The masters at wasting money. If it is not their money, they could not care less. They were told this plan did not make sense, but proceeded anyway, and now $70 million later the only people who benefit, are liberal friends who made the money.
All told, Ontario’s aborted pension plan cost $70 million before a single penny of contributions was collected, the province revealed Thursday.
What the top ORPP brass will pocket
The top six executives tapped to run the Ontario Retirement Pension Plan Administration Corporation (ORPPAC) will split $2,020,000 in severance, one-year’s salary each in addition to what they’ve earned so far. In all, they will receive more than $2.8 million in compensation for their work to establish the now defunct plan.
Here’s how that cash is divvied up:
Chief Executive Officer
Annual Base Salary: $525,000
Start date: January 1, 2016
Compensation including benefits so far: $302,925
Total compensation from ORPPAC: $827,925
Mary Anne Palangio
Chief Financial Officer
Annual Base Salary: $325,000
Start date: March 21, 2016
Compensation including benefits so far: $140,938
Total compensation from ORPPAC: $465,938
Senior Vice-President, Plan Operations
Annual Base Salary: $335,000
Start date: March 21, 2016
Compensation including benefits so far: $110,019
Total compensation from ORPPAC: $445,019
Chief Technology Officer
Annual Base Salary: $325,000
Start date: April 18, 2016
Compensation including benefits so far: $89,050
Total compensation from ORPPAC: $414,050
Annual Base Salary: $275,000
Start date: June 6, 2016
Compensation including benefits so far: $56,418
Total compensation from ORPPAC: $341,418
Senior vice-president, Communications
Annual Base Salary: $235,000
Start date: March 14, 2016
Compensation including benefits so far: $81,846
Total compensation from the ORPPAC: $316,816
Of that multi-million tally, over $2 million was spent on “golden handshakes” for the top Liberal appointees tapped to run the defunct plan, the documents released Thursday reveal. The man tapped as the plan’s CEO will, in the end, receive over $825,000 for six months’ work.
In sum, the six top executives will receive $2.8 million in compensation from the arm’s length corporation that would have administered the provincial pension plan.
The Liberals under Premier Kathleen Wynne announced the Ontario Retirement Pension Plan (ORPP) in their 2014 budget after discussions to expand the Canada Pension Plan (CPP) nationally fell through; but the Finance Ministry documents released Thursday reveal work began at least a year earlier. The plan became a major campaign promise in the June 2014 election that soon followed, a vote that returned the Grits to majority power.
Then, after a federal change in power, the province announced in June it would axe the ORPP after a deal was announced to expand CPP — a result of a major shift in federal policy that came in with the new federal Liberal government.
Wynne was quick to declare victory, saying Ontario’s pension designs put necessary pressure on other premiers and the feds to reach a deal before the ORPP was up and running.
But it’s Ontario residents who will bear the costs of the public policy victory. Finance Minister Charles Sousa and his associate minister in charge of pensions, Indira Naidoo-Harris, said in a joint statement the perceived urgency of the retirement crisis was worth the effort and cost: “The need to address the retirement savings gap was too important for us to sit idly by.”
Of the $70 million in sunk costs, almost half — $30 million — went to setting up the ORPP administration corporation, an arm’s length body that would have run the plan and its investments. Of that, $6.3 million was spent on salaries, severance and benefits for the employees who would have run the ORPP. In all, between 2013 and 2016, the province spent $9.5 million in compensation directly related to the development of the ORPP. In all, the province spent $3.7 million just on severance for the 33 employees who had already started work.
Unfortunately, we’ve learned once again that the Liberal government has taken advantage of another opportunity to use public funds to reward their friends with golden handshakes
The six top employees at the corporation, including CEO Saad Rafi, split over $2 million in severance. That means the executives split an approximate average of $366,666 each, while the 27 other employees each got an approximate average severance package of $62,522.
Rafi came to the ORPP after running the Pan Am Games, which the auditor general found came in $304 million over the original budget, but for which executives — including Rafi — split $5.3 million in completion bonuses. He is entitled to one year’s salary in severance, or $525,000 in addition to the $302,925 in compensation he’s received so far, for a total of $827,925 for six months work.
NDP pensions critic Jennifer French said, while her party supported both the idea of an ORPP and pending CPP expansion, the result in Ontario was yet another example of Liberal cronyism.
“There are legitimate costs to creating such a plan,” she said. “Unfortunately, we’ve learned once again that the Liberal government has taken advantage of another opportunity to use public funds to reward their friends with golden handshakes.
“The severance packages for the top ORPP executives disclosed today are an insult to people in this province who can’t afford to retire.”
Marketing was one of the bigger costs to setting up the ORPP, with the Liberals pouring $8 million into pension-pumping ads — some of which the government says will be used on “upcoming marketing efforts to inform Ontarians about the changes to the CPP.” That’s over 11 per cent of the final bill.
The province had a third party compile the tally of costs and says it will have the auditor general confirm the $70-million tab. That total could end up slightly lower, as it includes $15 million to cover any wind-up costs.
The government will repeal the legislation creating the ORPP this fall, the ministers said. They also noted that, in the long run, CPP enhancement will prove much cheaper to administer — something they were loath to admit while the ORPP was still up-and-running.
“CPP enhancement was always our first choice as a way to close the retirement savings gap, and will save millions annually in administrative costs,” the ministers said.
Advocates for both the ORPP and CPP expansion say Canadians, especially younger workers, suffer from a retirement savings gap that will hinder the economy decades down the line; however, multiple business groups argued both plans would serve as a new “payroll tax” and could depress employment.
Editor’s note: The author’s partner is a developer with the Canada Pension Plan Investment Board.
National Post Ashley Csanady | July 28, 2016 |