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Group Benefits
Rewards Strategies Changing
With 89% of employers finding it challenging to find skilled professionals, companies are revisiting their recruiting tactics to win over skilled workers according to a survey by Robert half Canada inc.
The survey polled over 500 employers and found the most common attraction strategies were increasing salaries (42%), offering remote workplace options (34%), providing signing bonuses (31%) and evaluating candidates outside of their company geographic location and allowing those hires to live anywhere (30%).
According to their research, salary remains the top issue but benefits are also being added with the most common being mental health resources, flex-time and wellness programs.
In Mercer’s 2023 Compensation Planning Survey, Canadian employers are budgeting 3.4% for merit increases and 3.9% for their total budget increase. The total compensation budgets also include other adjustments such as promotions and cost of living adjustments as well as merit increases. However, with inflation at record highs in the range of 7.5% to 8.0%, even these adjustments do not keep pace.
To counter these challenges, we suggest employers manage employee expectations through internal communications while also investing in their benefit programs in the three areas outlined.
Employer Communications Increasing
In a recent survey by the International Foundation of Employee Benefit Plans, 73% of employers have increased the emphasis on mental health and behaviourial health offerings in their communications over the past two years. The survey also found 90% of employers offer employee assistance programs, 86% provide mental health coverage and 67% provide substance use disorder benefits. Another statistic identified 64% of respondents provide flexible working arrangements.
HCSA Growing in Popularity
Almost half (48%) of plan sponsors have a Health Care Spending Account (HCSA) in 2022 compared to 39% in 2021 according to the 2022 Benefits Canada Healthcare Survey.More than two-thirds (69%) also provide a traditional benefit plan.
About a third (30%) of plan sponsors reported they include a wellness benefit which is up from the 14% that offered one in 2017.
Drug Costs & Claimants Increase in 2021
According to Green Shield Canada’s annual drug trends report, total drug costs grew to $2 billion in 2021 from $1.4 billion in 2017 while the number of claimants also increased from 1.9 million to 2.1 million over the same period.
Treatments for rheumatoid arthritis, Crohn’s disease, colitis and psoriasis represented the largest share of total drug cost as use of these medications grew by ten per cent. The percentage of claimants using medications to manage anxiety and depression symptoms rose by eight per cent.
Total costs for claimants in the $1,000 to $1,999 annual cost category grew by 19 per cent over the past five years. The report identified diabetes as the cost driver in this category, accounting for 57 per cent of total cost growth in 2021.
Group Savings
Wage Increases Versus Retirement Benefits
The current high inflation environment is driving employers to favour wage increases over retirement benefits according to a new survey by the Healthcare of Ontario Pension Plan and Angus Reid Group.
The survey polled nearly 800 business owners and found the following leading concerns:
- 82% see greater competition for hiring
- 79% have concerns over employee burnout
- 79% have concerns about labour shortages
- 77% are concerned about high turnover and 82% have a strong concern about inflation
In addressing these issues, 67% are favouring wage increases over benefit enhancements as the best way to mitigate the effects of inflation. This is evident among employers reporting improved productivity compared to those that do not (45% compared to 31%).
Among all respondents, 66% stated retirement benefits help retain talent and 62% indicated they also help recruit talent. The majority (75%) felt they have a responsibility to offer a retirement savings plan to employees while another 17% stated they launched or enhanced retirement savings plans in the past year.
Legislative
CRA Sets CPP Maximums
The Canada Revenue Agency (CRA) has set the maximum pensionable earnings under the Canada pension Plan (CPP) at $66,000 up from $64,900 in 2022. The basic exemption amount for 2023 remains at $3,500.
The employee and employer contribution rates will be 5.95 per cent, up from 5.7 per cent in 2022 while the self-employed contribution rate will be 11.9 per cent, up from 11.4 per cent in 2022.
For 2023, the maximum employer and employee contribution will be $3,754.45 each up from $3,499.80 in 2022. The maximum for self-employed contribution will be $7,508.90 up from $6,999.60.
Changes to EI
There are two changes coming to Employment Insurance (EI) in the coming weeks. The first is the Federal Government’s intention to extend EI sickness benefits from 15 to 26 weeks which is expected to take effect on December 18th. Employers who have Short-Term Disability (STD) plans that integrate with EI will need to align to the new 26 week benefit period. Employers should also review both their STD and Long-Term Disability (LTD) plan to ensure they align and, in the case of the LTD benefit, appropriate adjustments on the insured rates are realized. At this time, there will not be any change to the Premium Reduction Program which is expected to occur closer to 2024/2025.
The other change is to the EI premium rates. The Canada Employment Insurance Commission (CEIC) announced that the EI premium rate for employees will increase to $1.63 (from $1.58) per $100 of insurable earnings for 2023. The CEIC also advises the maximum insurable earnings will increase to $61,500 (from $60,300). These changes will result in an annual cash increase in the maximum EI contribution of $49.71 for employees and $69.59 for employers.