Benefits experts highlight the issues that COVID exasperated and where plan sponsors made changes
The COVID-19 pandemic shattered long-held assumptions about workplace benefits. It forced employers to move quickly, pivot on policy, and rethink what support really means for employees.
Now, five years later, benefits providers explain how the benefits space has changed and where plan sponsors have had to adapt.
David Krieger, regional vice-president of benefits consulting at BFL CANADA, highlighted that mental health has been a defining factor. He explained that workplaces have added or increased training programs for managers and employees to recognize signs and understand what benefit program supports are available.
He also pointed to the rapid rise of virtual care as one area of where employers had to act fast.
“There’s been a huge increase in virtual consulting. During the pandemic, you couldn’t go out to see people, and now, there’s been a huge increase in this,” he said.
Consequently, Krieger added mental health practitioners have since expanded the list of eligible counsellors, employers have increased their annual maximum for mental health under paramedicine and enhanced virtual counselling.
Daniel Drolet, senior partner, group benefits at Normandin Beaudry also agreed with Krieger. He emphasized how the pandemic accelerated long-overdue improvements in how employers approach accessibility and affordability in benefits.
“During COVID, it was obvious we couldn’t access service [in-person] so virtual came in to support that. And I think it’s there to stay,” he said. He emphasized that virtual care has helped plan sponsors support both mental and physical health, particularly in remote areas where access to specialists was already limited.
“It’s opened our eyes to other services that can be done virtually,” he said, adding that accessibility is now “more top of mind” when organizations review plan changes.
Krieger also acknowledged plan sponsors have dedicated more resources towards financial wellness, noting an increase in educational tools, like webinars and “in-plan plan device.”
“Prior to COVID, roughly only one-fifth of record keepers offered access to licensed, salaried financial advisors. Today, five out of five offer it,” noted Krieger.
Kriger and Drolet both agreed that ensuring workplace wellbeing has been a central theme in benefits post-COVID.
“What has shifted in benefits used to be the overarching theme,” Drolet said. “Now it’s well-being, and benefits as a pillar to support employee well-being.”
“If benefits and pension plans were important before COVID, they’re even more important post-COVID,” emphasized Krieger. “Perhaps COVID has been an opportunity for people to recognize the importance of their benefit and pension plans and make sure they’re using them, properly and effectively, for themselves and their family.”
Volatility in claims and pensions
Drolet underscored how COVID exposed a deeper issue. Notably, how most organizations weren’t financially prepared for the volatility in claims patterns. He recalled how dental claims, for example, plummeted during lockdowns, only to rebound sharply once restrictions eased.
“When we came back to normal, it was not even normal anymore. It was three, four years of inflation and increased utilization,” he said. That volatility has pushed employers to involve finance teams more closely in forecasting and plan management.
This created a mismatch between employer expectations and reality as Drolet explained benefit costs are still trending around 5 to 10 per cent, while general inflation has dropped back to 2 or 3 per cent, and salary increases are only around 2.5 to 3 per cent across Canada.
HR teams are now under pressure to justify benefit cost increases that outpace inflation and wages. Drolet believes the lesson here is that HR can no longer operate in isolation and to forecast benefit costs effectively, HR and finance need to collaborate year-round.
“It’s not just about plan design and guiding principles but understanding how the costs work. Those organizations that learned how the benefits world works are doing better today. They’re less reactive about those cost adjustments. They see them coming,” he highlighted.
From a pension perspective, Dimitri Poliak, principal at Normandin Beaudry, notably sees a similar trend.
He explained that the volatility in global financial markets since the pandemic, along with the added layer of geopolitical uncertainty, has pushed pension plan fiduciaries to reevaluate their investment strategies in both defined benefit (DB) and defined contribution (DC) plans.
In the DB space, there’s been a renewed focus on risk management, particularly around how strategic asset allocation supports the plan’s funded status over the long term.
“Fiduciaries have been reassessing how plan assets are positioned in light of these macro shifts and the long-term implications and impact,” said Poliak.
In the DC world, where members choose their investments but rely on fiduciaries to select the available options, the stakes are just as high. Poliak noted that most DC assets, upwards of 80 per cent are held in target date funds, which places added pressure on fiduciaries to ensure those funds are appropriately structured.
He also pointed to the new CAPSA guidelines, specifically Guidelines 3 and 10, which are raising the bar for fiduciary oversight and consistency across Canada.
“There’s been a segue away from just focusing on financial markets to a broader sophistication in investment and pension risk management,” he said.
