Balancing Cost, Care, and Compliance: The Evolving Landscape of Benefits Governance in Canada

After several years marked by labour shortages and pandemic-driven plan enhancements, organizations are now facing a sharp return to financial discipline. Inflation, lingering labour gaps in some sectors, and broader economic uncertainty are multiplying the pressures placed on group benefits budgets. As a result, benefits plans—once an area of expansion—are now under scrutiny.

According to MBWL International’s 2025 Global Benefits survey, 82% of organizations identify cost management as a priority when reviewing the design of their benefits, ranking far ahead of attraction and retention. Yet this shift brings a clear challenge: cost containment cannot undermine competitiveness. The task ahead is finding equilibrium and balancing financial prudence with a meaningful, credible employee experience.

The financial impact of group insurance plans continues to grow. With the average employer-paid cost now typically amounting to several thousand dollars per employee each year, a 5–10% cost increase represents a significant financial risk exposure. These increases accumulate rapidly, reinforcing the need to control costs efficiently and ensure a clear benefits strategy aligned with overall business objectives. Failing to invest in cost control measures today will ultimately result in greater expenses down the road, as delaying action allows costs to increase even more rapidly.

The survey data also reveals that 60% of organizations feel their governance of benefits costs and funding needs improvement. This signals a broader awakening: benefits governance must evolve from basic administrative oversight into proactive, structured financial management.

Benchmarking remains the top priority for organizations, and for good reason. Done well, benchmarking helps employers:

• Compare plan provisions against relevant market comparators
• Support decisions about plan changes

A holistic benchmarking approach extends beyond group benefits to include pay, retirement programs, well-being initiatives, and total rewards positioning. Evaluating benefits in isolation risks suboptimal or misaligned decisions; rather evaluating them as part of a broader employee value proposition leads to more coherent workforce strategies.

Organizations can influence plan financial health and sustainability through four major levers:

The goal is efficient spending—not indiscriminate cuts. Effective measures include:

• Mandatory generic substitution
• Deductibles per prescription
• Combined maximums for paramedical services

There are two main cost drivers in group benefits: prescription drugs and disability.

• For prescription drugs, an in-depth analysis of consumption can identify high impact measures to apply and control costs. This approach makes it possible to prioritize the most effective interventions and achieve meaningful savings with the fewest changes needed. Strong disability governance can also reduce claim durations by up to 10%, contributing to meaningful cost containment.

Organizations should regularly review:

• Risk-sharing arrangements
• Administrative fee competitiveness
• Adjustments in risk structure can generate significant annual savings.

Robust oversight mechanisms include:

• Periodic requests for proposals (RFPs), not only as a market check on pricing, but to reassess service quality, administrative capabilities, and evolving insurer offerings in areas such as drug management, disability governance, and digital tools.
• The organization’s process audits to identify and prevent administrative leaks, such as premium payments for ineligible employees or unvalidated invoices.

Together, these practices strengthen financial discipline while ensuring the plan continues to meet organizational and employee needs.

Strategic communication can maximize perceived value and improve plan utilization. Creative, proactive campaigns—visual tools, short videos, employee quizzes—help employees understand how to use their plan wisely, which ultimately contributes to cost management.

The survey reveals, despite the cost-conscious climate, many organizations continue to invest in well-being and preventive health measures. These investments may not yield immediate savings, but the long-term impact of healthier employees means lower claims, reduced absenteeism, and greater engagement. Organizations must balance short-term cost control with long-term wellness ROI, ensuring that budgets and employee needs align sustainably.

Survey results highlight three major challenges employers face in serving a multigenerational workforce:

Internal mobility programs, project-based assignments, and mentoring help address retention, development, and collaboration across generations.

Generational differences around work expectations continue to create tension—particularly around hybrid work arrangements and work-life balance. Clear flexibility frameworks help manage consistency, fairness, and expectations.

Rising medical costs, cited by 43% of organizations, amplify the need for health strategies that serve all age groups. From childcare to elder care and from budgeting to retirement readiness, employees face different needs, and initiatives must reflect this diversity.

One consistent enabler across all three challenges is visibility—ensuring employees know what programs exist, how to access them, and when they should be used.

Employees may not know which provider or program solves their problem, but they do know their challenge (e.g., divorce, elder care, mental health strain). Mapping needs to resources makes navigation intuitive, increases usage, and boosts perceived value. This approach helps organizations:

• Identify gaps in their well-being offering
• Improve understanding and appreciation of available resources
• Connect initiatives to life stages and generational diversity

A structured approach helps simplify a complex ecosystem. Organizing programs under four the following pillars of health can be impactful:

1. Physical
2. Psychological
3. Financial
4. Social

Savings and retirement programs can be strengthened through three pillars: 

Employees want options that allow saving for multiple goals, enabled through tools like TFSAs or blended savings plans.

Most employees need guidance. Personalized, timely financial education supports decision-making at every stage of the retirement journey.

In retirement, security becomes essential. Decumulation support, predictable income (including annuities), and educational resources help employees transition confidently.

Delivering financial guidance gradually—aligned with life stage and readiness—prevents information overload and improves planning outcomes.

CAPSA’s updated Guideline No. 3 represents a major modernization of pension governance and marks the first update in two decades. The guideline places emphasis on:

• Positive outcomes for employees
• Stronger governance standards that support—not hinder—plan management
• Transparency and education as core requirements of effective oversight

The message is clear: governance and communication are inseparable, and both are critical to sustaining employee trust and driving better financial outcomes.

Improved communication is a priority for 64% of Canadian organizations, yet it remains one of the most challenging areas to execute well for three essential reasons:

• Selecting the right channels
• Determining the right frequency
• Simplifying complex topics

A strategic approach to communication increases employee understanding, elevates perceived value, and enhances the return on benefits investment. Effective communication means employees:

• Know what their plan covers
• Understand how to use it effectively
• Recognize the value the organization provides

Practical strategies include:

• Using concise and inclusive messaging paired with visuals or interactive tools
• Tailoring content by life stage
• Centralizing the information in a user-friendly platform that is easy to find/consult
• Reinforcing key messages across multiple touchpoints
• Understand the audience, identify clear objectives, and plan communications accordingly

When done well, communication supports not only employee well-being but also cost containment through smarter utilization decisions.

The evolving benefits landscape demands more than cost cutting, it requires balance, discipline, and clarity. Organizations that align cost governance, with a well-being strategy, and strategic communication will be best positioned to manage economic uncertainty while strengthening employee trust.

Sustainable benefits management is not simply about reducing spending. It’s about investing wisely, governing responsibly, and communicating effectively to create plans that are resilient, competitive, and truly supportive of employees’ needs.

This article was written by:

Sophie Limoges
Principal, Group Benefits

Audrey Anne Desforges
Principal, Communication

Patrick Godin
Consultant, Health

Philippe Rickli
Principal, Pension and Savings