Post-retirement benefits at risk

Rising costs prompt more than half of Canadian companies to reduce health-care benefits
||Last Updated: 04/10/2006

The changing financial, demographic and economic landscape in Canada has caused many organizations to consider new cost-containment measures that will have a significant impact on the level of post-retirement health-care coverage employees receive.

According to a survey of 218 Canadian organizations by HR consultancy firm Hewitt Associates, 57 per cent of companies intend to reduce the level of post-retirement health-care benefits over the next three years. Four per cent of organizations surveyed intend to eliminate them entirely.

The survey found three primary reasons for reducing these benefits. Predictably, rising health-care costs were cited as a reason for reducing benefits by 95 per cent of organizations, while 67 per cent worried about accounting costs and 43 per cent worried about the increase in employees planning to retire in the next decade.