1. ORPP Final Design Elements April 2016

2. The Ontario Retirement Pension Plan  Ontario has finalized the proposed design elements of the Ontario Retirement Pension Plan (ORPP), modelled on the strengths and principles of the Canada Pension Plan (CPP).  ORPP Major Elements:  Require eligible employers and employees (between 18 and 70 years of age) each to contribute 1.9% of employee earnings.  Aim to replace 15 per cent of an individual’s pre-retirement earnings up to $90,000 (in 2017 dollars) based on 40 years of participation.  Provide two principal benefits; a retirement benefit and a survivor benefit.  Require benefits to be earned as contributions are made to ensure plan sustainability.  Exempt employees/employers who have comparable workplace pension plans.  The normal age of retirement for the ORPP will be age 65, with options to receive adjusted retirement income as early as age 60 or as late as age 70. Benefit payments will start in 2022  The minimum earnings threshold for the ORPP will mirror the CPP rate of $3,500. Eligible employees who meet the $3,500 threshold would start to contribute and accrue retirement benefits under the ORPP from their first dollar earned, consistent with the CPP. By 2020, every eligible worker in Ontario will be part of either the ORPP or a comparable workplace pension plan. 2

3. Employer Participation  In August, 2015, the government announced its comparability test for existing workplace pension plans. The test is anchored in key ORPP design parameters and evaluates a plan’s coverage and adequacy.  The threshold tests for defined benefit (DB) pension plans is a minimum benefit accrual rate of 0.5% salary/wages per year.  The test for defined contribution (DC) pension plans is a minimum annual contribution rate of 8% of salary/wages, at least half of which must be made by the employer.  In January 2016, the government announced further details on the comparability test.  Subset Level: The comparability test would be applied to each group or “subset” of employees, as defined in the registered pension plan’s governing documents or collective bargaining agreement. A subset of members could exist where a plan provides for different contribution rates or benefit structures based on the nature of the member’s employment, the terms of employment, years of service, etc.  Multi-Employer Pension Plans (MEPPs) would have the comparability test applied to each individual employer’s collective bargaining agreement and / or employee agreements at the subset level, as defined by plan governing documents. Employers would have the option to assess the comparability of a subset of employees using either the threshold for DC or DB plans.  Voluntary workplace pension plan contributions will not be applicable in calculating the DC contribution for the purpose of the ORPP comparability test.  Pooled Registered Pension Plans (PRPPs): The government intends that PRPPs will be a comparable plan option under the ORPP. An appropriate comparability test will be developed for PRPPs once they are available in Ontario. 3

4. Employee Participation & Eligibility  Definition of Employment: For the purposes of membership in the ORPP, a person would be considered employed in Ontario if he /she:  Is required to report to work at an establishment of the employer in Ontario; or  Is not required to report to work at an establishment of the employer in Ontario but is paid by the employing establishment in Ontario, (e.g. an employee whose employment contract states that he or she works from a home office and the location of the payroll department of record is in Ontario).  This definition of employment in Ontario is consistent with the Ontario Pension Benefits Act (PBA), and aligns with the definition of “province in which person deemed employed” under the CPP.  Service Caps: Workplace pension plans with service caps will be assessed on a case-by-case basis.  Voluntary Post-Retirement Re-Entry: A member collecting an ORPP retirement benefit who returns to paid employment would be eligible to, but not required to, opt-in to the ORPP and resume making pension contributions.  If the member opts-in, the member’s ORPP retirement benefit payments would be suspended until the member (once again) retires.  Exemptions: Similar to the CPP, the ORPP would apply exemptions for certain types of workers, such as those belonging to certain religious orders. Non-resident workers will be required to participate in the ORPP if they are not members of a comparable plan, subject to the requirements of the Income Tax Act and Canadian Tax Treaties (18 countries).  Self-employed / Non-crown federally regulated: The government’s objective is for all workers in Ontario to be a member of the ORPP or a comparable workplace pension plan. Ontario is thus discussing with the Federal government measures necessary for the inclusion of the self-employed and federally regulated workers. 4 Enrollment Phase-in: For the purpose of the ORPP enrollment phase-in, employers will be assessed based on whether they had a registered pension plan on August 11, 2015 and the number of employees in Ontario.

5. 5 ORPP Phase-in Schedule

6. Employee Participation & Eligibility Con’t.  First Nations employers on reserve would be eligible to opt-in to the ORPP, along with any of their employees who also wish to opt-in.  The government is committed to engaging with First Nations communities to discuss additional opportunities to participate in the ORPP and to strengthen retirement security for First Nations in Ontario.  Employer Opt-in: Employers with existing comparable pension plans would be able to join the ORPP if they wish to offer ORPP pension coverage to their employees.  Employers would be able to opt-in as follows: Opt-in would take place during Wave Four (January 1, 2020) or any time thereafter; Employers would opt-in at the full ORPP contribution rate of 3.8%; and All members of the employer’s comparable plans, not just specific employee subsets, would have to opt-in (with employers needing to be cognizant of the Pension Adjustment requirements).  Waiting Periods: If a workplace pension plan has a waiting period provision before an employee can join their plan, both the employer and employee would be required to participate in the ORPP for the duration of the waiting period and until such time as they begin contributions to a comparable plan. 6

7. ORPP Contributions & Benefits  Pensionable Earnings for the purposes of the ORPP will include both cash and non-cash earnings, including amounts beyond base salary such as overtime, bonuses, commissions and certain tips.  Leaves of Absence: Employees on Employment Standards Act or Workplace Safety and Insurance Act protected leaves (e.g., maternity leave) would be able to elect to continue making contributions into the ORPP during their leave, in which case the employers would also be required to contribute.  The ORPP will offer two benefits – a retirement benefit and a survivor benefit  (1) Retirement Benefit: When am ORPP member retires, the member’s retirement benefit would be calculated using the member’s average earnings over the years they contributed to the ORPP. The ORPP would begin paying retirement benefits in 2022.  ORPP targets a 15% salary replacement rate based on 40 years of participation  Early/Late Retirement: Actuarially adjusted benefits would be available to members as early as 60 and as late as December 31st of the year an individual turns 71. (Payments will be made to member turning 71 during the transition period as the ITA stipulates that RPPs must begin paying out benefits no later than December 31st of the year the member turns 71.)  (2) Survivor benefits: Will be payable to the surviving spouse of an ORPP member or their beneficiary/estate.  Pre-Retirement Death: If an ORPP member dies before retirement, a lump sum would be paid to their spouse, or if there is no spouse, to their designated beneficiary or to their estate.  Post-Retirement Death:  Married: When an ORPP member with a spouse begins collecting their pension, they will receive an actuarial equivalent 60% joint and survivor pension payable for the joint lives of the member and their spouse. Both member and spouse must consent to waive the joint survivor pension to get the 10 year life guarantee.  Single: For those without a spouse, the member’s beneficiary or estate will receive a lump sum representing the remainder of the retirement payment (10 year life). 7

8. Indexation  Indexation: Consistent with the government's commitment, the ORPP will provide pre-retirement and post-retirement indexation as is the case with the CPP.  Pre-retirement indexation: Benefits would be 100% indexed according to the average growth of wages and salaries as outlined by Statistics Canada. This means the benefits that an ORPP member has earned will be given present day value upon retirement.  Post-retirement indexation: Benefits paid over the course of an ORPP member’s retirement would be 100% indexed according to the Consumer Price Index to account for inflation. This means that the retiree maintains the purchasing power of their benefits throughout their retirement.  Registered Pension Plan Tax Treatment: As the ORPP is being designed as a registered pension plan under the Income Tax Act, contributions will constitute a tax deduction for employers and employees. 8 Indexation will mitigate the effect of inflation on a member’s ORPP benefits. Tax Treatment

9. 9 ORPP Sustainability  The ORPP would provide members with a predictable, reliable and inflation-indexed stream of income in retirement. The government has designed the ORPP, after extensive actuarial modelling and with the benefit of expert advice, to be sustainable over the long term (100+ years). This approach is based on CPP practices of comparing assets to expenditures.  To ensure continued ORPP sustainability, a funding policy has been established that provides for appropriate adjustments to be made to ORPP benefits and/or contributions.  The ORPP AC would be required to file an actuarial valuation of the ORPP with the Canada Revenue Agency every three years, and to make the valuation public and subject to peer review. Valuations would be public and be subject to independent peer review.  In the event of a funding shortfall, the ORPP AC would operate within a prescribed set of actions including: reversing any previous actions taken during a funding excess, reducing benefit indexing up to a limit. If further action is needed the ORPP AC may increase contribution rates by up to 0.2%.  In the event of a funding excess, the ORPP AC would work with the chief actuary to make recommendations to the government on actions to be taken.  The government intends to establish an Office of the Chief Actuary to conduct actuarial assessments of the ORPP and provide advice and analysis. The Chief Actuary will certify any funding policy actions before they are implemented.

10. ORPP Administration  Compliance and Enforcement: The ORPP AC will encourage compliance with audits, education and training. The ORPP AC will use a variety of tools to address an employer‘s non compliance. Wilful evasion or failure to remit contributions on a timely basis would result in fines and penalties.  Appeals: The ORPP AC would develop a fair, transparent and rigorous appeals process for ORPP members and employers who wish to dispute a decision made by the ORPP AC.  If the dispute cannot be resolved, an employer or member would have the right to launch a formal appeal with an independent adjudicative tribunal. The tribunal would operate at arm’s length from the ORPP AC to ensure a fair assessment.  Information Disclosure: The ORPP AC would publish an annual report within 120 days of it’s fiscal year end. The annual report would update members, employers and the general public on ORPP AC performance and operations.  The ORPPAC will make electronic statements of benefits available to all ORPP members.  Verification process: The ORPP AC will be providing more information to employers in the coming months about submitting attestations of the size of their workforce in Ontario, and whether they offered a registered workplace pension plan as of August 11, 2015.  Plan Review: The ORPP would be reviewed by 2025 to help ensure it is meeting its intended objectives. Subsequent reviews of the ORPP would occur every 10 years. 10

11. The ORPP Administration Corporation An independent, arms length pension administrator  The Ontario Retirement Pension Plan Administration Corporation Act, 2015 established the ORPP Administration Corporation (ORPP AC).  The ORPP AC is an arm’s length entity to administer the ORPP. Its responsibilities will include:  Enrolling eligible employers and employees;  Collecting, investing and holding contributions in trust for plan members;  Administering benefits; and,  Communicating with employers, members and other beneficiaries  In November 2015, the government appointed the initial board of directors to oversee the ORPP. Susan Wolburgh Jenah was named the chair, along with Murray Gold and Richard Nesbitt as directors.  In January 2016, the board recruited Saäd Rafi as the first CEO of the Administration Corporation. Mr. Rafi and the board are building the capacity of the Administration Corporation to deliver a member- focused, cost-effective and world-class pension plan.  The ORPP AC will be fully accountable to plan members for administration and investment decisions 11 Management of ORPP Contributions ORPP contributions WILL NOT go into general government revenue, they will be held in trust for plan members. ORPP contributions WILL be managed and invested by the ORPP AC, an arms’s length entity.

12. Next Steps  Legislation / Regulations  Employer and employee education and outreach  Building the Capacity of the ORPPAC  Establishing an Office of the Chief Actuary  ORPP registration with the CRA  Employer Verification/Enrollment Process 12