Cost-cutting Will not Affect Most Canadian Benefit Plans

January 23, 2009 ( - Canadian organizations are looking at alternative solutions to manage human resources budgetary constraints, while still investing in those programs that drive employee engagement, according to a recent Hewitt Associates survey.

According to a press release, survey results indicate that, for the most part, employers are considering changes with an eye to the future. Few are cutting back on employee benefit programs; any reductions are focused on discretionary spending, such as business travel.

“Employers recognize that the recession won’t last forever and they don’t want to find themselves short of employees or skills when things improve,” stated Tim Clarke, Hewitt Canada’s benefits practice leader, in the press release.

Only 5% of respondents to Hewitt’s survey plan to cut retiree benefits, and even fewer plan to cut retirement contributions or member services. Eighty percent of employers intend to leave their medical, dental and disability benefit plans at current levels. Some are even planning to expand their benefit programs – especially those that improve employees’ overall well-being and help them manage stress, including health and wellness programs and coverage for services such as physiotherapy or massage therapy, the press release said.

Employers are looking to reduce their benefits costs primarily in ways that will have no direct impact on employees and their families. About 25% will be seeking a reduction in benefit insurers’ administration fees, commissions, and outside supplier fees. Only about 11% plan to cut internal pension and benefits support staff.

The biggest cuts will occur in business travel, as 58% of respondents say they plan to cut back either substantially or slightly. Also, 10% of organizations cut back significantly on holiday celebrations this past season and 22% cut back slightly.