Ontario’s pension plan presents a game-changing opportunity

Ed Waitzer - Publications

Ontario’s pension plan presents a game-changing opportunity


Contributed to The Globe and Mail / Published Monday, May 10, 2016

There is evidence that an element of employer compulsion is required to ensure that Canada’s private-sector workers are covered by a functional workplace pension plan. That reality should be tempered by careful thought about strategies to minimize the potential negative impacts of compulsion.

One strategy is to encourage healthy private-sector competition through the “comparable plan” principle that Ontario has adopted in its Ontario Retirement Pension Plan (ORPP) initiative. Competition could foster much-needed innovation in workplace pension design and management in Canada, and is an opportunity for the financial sector to assert its social utility.

A 1994 World Bank study suggested that the ideal national retirement income system has three pillars: a universal pillar providing a basic pension to all, a workplace-based pillar providing supplementary retirement income and an individualized pillar permitting people to create their own “add-on” piece. This model flags a serious Canadian problem. More than three-quarters of Canada’s private-sector work force has no access to a well-designed, cost-effective workplace plan. This means many are undersaving and thus will not achieve their retirement income aspirations. Others will fall short because they are saving inefficiently through high-cost investment vehicles.

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