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Health care costs still worry many Canadian employers

Pension costs a lesser concern, survey finds

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The number of Canadian employers concerned about pension and other employee benefit plan costs remains fairly steady, with some considering changes in an effort to curtail such expenses, according to a survey.

According to "2006 Compensation Trends and Projections," a survey conducted by pensions and benefits consulting firm Morneau Sobeco, 58% of employers are concerned about rising health care costs, down from 60% last year. The percentage of employers concerned about future pension costs remained at 21%, according to the survey.

While employers are still seeking solutions to the problem of rising pension costs, only a few are considering terminating their defined benefit plans or replacing the plans with defined contribution plans. The survey found that only 3% of employers moved to defined contribution plans during the last two years, while 7% are considering such a change.

"Not everyone that's looking at (a possible conversion) goes through with it," said Andre Sauve, a partner and actuary in the firm's Montreal office. And while most movement has been away from defined benefit plans, some employers are converting defined contribution plans to defined benefit plans, he added. "In the background, you do have groups going in the other direction," he said.

The survey, based on the responses of 300 employers, found that 12% of employers were considering requiring employees to contribute to the pension plans as a way of dealing with costs.

With regard to health care benefits, 18% of surveyed employers said they were planning to review cost-sharing arrangements as a way of dealing with rising health care costs.

The cost of disability management plans has become a key concern for employers, with 35% of employers citing it as a top benefit issue and 27% saying they would review their disability management practices.

Most Canadian companies now have employee assistance programs, with 85% of surveyed employers indicating they have such a program, up from 72% in 2001. Wellness programs also are becoming more popular, as 33% of employers are offering such programs, up from 24% in 2001.

Meanwhile, the use of the Internet to communicate employee benefit programs has increased dramatically in recent years, with 58% of employers utilizing Web sites, up from 30% in 2001, and 46% of employers now offering retirement and financial planning pension tools online, up from 19%.

Copies of "2006 Compensation Trends and Projections" are available from Morneau Sobeco for $475 Canadian ($399) by calling Yves Robitaille at 866-222-0012.