Sites
On April 19, 2021, the federal government released its first budget in two years – Budget 2021: A Recovery Plan for Jobs, Growth and Resilience.
According to media reports, the budget contains over 280 new commitments – many of which aim at resolving inequities and inequalities revealed by the COVID‑19 pandemic.
Public investments this significant have potential impacts on every organization in Canada. Employers and employees alike will feel the effects.
Along with supports to provincial healthcare systems, the federal government extended the COVID‑19 income support programs it put in place at the beginning of the crisis. If the budget bill passes, the eligibility criteria and end date of these programs will not change, but the length of time an individual can receive the Canada Recovery Benefits, the CRB, CRSB, CRCB, has increased to 50 weeks, 4 weeks and 42 weeks respectively. EI regular benefits maximum duration has also increased to 50 weeks.
The government also addressed issues that arose from the design of other pandemic-related benefits. Publicly listed corporations that receive wage subsidies after June 5, 2021 must repay those subsidies, in the event that the aggregate compensation for specified executives – essentially their Named Executive Officers – during the 2021 calendar year exceeds that same compensation in 2019.
If the COVID‑19 pandemic has proven anything, it is that health and the economy are inextricably linked. What is true in the workplace is true for the nation: investments in health and wellbeing deliver dividends, in terms of productivity, reduced absenteeism, and increased engagement.
That is why we applaud the direction the government has taken on mental health and other wellbeing programs. These include investments in mental health supports for populations disproportionately impacted by COVID‑19, as well as in the Wellness Together portal, which provides Canadians free mental health and substance abuse resources. We will continue to monitor these programs for any impact to private benefit plans.
We also appreciate the government continuing to recognize the need for a universal pharmacare program. While no new funding was included in this budget, Health Canada is working through submissions from Canadians on rare disease drug supports. Mercer submitted a position paper advocating for private plan sponsors and we look forward to continuing to do so as the government moves forward.
COVID‑19 has also highlighted flaws in some of the existing support systems Canada has in place for workers, such as Employment Insurance (EI). It is in that light that the government announced that consultations would begin to modernize the EI program to be inclusive and flexible, and to remedy the systemic gaps the pandemic laid bare.
An additional change to the EI program is the extension of EI sickness benefits from 15 to 26 weeks – to come into force in the summer of 2022 – as well as a commitment that the Canada Labour Code will be amended accordingly.
Reforms to EI are a critically needed measure for Canadians – but as an employer, you will feel the impact on disability plans and with any potential changes to the funding structure or rebate programs. Employers must be included in the consultations before any changes to the EI program – and particularly its funding model – are made.
As the details of the consultation process are defined, be sure that we will advocate for employers and plan sponsors, to ensure that you have a seat at the table.
Employers who sponsor Defined Contribution (DC) pension plans know that a key systemic challenge for these plans is decumulation. Retirees can have a hard time determining the right level of spending and, as a result, tend to use up their DC account too slowly, meaning they may enjoy a lower quality of life than they might otherwise.
Changes to Old Age Security (OAS) announced in the federal budget may help mitigate that situation.
Starting in July 2022, Seniors aged 75 years old and older will receive a 10 per cent increase to their OAS payments, as well as a one-time grant of $500 in August 2021 if they are expected to have reached age 75 in June 2022.
This move shifts the incentives around decumulation – if someone newly retired at 65 knows that their OAS pension will pay out more at 75, they will be encouraged to spend more earlier. This will somewhat help Canadians deal with longevity risk. But, in isolation, this will not properly resolve all issues around decumulation. Resolving those issues will require broader policy initiatives. We see in the budget good signs for upcoming introduction of ALDA and VPLA – two awaited measures from the 2019 Budget – but are eager to see more details on these new decumulation options in upcoming bills.
Additional measures taken in the budget include proposals to modernize the regime for unclaimed pension assets and to review the funding framework for federally regulated Negotiated Contribution Pension Plans, and the introduction of administrative changes simplifying the correction of contribution remittance errors in DC plans.
While these changes are welcome, we are disappointed by the government’s continued inaction on a substantive review of the funding framework for federally-regulated Defined Benefit (DB) Pension Plans.
We have long held that all organizations – public and private – must invest in Diversity, Equity and Inclusion (DEI) in their own operations and hold themselves accountable. We are pleased to see the government take a leadership role in promoting workplace diversity, requiring Crown corporations to implement gender and diversity reporting beginning in 2022. We are also pleased to see a commitment to diversifying the Public Service’s talent pipeline, by amending the Public Service Employment Act to affirm the importance of a diverse and inclusive workforce and avoid biases and barriers in public service hiring.
Other measures included in the budget look to resolve these inequities on a national level. Chief among these is one of the Budget’s flagship commitments – a national Early Learning and Childcare System, which aims to provide every Canadian access to $10 per day childcare within five years. We applaud this initiative.
In our 2020 When Women Thrive report, we found that Canada is trailing its global peers in identifying gender-specific health needs in the workforce, and also in measuring the health and financial wellness of employees by gender. A national childcare program would help address one of those gender-specific financial wellness and career challenges – across the economy.
The government made several other announcements aimed at this goal – among them a $15 minimum wage and protection for gig workers in federally‑regulated industries.
As always, we remain committed to keeping you informed and helping you however we can.
If you have questions about the options available to you, please contact us today.
Africa