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(Reuters) — Ontario, Canada's most populous province, said on Tuesday it will push ahead with the launch of a new government pension plan rather than counting on an expansion of the country's existing federal plan.
The Ontario Retirement Pension Plan (ORPP) is set to be introduced in 2017 and is designed to benefit the two-thirds of workers in Ontario who do not have an employer pension plan, provincial officials said.
"Our government is unwavering in its focus on ensuring a financially secure retirement for every worker in our province through the Ontario Retirement Pension Plan," province Premier Kathleen Wynne said.
Ontario has taken a two-track pension strategy since 2013, preparing to introduce the ORPP while also waiting for a possible expansion of the Canada Pension Plan (CPP), the federal plan that covers most working Canadians.
However, Ontario Finance Minister Charles Sousa said it had so far proven too difficult to get the necessary agreement required among Canada's provinces to expand the CPP.
"We advocated strongly for a CPP enhancement, as did the federal government, but the consensus was not to be had," Sousa told reporters.
Like other governments around the world, Canada faces a challenge to provide for its aging population. By 2024, more than 20% of Canadians are expected to be age 65 or older, the traditional retirement age, according to federal government data.
"Changes in the nature of work are compounding the problem. The working world is no longer dominated by single job careers and guaranteed workplace retirement plans," Wynne told reporters.
Under the new Ontario plan, by 2020 every eligible worker in Ontario will be part of either the ORPP or a comparable workplace pension plan. The lowest-income earners will not be required to contribute.
The plan, which will start paying benefits in 2022, is designed to pay out up to 15% of individuals' earnings over their career if they contribute to it for over 40 years.
It particularly targets younger workers at smaller companies who may be well paid but are not offered a pension as part of their benefits because it is too expensive for their employer to provide one. Wynne said it will only have a limited benefit for older workers.
President Barack Obama will offer a package of ideas to stimulate more workplace access to retirement savings when he unveils his fiscal year 2017 budget on Feb. 9, top administration officials said Monday.