Almost one-half of Canadian employers do not offer any non-pension retiree benefits at all, according to a survey by Aon Hewitt.
Forty-four per cent of the respondents do not offer any retiree benefits at all, while another 10 per cent have closed their existing programs to future retirees, found the survey of 225 employers.
Of those employers not offering retiree benefits, the most often-stated reason (76 per cent) was “high costs compared to perceived benefit to employees,” while 66 per cent blame rising health-care costs specifically.
However, about 20 per cent of respondents said they would consider offering retiree health benefits such as drug, hospital and dental benefits, if the costs were fully or partially paid by retirees.
“The challenge is finding ways to make these programs affordable for more people,” said Greg Durant, senior vice-president and chief actuary of the health and benefits practice at Aon Hewitt. “Employers who don’t currently offer retiree benefits would consider doing so if retirees shared the cost burden. Retirees would benefit as well, by realizing the cost-savings of purchasing coverage in a group context rather than individually.”
Among the 56 per cent of companies surveyed that do offer retiree benefits, 85 per cent offer retiree medical coverage and 82 per cent offer hospitalization. The costs of those programs are shared by employer and employee in about one-half of the companies surveyed.
As for the likelihood of modifying current plans, 38 per cent said they were likely to increase retiree contributions and 31 per cent said they were likely to reduce or eliminate eligibility for future retirees; only eight per cent said they were likely to improve benefits for current or future retirees, found Aon Hewitt.
However, more than 85 per cent of employers had not considered or were unaware of alternative financing vehicles, while many (81 per cent) had not considered a “lump sum” buyout settlement to current retirees or moving to a defined contribution retiree medical plan (73 per cent).
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