Investment performance moved up from its fourth place finish in 2000. That is to be expected, given the decline in interest rates and the sharp slide in the equity markets, both of which are expected to increase the cost for employers of defined benefit pension plans. And on the defined contribution side, participants generally bear the full brunt of the market?s volatility.
Despite the uncertainty, Canadian employers still plan to follow through with their average salary increase of 3.3% for 2002, according to data collected in August from 309 organizations.
Following the events of September 11, 80% of the largest participants were contacted again to see if their plans would change.
Some 18% of these organizations now expect to reduce their salary increase budget for 2002 by 0.9% on average, reducing the average anticipated salary increase from 3.3% to 3.1%.
West is Best
Prior to these adjustments, the salary increase anticipation by employment category varied from 2.9% for unionized hourly staff to 3.7% for executives. By region,
- participants in Western Canada reported the highest anticipations for all job categories, with average increases of 4.2% for executives,
- compared to 3.9% in Ontario, and
- a slightly lower 3.7% in Quebec
In terms of group benefits, the increasing cost of health care continues to be the top concern among Canadian employers. Half of the sample intends to review their plans and revise them to limit the effect of predicted cost increases.
In addition, disability management is expected to become an even more weighty issue, since the number of disability claims generally rises when the business cycle heads toward a trough.
Another major trend evident in the survey is the continuing fall in the prevalence of retiree benefit programs due to the increased pressure on corporate bottom lines resulting from the change in CICA accounting rules, which require employers to reflect the liability for retiree benefits while the employees are still actively working for the company.
Finally, the trend toward Internet plan administration and communication continues with 25% of companies currently without Internet support planning to introduce it in the next 12 months.
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