The Ontario government needs to find a more cost-efficient way to tackle the gap in retirement savings than the proposed Ontario Retirement Pension Plan (ORPP), according to Joanne De Laurentiis, president and CEO of the Investment Funds Institute of Canada (IFIC).

The province is currently looking at establishing the ORPP, which is to come into effect in 2017 and will likely encompass most employers. It has also set out legislation to allow employers to implement pooled registered pension plans (PRPPs).

In comments made to Ministry of Finance regarding the subject, De Laurentiis makes clear that her organization believes that PRPPs are the more effective option for Ontarians.

“By bringing in the ORPP, you have to create a whole new regulatory body,” she says. “You have to create a body that will regulate and administer it.”

This is in contrast to PRPPs where employers can go to an already-established provider that is experienced in administering and managing these programs.

In IFIC’s submission to the Ministry of Finance, the organization suggests that employers with a certain number of employees be required to implement a mandatory PRPP. The flexibility for employers will come in choosing a program that works best for them, whether that be a group registered retirement savings plan (RRSP), a defined contribution (DC) plan or a defined benefits plan.

IFIC’s submission also suggests that employers have the ability to auto-enroll employees with reasonable opt-out provisions and that employer contributions be locked in with the possibility of limited employee-contribution withdrawal options.

Should the Ontario government choose to go ahead with the ORPP, it must expand on its definition of a “comparable” plan that would let employers offer their own plans as opposed to the government-designed program, says De Laurentiis.

The Ontario government is proposing that employers who have a plan comparable to the ORPP will not be mandated to provide the latter. However, that province’s definition does not include all workplace plans, such as group RRSPs, DC pension plans, deferred profit sharing plans and group tax-free savings account plans.

If the government forces employers to offer the ORPP, those employers will have to offer the Ontario plan and may dissolve their original programs, according to de Laurentiis.

“What you would be doing is displacing one program for another, versus expanding the options available,” she explains.