Ontario Pension Plan

Just recently the Ontario Liberal government announced a proposal to establish an Ontario Pension Plan (OPP; yes, that acronym already belongs to the Ontario Provincial Police).  The Liberals have noted that 40% of Ontario employees will not receive benefits from the CPP and this would help those people come retirement age.

At this early stage of the game, many people I’ve spoken with have the belief that the provincial government will do the same as the federal government; spend the money on other things.  But that isn’t the focus of this article.

In terms of bookkeeping and accounting, what does it mean?  It means another payroll deduction.

For employers, this means increased payroll expenses.  I suspect the Ontario government will require employers to match the OPP deduction, just like they are required to do with the CPP (Canada Pension Plan) deduction.  It has been suggested by the Ontario Progressive Conservative party that this increased expense will deprive employers of the money needed to hire more employees and therefore, cause a decrease in new jobs in the province.

For employees, it means less take home pay.  Less money to take home is never a good thing, but it’s worse at a time when people are all ready struggling to make ends meet due to economic conditions.

For bookkeepers and accountants, it means very few changes.  It’s easy enough to add another payroll deduction to the payroll software and to have it tracked and recorded as an expense.

At this point, the Ontario Pension Plan is a proposal.  It remains to be seen whether or not it will ever be implemented.  Certainly, if it can be tied up in debate until the Liberals lose another election it may just vanish and be forgotten.

© Rigel Chiokis 2012 - 2017