Toronto, ON (Dec. 19, 2014) – The Canadian life and health insurance industry is extremely disappointed with the suggestion in the Ontario government’s consultation paper on ORPPs that existing workplace plans, such as defined contribution (DC) plans, would not be considered “comparable.”
“This stance would negatively impact DC plans and savings rates not only in Ontario, but across the country,” says Frank Swedlove, President and CEO of the Canadian Life and Health Insurance Association. “Employers who took the responsible approach and established these types of plans for their employees would now also be obliged to participate and contribute to ORPPs. In too many cases, we fear that they will either cut back the benefits of their DC plans or abandon them entirely.”
Contrary to the impressions left by the Ontario government’s paper, DC Registered Pension Plans have proven to be an effective way for Ontario workers to save for retirement. More than 600,000 Ontarians have DC plans at their workplace and many more will be offered this opportunity through the proposed PRPPs. Further, the average employer contribution for DC plans is 6.5 per cent and the average employee contribution is 4.5 per cent.
“The Ontario government says that their objective is to make Ontarians better off in retirement. The truth of it is that they could be undermining the future well-being of hundreds of thousands of workers who have DC plans and leaving them worse off in retirement,” adds Swedlove.
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 28 million Canadians. It also holds close to $647 billion of assets in Canada and employs about 150,100 Canadians.
Source: Canadian Life and Health Insurance Association Inc.