension Plan,” Charles Sousa, Ontario Minister of Finance, and Indira Naidoo-Harris, Associate Minister of Finance, said Thursday in a statement. “When the previous federal government refused to act, we moved forward in 2014 with the (Ontario Retirement Pension Plan). Ontario’s determination to provide enhanced retirement security for workers by establishing the (Ontario Retirement Pension Plan) was a catalyst in reaching a national consensus on (Canada Pension Plan) enhancement.”
After the national agreement in principle, the provincial government and the Ontario Retirement Pension Plan Administration Corp. froze all spending and work on the Ontario plan.
On Thursday, the government estimated the cost of that effort: CA$70 million between 2013 and 2016 to develop and begin implementing the plan, including up to CA$15 million ($11.4 million) in held contingency to cover outstanding costs associated with concluding the plan.
The Office of the Auditor General of Ontario will be tasked with reviewing the financial statements and validating the cost estimate.
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