By Mark Reusser, Executive Member, Ontario Federation of Agriculture
Last year the Ontario government proposed the Ontario Retirement Pension Plan (ORPP). The new plan would provide a predictable source of retirement income for those most at risk of under-saving and particularly middle-income earners without workplace pensions. The proposed ORPP could be a helpful program for the average Ontarian. But it may not be for farmers.
The Ontario Federation of Agriculture (OFA) will be submitting comments to MPPs and policymakers on the proposed retirement plan. Our comments outline concerns and considerations on how the ORPP will affect farm businesses. The largest concern is that farmers have an array of legal structures, ownership and employee circumstances across agriculture.
Many farmers are employers of family, part time and seasonal workers and may even employ themselves if the farm is incorporated. And that means new government programs must consider how they play out for farmers and the agriculture industry. That’s why the OFA is asking the Ontario government to consider a few points as they work through the details of the new ORPP.
The OFA would like the government to conduct and divulge an impact analysis of the proposed ORPP to fully assess the costs and benefits of the plan from economic and social perspectives. This analysis should include an impact assessment of ORPP on farms, business competitiveness, investment and employment. OFA estimates the ORPP will cost Ontario farmers, as employers, approximately $30 million annually. This additional cost will likely be deducted from farm net farm income as it won’t be added into prices for farm products.
The ORPP presents a one-time inflationary jump in farm labour costs that isn’t recoverable. If we can’t recover the cost from sales, farmers will look to wage caps, increased mechanization and fewer employees to cover rising employment costs. These actions could significantly lower farm employment and dampen Ontario agriculture’s ability to achieve the Premier’s job growth challenge.
The OFA is advising the government to provide an exclusion for off-shore seasonal workers in the ORPP. Seasonal workers are a vital part of Ontario agriculture’s employee resource, representing about 20,000 workers. The pension contribution will be significant but be contrary to a key goal of the ORPP which is to keep pension funds working in Ontario.
The government appears to be struggling with the treatment of self-employed Ontarians as it relates to the pension plan. OFA is recommending Ontario work with the federal government to enable self-employed workers to opt into the plan if they choose. More importantly, OFA is also recommending that farmers be eligible to draw funds from their own private pension savings to invest in farmland and farm capital.
As farmers, investment in our farm businesses is seen as a form of a self-funded pension, or retirement funds. Our choice of directing capital investments to our own businesses will help grow our businesses while serving as a viable form of private retirement savings planning.
The proposed retirement pension plan for Ontario is intended to secure pension savings for those not currently saving enough. However, it is another employment burden on farm employers, a source of additional paperwork and a significant net cost to farm businesses. In representing the interests of Ontario farmers, OFA will be presenting our concerns on how the plan will impact farm businesses and offering considerations to make this a workable retirement savings option for Ontarians.
Source: OFA