Five ways the Ontario Retirement Pension Plan will affect you

Five ways the proposed Ontario Retirement Pension Plan* will affect you:
For more than half of Ontario workers, it’s mandatory:
Unless you have a defined benefit pension plan, where your employer is obligated to provide you with a guaranteed pension sum regardless of how the plan performs, or a better than average defined contribution pension plan, you’ll start paying 1.9 per cent of your salary into the plan, starting sometime in the next six years depending on the size of company you work for. Employers will kick in an additional 1.9 per cent, making the total contribution 3.8 per cent. The province estimates 3.5 million of the 6.9 million workers in the province will be covered. Even if you opt out entirely from your employer’s pension plan, you will be forced to contribute to the ORPP, starting in 2020.
Companies that use the increasingly popular defined contribution pension plan would only be exempt from the Ontario Retirement Pension Plan if they have a minimum annual contribution rate of eight per cent of an employee’s salary, with at least half of the contribution coming from the employer.
If you’re self-employed, you’re excluded:
As it was announced by Premier Kathleen Wynne and several of her ministers on Tuesday, the Ontario Retirement Pension Plan will not cover approximately 1.1 million workers in Ontario who are self-employed. That’s because the federal Income Tax Act does not allow self-employed workers to enroll in government-mandated pension plans.
Returns you can expect:
A worker earning $45,000 would contribute $855 over the course of a calendar year. After 40 years of work, they could expect an annual benefit of $6,410. A worker earning $90,000 per year would contribute $1,700 over the course of a calendar year. After 40 years of work, they could expect an annual benefit of $12,815. The Ontario Retirement Pension Plan does not take contributions on earnings beyond $90,000.
The Canada Pension Plan pays out an average of $6,900 per year to retirees. The average retirement age in Canada in 2015 was 63-years-old. The average annual salary in Ontario in 2014 was $49,088.
When it starts:
The province plans to implement the pension plan in waves, starting with all companies employing 500 or more people who do not have a workplace pension plan. Contributions for those firms and workers start Jan. 1, 2017.
Firms with between 50 and 499 employees that do not have a pension plan would start contributing exactly one year later.
Firms with 50 or fewer employees without a workplace pension plan would begin contributing in 2019.
Finally, the province has set a 2020 deadline for companies with workplace pension plans that do not meet the “compatibility test” with the province’s plan. After Jan. 1, 2020, workplaces of any size who have an existing pension plan that does not meet the provincial standards mentioned above will be forced to begin contributing to the ORPP.
Many businesses say ORPP will delay expansion, raises:
Many Ontario firms are opposed to the Ontario Retirement Pension Plan, saying the 1.9 per cent contribution they are expected to make could make them uncompetitive. Executives from auto parts maker Magna told the Globe and Mail last year that the ORPP could cost them $36 million per year if applied to all of its employees in the province.
*The Ontario Retirement Pension Plan has not yet been approved by the Ontario legislature.