The Ontario Retirement Pension Plan is getting a big thumbs-down from small business owners, a new Meridian report shows.
The credit union examined the views of the province’s entrepreneurs regarding the new mandatory pension plan and found that more than three-quarters (77 per cent) believe it could be the biggest business challenge they’ve ever faced.
The Ontario Retirement Pension Plan (ORPP) will require contributions from both employees and companies starting in 2017 under legislation passed by Premier Kathleen Wynne’s Liberal government.
It would force the two-thirds of the province’s workers who do not have an employer’s pension plan to set aside 1.9 per cent of their pay. Enrolment is set to occur in stages starting with the largest employers, and with contributions phased in over two years.
The credit union’s 2014 Small Business Banking in Ontario report shows that while owners support helping their employees, they are fearful of its implications.
Sixty-one per cent of small business owners surveyed agree that they would be in favour of the plan if they themselves were employees. The same number (61 per cent) also worry that the implementation of the plan may negatively impact their own retirement plans.
Yet the vast majority (91 per cent) expressed concern about the new pension plan eating into their business’ profits, the study reveals.
And it shows that half of small business owners do not feel their firms can remain running at their current capacity while contributing to the Ontario plan.
“The results show that this is on small business owners’ minds already,” says Jeff Brown, Meridian’s vice-president of small business.
“It could impact their hiring decisions and how they compensate employees,” he said, noting the financial burden will be felt just as much by workers as it will on owners.
Prime Minister Stephen Harper has panned Wynne’s bid to create a made-in-Ontario pension plan, saying people prefer tax breaks as a reward for saving for retirement rather than having their taxes hiked to force them to save.
The Tories argue it would be harmful to increase contributions from workers and employers until the economy gathers steam. But Wynne has insisted the Ontario plan wouldn’t hurt the economy because it would be phased in gradually.
Meanwhile, a new BMO Financial Group report shows confidence is on the rise among Canada’s small business owners heading into next year.
In fact, entrepreneurs’ confidence in the state of the economy and their business prospects has risen compared to earlier this year, according to the semi-annual BMO Small Business Confidence Report.
“Canadian small business owners believe their organizations are in good health and are picking up momentum in order to rebuild the solid business foundation of previous years,” said Steve Murphy, who heads Canadian Commercial Banking at BMO Bank of Montreal.
“Of particular interest, business owners from nearly every province have an increased level of optimism compared to earlier this year,” he said.
Overall, 59 per cent think business will be better in 2015 while 14 per cent believe their prospects will be worse, says the report.