In honour of Benefits Canada’s 35th anniversary, they took the opportunity to go back to the source to explore why employers offer employee benefits programs.
Their research looks at the past, present and future of employee benefits—and shows how much senior business leaders value them.
Perhaps not surprisingly, cost is the main driver for senior decision-makers when it comes to their pension and benefits plans.
More than half (53%) of respondents in their research say it is their biggest challenge, while 31% say cost is the main factor that caused them to make changes to their benefits offerings.
Top changes reported include changing plan design (including removing or eliminating a plan), increasing employee or employer contributions, adding new investment options (for retirement savings plans) and adding a preventative component, such as a wellness program (for health benefits plans).
And the cost issue isn’t going away: 70% say it will be the main concern in offering benefits plans going forward.
“It’s actually good news to hear that there is a greater awareness around costs and a desire for change to allow for future stability,” says Marilee Mark, vice-president, marketing, group benefits, with Manulife Financial.
“In the past, there has been inertia, and sponsors weren’t really looking for wholesale changes in benefits. They would increase coinsurance or remove a benefit to contain costs, but now, they want to make better use of what they already have instead. They understand that if they want to take care of their employees, they don’t just want to cost-shift.”
The key, then, is showing plan sponsors what they can do to manage costs and making them aware of constructive options. On the health benefits side, many employers (52%) say they’ve changed their overall plan design. Some (22%) are taking the changes a step further by adding a preventative element, such as a wellness program, to their health benefits plan.
Matthew Rotenberg, manager, marketing communications, group products, with Standard Life, says that’s a trend that providers expect will continue.
“It comes back to early intervention programs that promote healthy outcomes and lifestyles from the beginning. These kinds of programs do come with a cost, but they add real value and show a reduction in cost over the long term.”
For example, a disability management program in partnership with a provider would work closely with an employee who is about to go on leave, keep the employee engaged during the leave and help him or her transition back to work at an appropriate time.
“Sponsors will find that individuals return to work faster and are more productive with those types of programs,” Rotenberg adds.
On the retirement side of the equation, it appears that plan sponsors are a little slower to change. Less than one-quarter (22%) have made changes to their group RRSP (22%) while only 11% report changing their DB plan, and 8%, their DC plan. But industry experts expect that to change.
“On the retirement and savings plan side, the CAP Guidelines have been in place for a number of years,” says Dave McLellan, vice-president, market development, with Sun Life Financial.
“Plan sponsors and providers alike, now have a clear understanding of what the CAP Guidelines mean for plans and that there is a spectrum of costs associated with the requirements, depending on how the plan sponsor has decided to address the needs of its membership.”