In late January, we launched a series of articles about trends affecting benefits in 2025, with the first two topics surrounding public policies and remote work monitoring. In this third article, we discuss the affordability crisis and the role employers can play in mitigating issues related to cost of living. HR programs and policies, group benefit plans and group retirement programs can be used by organizations wanting to stand out – and AGA can identify and implement solutions that fit with their employer brand without necessary breaking the bank.
Affordability crisis – is it over yet?
Inflation has been steadily on the rise during the 2020s. Many Canadians have been struggling to make ends meet amidst a widespread affordability crisis impacting housing, food, childcare, healthcare, and education. Even with lower increases through 2024, recent events such as trade policies contemplated by the new U.S. administration may reignite cost-of-living issues.
The affordability crisis is weighing heavily on the shoulders of low- and middle-income Canadian households, negatively impacting employee productivity and overall wellbeing. Employers that invest wisely in supporting their employees with these challenges can expect to reap great rewards.
Housing
The situation: Skyrocketing housing prices1; surging rental costs; housing shortage2 in Canada.
How plan sponsors can help: Recognizing this issue and exploring solutions that allow plan member savings to serve dual purposes – homeownership goals and adequate retirement funding –such as:
- Offering flexible and purpose-driven savings options to address these competing priorities. empowering younger plan members to meet their financial objectives
- Allowing to allocate savings to specific individual goals – retirement, homeownership or both – through a combination of vehicles such as Defined Contribution pension plans, group RRSPs, group Tax-Free Savings Accounts (TFSAs) and Tax-Free First Home Savings Accounts (FHSAs)
Child Care and Education
The situation: High childcare and tertiary education tuition fees; shortage of low-cost spaces provided by government programs; student debt burdens.
How plan sponsors can help:
- Adding childcare expenses under a taxable wellness account
- Offering childcare subsidies or on-site childcare facilities, although these do not come with a direct tax credit for the employer
- Helping with the cost of tertiary education through tuition assistance reimbursement, graduate assistance programs and specific employment-related training and student loan repayment programs
Generational Impact
The situation: Young Canadians being disproportionally impacted by high housing, tertiary education and childcare costs; decline of home ownership; stagnant wages, precarious employment, student debt and rising inflation delaying financial independence3.
How plan sponsors can help: Addressing different generations in the workforce through flexibility, for example by:
- Offering flexible benefit plans and healthcare spending accounts
- Implementing flexible work arrangements, helpful for parents struggling to find affordable childcare and reduce the impact of long commute times for those who cannot afford to live close to their location of work
- Giving access to competitive retirement and savings programs, complemented by financial literacy programs and financial advisory services to help employees improve their personal financial management skills
Impact on stress and mental wellbeing
The situation: Negative impact of affordability issues on mental health, family dynamics, and social lives4, leading to anxiety and depression.
How plan sponsors can help: Employers can support their employees’ mental wellbeing by:
- Providing adequate mental health paramedical coverage
- Adding services to enhance access to care, such as virtual mental healthcare and internet-based Cognitive Behavioural Therapy (iCBT)
- Promoting its Employee and Family Assistance Program (EFAP) program for short-term counselling services, work-life-balance support, financial and legal services and crisis support – or implementing a new one
- Providing addiction and substance use support through niche suppliers
What’s next?
Employers have a vested interest in helping their employees navigate through the current uncertain economic environment. Physical and mental health benefits and services, savings vehicles and financial literacy, and work/life balance policies are pillars of a sound approach.
AGA helps its clients elevate their benefits offering with a full suite of group benefits and group retirement services. AGA has also created an Exclusive Benefits for Plan Members Program which provides plan members access to products and exclusive offers to support their physical, mental, and financial health. Only members of an AGA group insurance plan will be able to get these offers via the AGA plan member portal.
Your AGA advisor is at your service to design a benefits strategy that will meet today’s challenges.
1 Unraveling the Housing Crisis – Canada, Pine Canada Financial Corporation
2 Government Can Fix the Housing Affordability Crisis – Here’s How, Canadian Chamber of Commerce
3 In Ontario, over 53% of young adults are living with parents.
4 Two-thirds of renters report mental health impacts from rent expenses, while homeowners face similar stress from mortgage payments.