When I retired from my corporate job eight years ago, post-retirement health and dental benefits were included in the package. Since then, the company merged with another benefits consulting firm and non-pension retiree benefits have been eliminated completely for new hires, and existing employees who are not eligible to retire by 2016.
Nevertheless, the Benefits Benchmarking 2012 survey conducted by the Conference Board of Canada reveals that over 50 per cent of the participating 356 large and medium sized companies still offer group benefits to some or all employees after they retire.
It is much more common for retiree benefits to be offered by the public sector and companies with over 5,000 employees. The incidence of retiree benefits also varies significantly across industry sectors and is most prevalent in chemical and pharmaceutical companies (86 per cent) and least typical in the construction industry (17 per cent).
When benefit plans are available to new retirees, there may be an age and service requirement at retirement (i.e. age 55 and ten years of service). Also, some organizations allow retirees to receive benefits only until age 65 when they can potentially qualify for provincial drug benefits (e.g. Ontario Drug Benefit Plan).
Annual health care premiums for retirees ($987 single; $2,129 family) are higher than for active employees ($806 single; $2009 family). About half of employers offering retiree benefits such as health, dental, life and accident insurance pay 100 per cent of single premiums. The remaining organizations either share the cost or require premiums to be paid completely by the retiree.
Mercer senior partner Brian Lindenberg recently chaired a Conference Board Benefits Summit based on the survey results. In spite of the deceptively rosy picture revealed by the data, he says more and more companies are finding ways to reduce or eliminate group benefits for new retirees and they are very rare in companies with under 50 employees.
The Supreme Court of Canada ruled in the 1993 Dayco case that employers cannot eliminate or reduce vested post-retirement benefits of current retirees.
Related: What about benefits when you retire?