NEW DATA SHOWS MAJOR PROBLEMS WITH ORPP DESIGN
News ReleaseRelease Date: 02/12/2015 Staff Reference: Wendy Hope
(Toronto) -- New research for the Canadian Life and Health Insurance Association (CLHIA) raises significant concerns about the impact of the proposed Ontario Registered Pension Plan (ORPP) on the retirement savings of Ontario workers.
Today, the CLHIA released a survey of Ontario companies conducted on its behalf by Environics Research. The survey, conducted in January and covering 401 workplaces with Defined Contribution (DC) plans or Group Registered Retirement Savings Plans (GRRSP), found that more than three-quarters (78%) of those surveyed were likely to reduce contributions under their existing workplace plan with the introduction of a mandatory ORPP. Furthermore, two-thirds (66%) also indicated that they would even consider eliminating their existing plans altogether.
"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."
About the CLHIA
Established in 1894, the CLHIA is a voluntary association whose member companies account for 99 per cent of Canada’s life and health insurance business. The industry provides a wide range of financial security products such as life insurance, annuities (including RRSPs, RRIFs and pensions) and supplementary health insurance to almost 28 million Canadians. It also holds close to $647 billion of assets in Canada and employs about 150,100 Canadians.
For more information please contact:
Wendy Hope, Vice President, External Relations