getting the benefits from benefits may 2011

Getting the benefit from benefits

by Toronto Training and HR

May 2011

Contents3-4 Introduction to Toronto Training and HR5-6 Why have an employee benefits plan7-8 Most common employee benefits

provided9-14 What is typical?15-21 Critical illness insurance22-24 Employee assistance programs25-26 Drill27-30 Retirement plans31-36 What do people REALLY think about pensions? 37-38 Ethical pensions39-44 Outsourcing benefits45-48 Overtime…for managers?49-50 Benefits communication51-52 Selecting a benefits provider53-54 Making benefits effective55-58 Case studies59-60 Conclusion and questions

Introduction

Introduction to Toronto Training and HR

• Toronto Training and HR is a specialist training and human resources consultancy headed by Timothy Holden

• 10 years in banking• 10 years in training and human resources• Freelance practitioner since 2006• The core services provided by Toronto Training and HR

are:- Training course design- Training course delivery- Reducing costs- Saving time- Improving employee engagement &

morale- Services for job seekers

Why have an employee benefits plan?

Why have an employee benefit plan?

EMPLOYERS PROVIDE BENEFITS TO EMPLOYEES:Comply with provincial and government regulationsMotivate and support existing workers, particularly the high-performers that are important to retainHelp attract new employeesStrengthen the long-term commitment of employees to the organizationReduce stress associated with health and financial difficultiesImprove the mental and physical health of employees

Most common employee benefits

provided

Most common employee benefits provided

Medical insuranceDental insuranceVision careGroup-term life insuranceDisability insuranceCritical illnessEmployee assistance plan

What is typical…medical insurance

What is typical…medical insurance

Prescription or prescribed drugsPrescription eye glassesContact lensesProfessional services and paramedical practitionersSemi-private hospital roomOut of province and out of country hospital and medical expensesAmbulance, lab chargesHearing aidsMedical suppliesProsthetics, appliances and medical equipment

What is typical…dental insurance

What is typical…dental insurance

Diagnostic and preventative treatmentMinor restorative treatmentsMajor restorative treatmentsOrthodontics

What is typical…vision care

What is typical…vision care

Prescription eye glassesContact lensesLaser eye surgery

Critical illness insurance

Critical illness insurance 1 of 6

WHY IS IT IMPORTANT?Disability insurance replaces income but is insufficient for the added burden of medical expensesGroup health coverage has restrictive limitation and maximumsSocial medical care is eroding and cannot be relied uponPersonal and retirement savings have intended purposes other than medical expensesMost critical illness victims make a full recovery after a lengthy expensive treatment period


CANADIAN STATISTICS1 in 2 will contract heart disease1 in 2 heart attack victims are under age 651 in 3 will develop some form of life threatening cancer1 in 4 currently suffer from cardiovascular disease70% of open heart surgery operations each year are coronary bypasses1 in 4 will suffer kidney failure1 in 20 run the risk of having a stroke before age 701 in 500 people will suffer from multiple sclerosis


CANADIAN STATISTICSHeart attack, cancer and stroke are the three most common diseases1 in 4 will contract cancer or heart disease before they retireTwo-thirds of the cost of cancer treatment is not covered by provincial medical plans30% of cancer victims are completely cured75% of stroke victims survive the initial occurrence95% of heart attack victims survive the initial occurrence


CONDITIONS THAT COULD BE COVEREDCancer (life-threatening)Heart attack stroke (cerebrovascular incident)Coronary artery by-pass surgeryMultiple sclerosisKidney failure (end-stage renal disease)Major organ transplantParalysis (two or more limbs)


CONDITIONS THAT COULD BE COVEREDDeafnessBlindnessParkinson’s DiseaseAlzheimer’s DiseaseMotor Neurone DiseasePermanent total disabilitySevere burns


WHAT TO LOOK FOR IN CRITICAL ILLNESS COVERAGEClear definitions (medical terminology)No restrictions at the time of claim, for instance HIV exclusionsComprehensive scope of coverageLump sum benefit payment for claims

Employee assistance programs

Employee assistance programs 1 of 2

AbsenteeismProductivityAttritionDisability

Employee assistance programs 2 of 2

FEATURES TO LOOK FORDirect accessQuick responseProfessionalConfidentialityOff siteDirect treatmentAppropriate coverage

Retirement plans

Retirement plans 1 of 3

DEFINED BENEFITS PLANSAdvantagesDisadvantagesDEFINED CONTRIBUTIONS PLANSAdvantagesDisadvantagesGROUP REGISTERED RETIREMENT SAVINGS PLANSAdvantages Disadvantages


WHICH PLAN IS BEST FOR OUR ORGANIZATION?Amount to spendInternal resources and people available to manage and administer the planRisk of guaranteeing a set pension (Defined Benefit) or leaving the responsibility for the performance of the retirement funds (Defined Contribution)


POINTS TO REMEMBERChanges in life expectancy, the economic downturn and mobility in the labour market have contributed to the shift from defined benefit (DB) to defined contribution (DC) schemesMany employees perceive DB plans to be of greater value than DC, but this is not necessarily so-low DB accrual rates may produce a lower return than good contribution levels to a DC planEmployers should clearly explain the good points of moving to a DC plan, such as the employer contributions

What do people REALLY think about pensions?

What do people REALLY think about pensions? 1 of 5

It is a valuable recruitment tool It is a valuable retention toolAs an organization, they feel responsible for employees‘ long-term financial wellbeingThere is too much regulation involved in running a pension scheme They have to offer a pension scheme because competitors do


Pension schemes have become too expensive to run Pensions are the benefit that most employees want above all other benefits Employees have lost trust in employer-provided pension schemes Most employees would prefer to forgo the pension scheme and have more basic pay


REASONS PEOPLE DON’T JOINAffordabilityOther financial demands and interestsApathy/inactionLack of understanding about pensions generallyLack of interestLack of awareness about pensionsLack of trust in pensionsNot seen as a good investment


ENSURING PEOPLE HAVE AN ADEQUATE PENSION IN RETIREMENTActively encourage pension scheme membershipEnsure employer contributions are adequateActively encourage employees to make adequate contributionsProactively educate employees on pensionsOffer access to independent financial adviceInclude pensions as part of total reward statementsOperate compulsory minimum contributions for employer and employees


MEASURING RETURN ON INVESTMENTNo action takenBy looking at pension scheme take-upBy including it in a staff satisfaction surveyBy looking at retentionBy looking at recruitmentBy including it in a staff engagement surveyThey do not but plan to in the future

Ethical pensions

Ethical pensions

Ethical investment funds enable people to invest pension contributions in companies that have ethical practicesMore employers are offering an ethical pension fund optionA fund can actively seek to invest in organizations considered to be ethical, or screen out those considered to be involved in unethical activitiesPositive criteria include environmental conservation, equal opportunities and animal welfare. Negative criteria can include health and safety breaches, poor relations with employees and customers, and nuclear power

Outsourcing benefits

Outsourcing benefits 1 of 5

COSTS GETTING REDUCEDMaturing industryIncreased competitionOffshoring

COST OF INTERNAL ADMINISTRATIONInternal administrative peopleIT expenses


RISK CONSIDERATIONSMaturing industryIncreased competitionOffshoring

COST OF INTERNAL ADMINISTRATIONStaffing riskSystems riskDatabase riskError risk


ADMINISTRATION OPTIONSOnline sites providing access to tools and resourcesExpanded capacity to ensure consistent serviceCHALLENGES TO INTERNAL BENEFITS ADMINISTRATIONPlan design and security changes that impact administration requirementsNew employer groups or plans added through acquisitionHigh transaction volumes driven by a reductionin force or location closureAdministrative changes driven by new legislative or regulatory compliance


IS OUTSOURCING RIGHT FOR YOUR ORGANIZATION?Employee numbers are limited, so they struggle to keep up during annual enrolment or when other new changes are implementedOne or two people on the HR team hold much of the historical knowledgeThe system (or worksheet) currently used is outof date and difficult to modifyIt’s difficult to get support from the IT departmentRecords are not centralized—some in paper files,some in other databases


IS OUTSOURCING RIGHT FOR YOUR ORGANIZATION?The organization struggles to keep administrationconsistent with the most recent law changesCalculation or administration errors have led to costly legal settlementsIt is desirable for employees to have online tools so they could model their own pension estimates instead of calling HREmployees can’t get daily work done because of participant calls

Overtime…for managers?

Overtime…for managers? 1 of 3

Supervision of other employeesRole in running the organizationHow much the individual earns


IN SUMMARY-employees may still have a right to receive overtime even if they’re considered managers under the employment standards laws if:

they’re covered by the mandatory overtime provisions of the employment standards law; and/orovertime is required under the terms of the employment contract or collective agreement.

Consider not just what the employmentstandards law says but what the contract requires


POSITION IN ONTARIOPerson “whose only work is supervisory or managerial in character and who may perform non-supervisory or non-managerial tasks on an irregular or exceptional basis” exempt from overtime; and regulations don’t define “supervisory or managerial” (Exemptions, Special Rules & Est. of Minimum Wage Reg., Sec. 8(b)).

Benefits communication

Benefits communication

Old approachNew approach

People get distracted and forget; repetition, across time, is vitalTargeting fuels motivation and improves outcomesWants are more important than needsYour “hero” is the customer, not the plan or program

Selecting a benefits provider

Selecting a benefits provider

AT THE MEETINGAssess your organization and needs so that they can recommend an appropriate benefits structureExplain in detail the costs, detailed benefits and admin options availableHelp you to implement the benefits plan

Making benefits effective

Making benefits effective

Consider your objectivesTune into employeesAgree your main messageDevelop a strong campaign concept Make it personal Communicate clearly and conciselyEnsure data is up to Build momentum and launch with a bang! Follow up and send reminders

Case study A

Case study B-Oracle

Case study B

Conclusion & Questions

Conclusion

SummaryQuestions

getting the benefits from benefits may 2011

Business

specialist training

hrtoronto training

benefitsby toronto training

training course delivery

training course design

employee benefits plan7

benefits effective55

benefits communication51