Strengthening the retirement system

Ontario Legislation Building

Photo courtesy wikipedia.org.

Seniors may get more help to save for retirement.

The Province of Ontario has introduced new legislation that would, if passed, strengthen its retirement income system and ensure residents are better able to enjoy their retirement years.

The Ontario Retirement Pension Plan Act, 2014 would lay out a framework for the creation of the Ontario Retirement Pension Plan (ORPP) and commit the government to establishing the plan by January 1, 2017, which would help to address the retirement savings gap, according to a release.

Retirement experts recommend that workers aim to replace 50 to 70 per cent of their income in retirement to maintain a similar living standard, states the release.

However, for a variety of reasons, many workers are not meeting that savings goal. As a result, a significant portion of Ontario workers may face a decline in their standard of living after retirement, resulting in a retirement savings gap.

“The Ontario Retirement Pension Plan Act represents a major step forward in fulfilling our government’s commitment to creating a strong, secure retirement income system,” says Mitzie Hunter, associate minister of finance. “We are taking leadership today to fulfil this goal and give Ontarians the retirement future they deserve.”

The government released a consultation paper on the proposed implementation details of the ORPP, with formal consultations to have followed in January.

The province also introduced the Pooled Registered Pension Plans Act, 2014. This legislation would provide a legal framework for the establishment and administration of pooled registered pension plans in Ontario.

This proposed plan is a new voluntary retirement savings tool that enables members to benefit from lower costs, achieved through a simple design and economics of scale.

“The retirement savings challenge is complex and requires collaboration from all sectors, as well as a range of tools to ensure a strong and stable retirement income system,” says Charles Sousa, minister of Finance. “That is why encouraging investment in voluntary retirement savings tools such as pooled registered pension plans is an important part of the government’s strategy to enhance retirement savings for all Ontarians.”

For more information, visit www.ontario.ca/finance.

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