When it comes to bol-stering Canadians’ retirement savings, federal and provincial governments have proposed myriad solutions for the public and private sectors. But some experts believe that governments have mostly just muddied the waters – without finding solutions that strike a balance between clear, individual choices in financial planning and the need to ensure that public pensions provide for people’s basic needs at the least. (See editorial, page 20.)

Ontario, in particular, made a slew of proposals in its May budget (now defeated) that strike many in the financial advisory industry as being impractical.

“I give Ontario credit for putting forward a range of solutions,” says Jana Steele, partner, pensions and benefits group, at law firm Osler, Hoskin & Harcourt LLP in Toronto. However, she believes that adding plans, particularly those that are similar to existing options, could simply overwhelm employers and employees. “When you start introducing more and more acronyms into the pension world, it becomes more and more confusing for people.”

Two proposals to improve access to pensions have been put forward recently. The first out of the gate, the federal government’s pooled registered pension plans (PRPPs), were created in 2012 to address the needs of the estimated two thirds of Canadians employed in the private sector with no workplace pension of any kind. PRPPs are designed to offer the benefits of a large pension fund at low cost.

The PRPP program will be administered through private financial services companies. While the number of firms licensed to do so remains relatively small, major players such as Manulife Financial Corp. in Toronto and Montreal-based Standard Life Assurance Co. of Canada have the green light to offer PRPPs once the individual provinces fully enact the appropriate legislation. So far, however, that has happened only in Quebec, which has a slightly different program called the voluntary retirement savings plan (VRSP), which comes into effect on July 1, 2014.

A second option was recently unveiled by the minority Liberal government in Ontario, which proposed the Ontario retirement pension plan (ORPP) in its 2014 budget: that budget died following lack of support from the Opposition, the New Democratic Party. Ontario will be going to the polls on June 12. However, the proposed mandatory plan – a response to Ottawa’s refusal to consider provincial requests to enhance the Canada Pension Plan (CPP) – has met with responses from the financial advisory community ranging from concern over greater complexity in the planning environment to lack of flexibility in the plans themselves.

One of the key issues is that financial advisors will have to spend more time explaining the options to their clients, says Ian Edelist, principal with actuarial consultants Eckler Ltd. in Toronto. More forced savings under government plans such as the ORPP also could mean less contribution room for RRSPs, adds Edelist, and fewer assets under management for advisors and firms.

Similarly, as clients contribute more to mandatory plans, they may not have sufficient assets to pay for financial planning advice, says Barbara Amdsen, managing director of the Toronto-based Investment Industry Association of Canada (IIAC). Amdsen also is concerned about the additional burden on advisors to sift through the options for their clients, especially in the first year of the relationship, given that the industry is already facing an onslaught of regulatory change. Says Amsden: “It’s sort of death by a thousand cuts because there are other changes that are happening within the industry at the same time.”

Other industry-watchers, however, don’t anticipate a big hit for the financial advisory industry as a result of the ORPP, should it come into force at some point.

Ronald Harvey, branch manager and certified financial planner with IPC Investment Corp. in Ottawa, feels it will be business as usual for most advisors should the new plan be implemented.

“[The ORPP] would just be one part of the [financial] plan,”says Harvey. “It may reduce the amount [clients] have to fund on their own by a nominal amount, but not significant enough to make a difference in my life.”

More important, however, is that many experts don’t see these plans being effective in bridging the retirement income gap for most Ontarians. The ORPP is a proposed mandatory public pension plan for employed Ontarians similar to the CPP, except for those with a comparable workplace pension. (What a “comparable” pension would be remains unclear.) Employees and employers would each contribute half of the required amount, to a total of 3.8% of the employee’s gross earnings, on the first $90,000 of earned income. The goal of the ORPP would be to replace 15% of an employee’s earnings in retirement, up to $90,000.

But some experts believe the introduction of the ORPP is more about politics than savings. “The election is on,” says Edelist, “and it’s a good question as to whether the ORPP was more of a political move to get some momentum going to expand the [CPP].”

But, apart from the likelihood that many more employed Canadians would have a workplace pension than is the case now, pension experts fault PRPPs for being too close to defined-contribution plans to change the current pension climate substantially. Notes Steele: “A PRPP is really just a group [RRSP] in another jacket.”

Steele also believes that such plans, to be effective, should be mandatory for firms with more than five employees, as is the case for Quebec’s VRSP.

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