Rising benefit costs easily number-one issue for Canadian employers’ benefit strategies in 2025
Many Canadian employers are re-evaluating their benefits offerings amid the challenges of the economic climate.
Overall, 55 per cent of employers plan to reallocate or rebalance spend over the next three years, up from just 10 per cent in the past year.
Nearly two in three (64 per cent) plan to tackle high costs by enhancing value or switching to better-value vendors across health, retirement, and risk benefits, while almost half (44 per cent) intend to address high-cost medical conditions, according to , according to the Willis Towers Watson (WTW) report.
“After a long period of high benefits inflation and in the face of a possibly weakening economy, employers are taking a step back and looking to focus on what drives real value for employees and the business,” says Anne-Marie Nawar, Canadian Health & Benefits Insights & Solutions leader. “That means targeting support and spending on the benefits that matter most, enabling personalisation, and helping employees make better decisions.”
Many employers are trying to cut down the cost of benefits, according to a previous report.
What are the factors affecting companies’ approach to benefits?
Rising benefit costs is the top issue (73 per cent) influencing Canadian employers’ benefit strategies in 2025, up from 40 per cent in 2023, according to WTW’s survey of 145 Canadian employers.
Costs ranked second in 2023 and only sixth in 2021.
Against a backdrop of cost control and recalibrating benefits spend, employers are becoming more targeted in how they support employees, focusing on the issues that matter most.
These priorities include mental health, as well as health and financial wellbeing benefits, according to the report.
“Employers are looking to redesign their benefits to allow meaningful choice,” reads part of the WTW report. “This could include providing voluntary benefits or allowing optional enhancements to current benefits to full flexible benefit allowances. For leading employers, we see choice alone isn't enough. Decision support, digital navigation tools and enhanced education all play a crucial role in accompanying personalisation, to ensure workers get the best value from the choice on offer.”
Overall, 66 per cent of employees say they want to see more voluntary add-ons when it comes to their employer’s benefits plans, according to a previous report.
Redesigning employee benefits
When it comes to redesigning benefits, it’s important to prioritise employees’ needs, notes Robert Half.
“Comprehensive employee benefits packages and the best employee perks aren’t just expenses on a balance sheet—they're investments that create value for both employees and employers,” the human resources consulting firm says.
“Many esteemed organisations understand this connection between employee support and business success. They see their benefits and perks not as costs to minimise but as strategic tools that help build loyalty, attract talent and strengthen their market position.”
When it comes to workplace benefits, there is a disconnect between what many employees value and what employers provide, according to a previous Mercer Marsh Benefits report.
