Group Benefits
Why offer employee benefits?
Offering employee benefits—supplementing individual coverage with additional insurance products—is one of the best ways to attract top-notch employees to your company.
In business, you want to generate revenue while keeping expenses as low as possible. That's why many employers try to minimize benefits. While that can reduce costs short-term, it often creates bigger challenges over the long term.
Advantages of investing in group benefits
- Attractiveness to new hires: When your company offers fewer benefits than competitors, competitors tend to attract the best new hires.
- Healthier employees: When preventive care, medications, and treatments are affordable, employees are more likely to stay healthy and manage stress.
- Lower tax burden: Employer-provided group benefits can reduce taxable revenue and typically do not increase CPP, WCP, or EI payments. In many cases, employer premium contributions are tax deductible.
- Incentive to stay: Health coverage and perk programs help employees feel supported while building families or caring for aging parents.
- Positive positioning: Many employees—especially younger workers—value employers who demonstrate care and long-term investment in their people.
Common employee benefits
You can offer almost any imaginable perk to employees, but these are some of the most common group benefits offered by Canadian businesses.
- Supplemental health coverage: Covers consultations and procedures not included under Canada's public health system.
- Coverage for family members: May extend benefits to spouses, children, and other dependents.
- Travel health benefits: Helps cover medical needs when employees travel for work or outside Canada for personal trips (plan-dependent).
- Dental benefits: Coverage for preventive dental care and dental procedures not included under public plans.
- Life insurance: Allows employees to supplement their individual life insurance with workplace coverage.
- Disability insurance: Protects a portion of income if an employee must miss work short-term or becomes unable to work due to disability.
Investing in the future: group retirement plans
In addition to group insurance, many employers offer competitive retirement plans. Often, businesses match a percentage of employee contributions as part of total compensation.
Registered Retirement Savings Plans (RRSPs)
Employees can contribute to RRSPs and employers can match contributions. Keep in mind employer contributions may count as taxable income for employees. The combined total (employee + employer) should not exceed the annual deduction limit.
Other types of retirement investments
In addition to RRSPs, some employers support retirement income options such as Life Income Funds (LIF) after age 55. These accounts can be used to pay out locked-in RRSPs and Locked-In Retirement Accounts (LIRAs), including pensions transferred from other companies.
How Life Income Funds (LIFs) are commonly used
- Flexible withdrawals: After funds are transferred, withdrawals follow minimum and maximum rules set by the plan and regulations.
- Real-life needs: Employees may use funds for education costs, caring for aging parents, or other priorities.
- Beneficiary designation: Employees can name beneficiaries to receive remaining funds after death.