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By Susanna Kelley
Bringing in an Ontario public pension plan 
on top of raising the minimum wage to $11 
an hour could drive badly needed jobs out of 
the province, says the head of the Canadian 
Federation of Independent Businesses. 
"A lot of small businesses in this province are 
hanging on by the skin of their teeth," says CFIB 
President Dan Kelly.
Even if they aren't laid off, employees will end up 
being harmed one way or the other, he says.
"Any expectation for (small businesses) to 
contribute more is going to have to come from 
somewhere. It's going to come from more 
modest wages or benefits for their employees, 
or it's going to come at the expense of jobs or 
hours."
"All of those are pretty ugly consequences," Mr. 
Kelly says.
The CFIB, which represents 42,000 small 
businesses in the province, is advising Premier 
Wynne that the economy is too fragile right now 
to go ahead with setting up a new go-it-alone 
pension plan for Ontarians.
DAN KELLY CLIP HERE 
Rather, Mr. Kelly would like to see more "tools" 
made available to help people save towards 
their own retirement, and praised Tax Free 
Savings Accounts (TFSAs) as an example of the 
kind of tool that can make a big difference.
The organization supports the idea that 
individuals should save for their own 
retirements, rather than have businesses 
contribute to a public plan through mandatory 
contributions. 
Mr. Kelly believes any mandatory contribution is 
a payroll tax. 
The CFIB supports the Harper government's 
ideas for Pooled Registered Pension Plans. 
PRPPs are what Finance Minister Jim Flaherty 
favours over expanding the Canada Pension 
Plan. 
PRPPs will be accessible to small and medium 
sized business employees and those who are 
self-employed. These will contribute to them 
directly, and company contributions are only 
voluntary. They are defined contribution plans - 
i.e. the only guarantee with them is how much is 
put in, not what the eventual benefit payouts will 
be. The government says the PRPPs will have 
low administrative and management fees as well 
as require less paperwork.
The number of people with workplace pension 
plans across Canada is shockingly low in the 
private sector, with 80 per cent of small business 
employees having none at all. 
For the general population, 60 per cent have no 
retirement savings plan through their workplace.
But that's something that is relatively new, says 
Hugh O'Reilly, a pension lawyer at Cavaluzzo 
LLP.
"I think that if we look at the situation now, and 
we compare it to say, our parents'... generation, 
people retired on defined benefit plans, they 
were quite common in the private sector."
"But over the course of the last twenty years 
really there's been a decimation of private sector 
defined benefit plans, and I think increasingly 
there's a concern that Canadians and people in 
Ontario have insufficient savings to sustain them 
through retirement," Mr. O'Reilly says.
Any new Ontario plan must be a defined benefit 
one so people know how they much they can 
count on when they retire, says the pension 
expert. So-called defined contribution plans are 
too risky for people:
HUGH O'REILLY CLIP HERE
It must also be mandatory because, Mr. O'Reilly 
says, voluntary systems have failed.
"The voluntary system, we have all sorts of 
evidence now, it doesn't work. People have 
trouble taking that money out of their pocket to 
put it aside in that sense, but if it's automatically 
taken out of their pocket, I think we'll all be better 
off."
Small business employees and even small 
business owners are going to have to retire 
eventually and they are going to need income, 
he says.
"It's not that pensions are expensive, it's 
retirement that's expensive... If we end up in 
a scenario where people don't have enough 
money to live off after they retire, yet they're 
living longer, that's going to be a huge resource 
drain on the economy. So I think it's prudent to 
plan ahead."
A new Ontario pension plan should exempt 
those making $20,000 or less from contributions, 
he says. 
Rather, it should be aimed at those making 
between $30,000 and $100,000, because that is 
the group that isn't saving enough.
As far as the benefits go, Mr. O'Reilly believes 
they should be in addition to the Canada 
Pension Plan.
"Right now the CPP covers 25 per cent of the 
years' maximum pensionable earnings, so I think 
we could bring it up to cover the next 50 to 100 
per cent... or at least from 25 to 50 per cent (as 
a) start."
Mr. Reilly says it would be beneficial for all 
sides to look at what the actual data shows and 
work from there, rather than from ideological 
positions.
"I think that none of us are served if people take 
well-known and easy yes-no positions. All this 
energy we devote to extremism, we need to be 
talking, (and all parties) spend a little ore time 
thinking about solutions that could work."

ONTARIO PENSION PLAN WILL COST JOBS:

                     SMALL BUSINESSES

 

But pension expert says data shows voluntary systems have failed



By Susanna Kelley


Bringing in an Ontario public pension plan on top of raising the minimum wage to $11 an hour could drive badly needed jobs out of the province, says the head of the Canadian Federation of Independent Businesses. 

"A lot of small businesses in this province are hanging on by the skin of their teeth," says CFIB President Dan Kelly.

Even if they aren't laid off, employees will end up being harmed one way or the other, he says.

"Any expectation for (small businesses) to contribute more is going to have to come from somewhere. It's going to come from more modest wages or benefits for their employees, or it's going to come at the expense of jobs or hours."

"All of those are pretty ugly consequences," Mr. Kelly says.

The CFIB, which represents 42,000 small businesses in the province, is advising Premier Wynne that the economy is too fragile right now to go ahead with setting up a new go-it-alone pension plan for Ontarians.



Rather, Mr. Kelly would like to see more "tools" made available to help people save towards their own retirement, and praised Tax Free Savings Accounts (TFSAs) as an example of the kind of tool that can make a big difference.

The organization supports the idea that individuals should save for their own retirements, rather than have businesses contribute to a public plan through mandatory contributions.

Mr. Kelly believes any mandatory contribution is a payroll tax. 

The CFIB supports the Harper government's ideas for Pooled Registered Pension Plans.   PRPPs are what Finance Minister Jim Flaherty favours over expanding the Canada Pension Plan.

PRPPs will be accessible to small and medium sized business employees and those who are self-employed. These will contribute to them directly, and company contributions are only voluntary. They are defined contribution plans - i.e. the only guarantee with them is how much is put in, not what the eventual benefit payouts will be. The government says the PRPPs will have low administrative and management fees as well as require less paperwork.

The number of people with workplace pension plans across Canada is shockingly low in the private sector, with 80 per cent of small business employees having none at all. 

For the general population, 60 per cent have no retirement savings plan through their workplace.

But that's something that is relatively new, says Hugh O'Reilly, a pension lawyer at Cavaluzzo LLP.

"I think that if we look at the situation now, and we compare it to say, our parents'... generation, people retired on defined benefit plans, they were quite common in the private sector."

"But over the course of the last twenty years really there's been a decimation of private sector defined benefit plans, and I think increasingly there's a concern that Canadians and people in Ontario have insufficient savings to sustain them through retirement," Mr. O'Reilly says.

Any new Ontario plan must be a defined benefit one so people know how they much they can count on when they retire, says the pension expert. So-called defined contribution plans are too risky for people:


 

It must also be mandatory because, Mr. O'Reilly says, voluntary systems have failed.

"The voluntary system, we have all sorts of evidence now, it doesn't work. People have trouble taking that money out of their pocket to put it aside in that sense, but if it's automatically taken out of their pocket, I think we'll all be better off."

Small business employees and even small business owners are going to have to retire eventually and they are going to need income, he says.

"It's not that pensions are expensive, it's retirement that's expensive... If we end up in a scenario where people don't have enough money to live off after they retire, yet they're living longer, that's going to be a huge resource drain on the economy.  So I think it's prudent to plan ahead."

A new Ontario pension plan should exempt those making $20,000 or less from contributions, he says.

Rather, it should be aimed at those making between $30,000 and $100,000, because that is the group that isn't saving enough.

As far as the benefits go, Mr. O'Reilly believes they should be in addition to the Canada Pension Plan.

"Right now the CPP covers 25 per cent of the years' maximum pensionable earnings, so I think we could bring it up to cover the next 50 to 100 per cent... or at least from 25 to 50 per cent (as a) start."

Mr. Reilly says it would be beneficial for all sides to look at what the actual data shows and work from there, rather than from ideological positions.

"I think that none of us are served if people take well-known and easy yes-no positions.  All this energy we devote to extremism, we need to be talking, (and all parties) spend a little ore time thinking about solutions that could work."

About Susanna Kelley

Susanna Kelley is Editor-in-Chief and Queen’s Park Bureau Chief for Ontario News Watch. A veteran political and investigative reporter, documentary-maker, host and media commentator, Susanna oversees and has final editorial control over all news production at Ontario News Watch. Susanna has reported for the CBC, the Canadian Press and served as Queen’s Park Bureau Chief for TVOntario for 13 years. She has also hosted a number of documentaries for CBC’s The Current, CBC Radio News and TVOntario’s Studio 2. Passionately dedicated to excellence in political journalism, and having covered both Parliament Hill and Queen’s Park, Susanna believes quality political reporting is essential to a healthy democracy. You can find Susanna here: @susannakelley
Posted date : February 05, 2014

View all of Susanna Kelley's columns
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