The Number of Organizations Offering Benefits to Retirees Continues to Decline as Costs Rise: Mercer Poll
Toronto, ON (May 27, 2016) – The largest demographic in Canadian history is shifting into retirement. There are now more Canadians over 65 than under the age of 15. This cohort is bringing into focus the very real costs of benefits during retirement, including health, life and travel insurance.
According to Mercer Canada’s Post-Retirement Benefit Trends Poll, less than 30 per cent of employers offer post-retirement benefits to future retirees, down from more than 40 per cent 15 years ago.
Over the past four years, 22 per cent of survey respondents made reductions to their retiree plans, often closing retiree plans to new hires. Escalating costs are likely to blame. Retiree benefit plan costs have increased 150 per cent since 2000, and specialty drug costs are expected to increase 25 to 35 per cent in the next three years. Going forward, a further 17 per cent of employers plan to make reductions to their offerings, and the 71 per cent of employers in the Mercer Poll who do not offer retiree benefits say they will not consider providing such a plan in the future.
“With employers exiting their post-retirement benefits plan, employees are often left to navigate retirement benefit plans and options on their own, including purchasing an individual health conversion plan or depending on limited provincial healthcare at retirement,” said Brian Lindenberg, Head of the Health and Benefits business at Mercer Canada. “However, many employers continue to see benefits for retirees as a means to enhance attraction and retention. They may be looking for alternatives that provide access to flexible and affordable coverage and require no company contribution.”
The Mercer Retiree Solution (MRS) provides plan that benefits the employee without burdening the employer with escalating costs. MRS provides employers’ retirees with access to a complete suite of Mercer designed health, travel and life insurance products tailored to individual needs. Mercer is responsible for product design, solution oversight, employer relationships, and the contracts are issued on an individual basis. Following a thorough due diligence process, Mercer retained SSQ Financial Group to provide online enrolment and telephone support to retirees. Mercer and SSQ’s combined offering provides all of the administration of the solution. The employer serves only as the facilitator.
Canadian employees place a high value on their employer-provided benefits, with 82 per cent of Canadian employees in agreement that receiving health benefits through work is as important as receiving a salary.
“Unfortunately, market forces have caused organizations to pull back on employer pay-all retiree coverage,” adds Lindenberg. “The Mercer Retiree Solution is a significant advancement for Mercer and clients as we strive to help address the increasing concerns with benefits and health care costs. Whether Gen X, Gen Y or nearing retirement, employees will seek to be increasingly in control of choices and will demand more options to meet their unique needs.”
About the poll
For the 2015 Post-Retirement Benefits Trends Poll, Mercer collected information from the leaders of 289 Canadian organizations on what actions they have taken or are considering in terms of changes to their retirement benefit plans.
Read the executive summary.
About Mercer
Mercer is a global consulting leader in health, wealth and careers. Mercer helps clients around the world advance the health, wealth and performance of their most vital asset – their people. Mercer’s more than 21,000 employees are based in more than 40 countries and the firm operates in over 130 countries.
Mercer is a wholly owned subsidiary of Marsh & McLennan Companies (NYSE: MMC), a global professional services firm offering clients advice and solutions in the areas of risk, strategy and people. With 57,000 employees worldwide and annual revenue exceeding $13 billion, Marsh & McLennan Companies is also the parent company of Marsh, a leader in insurance broking and risk management; Guy Carpenter, a leader in providing risk and reinsurance intermediary services; and Oliver Wyman, a leader in management consulting. For more information, visit www.mercer.ca.
Source: Mercer
