The proposed Ontario Retirement Pension Plan (ORPP) has many small businesses worried, including new car auto dealers.
These concerns were reflected in a recent letter addressed to Ontario Premier Kathleen Wynne from the president of the Ontario Chamber of Commerce, backed by the Trillium Automobile Dealers Association along with Chrysler, Ford and General Motors.
The letter has gotten tremendous support from Ontario businesses, including about 50 chambers of commerce and 80 employers.
One of the main concerns outlined in the letter centres around what the province defines as existing plans that are considered exempt from the proposed legislation.
That would mean small businesses would need to shell out an additional 1.9 per cent to the new public plan.
The problem for many auto dealers is the ORPP would interfere and potentially eliminate defined contribution plans like group RRSPs and other retirement saving vehicles that dealers currently offer, says Frank Notte, Director of Government Relations for the TADA, which represents the new car franchised dealers in Ontario.
Defined contribution plans are not considered exempt from the legislation, he says.
“We’re worried about the cost of doing business. It’s not just one thing but one more thing for dealers,” says Notte, adding dealers and other small businesses are facing skyrocketing hydro costs and increasing WSIB rates.
Notte worked out a dealer-specific scenario in a letter he sent to Associate Minister of Finance (Ontario Retirement Pension Plan) Mitzie Hunter in November 2014.
It’s a lot of money on the line.
With around 49,000 people employed at new car dealerships, Notte estimated in his letter the new plan would cost dealers roughly $47 million per year collectively if they have to take out almost two per cent of their salary towards contributions.
The TADA hopes that dealers who do have defined group plans can be exempted from the new retirement one. And since the plan has now been approved and will come into effect in January 2017, Notte says the government should implement tax relief to offset the cost to employers.
“We’re hoping that the big push from the chamber letter will really convince [the government] that they should take our view,” says Notte.
