Group Benefits

Canadian employers hold the line on salary increases - Survey

According to new data released by Mercer Canada, Canadian employers are planning to keep salary budgets largely unchanged for a third straight year in 2027.

The 2026 survey draws on responses from over 470 Canadian organizations across 15 industries and found that employers plan to budget an average merit increase of 3.0% and total salary increases of 3.2% in 2027.

While national averages appear consistent year to year, certain sectors also continue to be higher than average. High Tech leads the market with a merit budget of 3.3% and total increases of 3.6% while, at the other end, Banking and Financial Services are planning smaller increases at 2.7% for merit and 3.0% total. Promotion activity is another factor though the data indicates it is slowing.

The survey also tracked the growing role of AI in compensation planning with 57% of organizations reporting at least some automation in compensation processes. AI adoption is most common in annual salary increase planning (43%), market pricing and benchmarking (38%) and job matching (36%).

Perspectives on Benefit Plans differ between Employers and Employees – Survey

Just 62% of plan members rated their plan as excellent or good – the lowest in six years – in comparison to 82% of plan sponsors. Just 52% of plan members indicate their plan meets their needs extremely or very well which is a 10-year low.

According to the 2026 Benefits Canada Healthcare Survey, which polled 1,000 Canadian benefit plan members and 504 plan sponsors, this divide continues to grow.

However, there are areas within the benefit plans that are viewed positively. More than three-quarters (79%) of plan members agree their organization’s culture and environment encourage health and wellness, up from 72% last year and the highest result since the pandemic in 2020 (77%). The survey also found the average annual maximum for stand-alone mental-health counselling benefits increased 3.7% to $2,679 in 2026, up from $2,583 in 2025 and $1,743 in 2024. The survey found 26% of plan sponsors provided mental-health counselling as a separate benefit with its own coverage maximum with 46% providing coverage through an employee assistance program, while 38% included it within paramedical benefits and 28% through a health-care spending account.

The survey also found plan sponsors were more likely to enhance overall benefits than scale them back with 37% adding or improving a benefit while 10% removed or reduced coverage. The majority (54%) made no changes.

Two cost drivers for private plan drug benefits

The increase in chronic disease combined with new drugs being introduced in the market is a significant one-two punch for employer-sponsored drug benefits.

A new report by GreenShield Canada, based on nearly 39 million drug claims adjudicated in 2025, found plan sponsors’ drug costs rose 9.5% in 2025 reflecting growing demand for treatments related to diabetes, obesity and other chronic conditions. For example, costs related to diabetes and weight management treatments increased 47.7% year over year.

Semaglutide, sold as Ozempic, Rybelsus and Wegovy, topped the list of drug products by cost in the 2026 GreenShield Drug Trends Report.

Between 2021 and 2025, Health Canada granted first Canadian approval to an average of 41 medicines a year with an average of 14 of those being expensive drugs for chronic diseases. Specialty drugs used for the treatment of chronic diseases represent 28.8% of total drug cost.

There are a number of brand name drugs that expire in late 2026 and 2027 so a less expensive biosimilar should be available and these include nine cancer drugs.

Canadian mothers facing burnout – survey

A new survey by GreenShield Canada polled more than 1,000 Canadian mothers aged 18 to 64 with children younger than 18 and found they’re carrying the mental load for their families, with many reporting burnout, anxiety and barriers to accessing mental-health support.

At the same time, 71% said they’ve avoided or delayed seeking mental-health support with time (44%) and cost (43%) among the biggest barriers.

When asked what would help remove barriers to accessing mental-health support, 92% cited flexible options to fit their schedules, while 89% pointed to affordable services with easy access to care.

Employer-sponsored Virtual Care increasing

The number of plan sponsors covering virtual care increased this year from 32% in 2025 to 43% in 2026, the highest result since the pandemic in 2021 (41%).

The usage was highest among medium users (4 to 10 claims) of mental-health benefits (50%), those who had reached their mental-health maximum (44%), members with poor mental-health (33%) and those who experienced high to extreme daily stress (33%).

Of the more than 1,000 plan members surveyed in the 2026 Benefits Canada Healthcare Survey, 24% said they used a service from another health-care provider (physiotherapist, pharmacist or counsellor) while just 7% said they personally paid for a private service.

Group Savings

Few Canadians factor longevity into retirement plans – survey

While 76% of Canadians recognize that people are living longer, only 34% have a retirement plan that considers how many years they may need to fund according to a new survey by the Canada Pension Plan Investment Board.

The survey polled more than 5,000 Canadians and found just 42% had a financial plan. This year’s survey introduced the Retirement Longevity Index where Canadians scored an average of 44 out of 100 on its Confidence Score, which reflects how secure they feel about supporting themselves through a potentially long retirement, and 4.2 out of 10 on its Preparation Score, which captures actions such as saving, having a plan and considering how long retirement will last.

For employers and plan sponsors, this provides an opportunity to make longevity a more explicit part of the plan member’s education.

Legislative

CPP base rate dropping

The Office of the Superintendent of Financial Institutions prepares the actuarial reports for the Canada Pension Plan and the Old Age Security program as well as plans for federal public servants.

Bill C-30 received Royal Assent on June 19, lowering the base CPP rate from 9.9% to 9.5% for 2027.

Finance Canada put the savings at about $133 a year for an employee earning $70,000, with matching savings for employers.

Alberta’s Bill 11: Changes to Employer Sponsored Benefit Plans

Effective October 1, 2026, important changes will be implemented through Bill 11, the Health Statutes Amendment Act, 2025 (No. 2), that will have immediate implications for employers.

Employers must now continue certain prescription drug and supplemental health benefits for as long as an employee remains actively employed, regardless of age. Dental, life insurance, disability and travel insurance will not be impacted by the above change and will still be subject to changes at the applicable age.

Where an employee has private coverage – such as employer group benefits or a personal plan – and government-sponsored coverage, the private plan must generally be billed first. Government coverage will become the payor of last resort.

Employers need to identify any age-based restrictions in current benefit plan documents and whether they remain appropriate and whether any current employees, regardless of age, need to be reinstated. A discussion with the insurer for the benefit plan on claim coordination procedures is recommended as are employee communications.

Quebec Bill 68 – Impact on group benefit plans

Effective January 1, 2027, under Bill 68, insurers and group benefit plan administrators won’t be able to require plan members to obtain a physician’s prescription to be reimbursed for many paramedical services and certain medical and technical aids. The legislation also limits an insurer’s ability to require ongoing medical appointments at a set frequency for disability claims so, instead, follow-up care will be based on what the attending physician considers appropriate.

Prescription drugs and certain services and equipment will still require a physician’s prescription or prior authorization.

Required changes related to Bill 68 must be completed by December 1, 2027.

Quebec Bill 99 – Increase in insurance premium tax

Effective January 1, 2027, tax on insurance premiums in Quebec will increase from 9.0% to 9.975%. The increase applies to taxable insurance products including group benefit plans.