In its pre-budget submission to the federal government, the Canadian Life and Health Insurance Association highlighted variable payment life annuities, automatic features in pension plans, pharmacare and virtual health care as areas that require attention.
While the CLHIA said it supports the concept of VPLAs as a decumulation solution for defined contribution plan members, it also noted how important it is that the associated legislation and regulations are principles-based, ensure sufficient scale, provide for a single Canada-wide pooled solution under both federal and provincial legislation and use market-based pricing.
Read: CAPSA developing multi-jurisdictional VPLA framework for DC pension plans
More specifically, the letter suggested the VPLA framework allows funds from other registered retirement plans — not just those from DC pensions or pooled registered pension plans — in order to maximize the ability of Canadians to effectively secure a post-retirement income stream. This includes funds in registered retirement savings plans, registered retirement income funds, deferred profit-sharing plans, locked-in retirement accounts and life income funds.
Since the federal government passed legislation to support VPLAs in 2021 with little movement since, the CLHIA strongly encouraged it to work with provinces to develop a VPLA framework that allows for maximum flexibility in terms of a design framework and a harmonized experience for all Canadians.
The CLHIA’s letter also pointed to the significant savings shortfall and declining pension coverage for individuals across Canada, noting an estimated 40 per cent of employees in Canada don’t take full advantage of their workplace plans, leaving as much as $3 billion on the table annually in free money in the form of matching employer contributions.
As a clear solution, it highlighted automatic features — such as auto-enrolment, auto-contributions and auto-escalation — as effective ways to help employees take full advantage of their workplace savings plans. The CLHIA recommended legislative amendments to the Pension Benefits Act and the Canada Labour Code so employers can make payroll deductions to encourage employees to participate in a workplace savings program using automatic features while allowing them to opt out if they decide not to participate.
Read: A look at the landscape for automatic features in Canadian pension plans
“Federal leadership in introducing these reforms would not only improve the retirement security of those employed in federal workplaces, it would also serve as a precedent for provinces to follow in bringing the same benefits to the many more workers employed in provincially regulated workspaces.”
The CLHIA’s letter also recommended the government supports universal access to medications through a “fill-the-gap” system and focus resources on those without access to prescription drug coverage.
The insurance industry is concerned the Pharmacare Act is widening the gaps in this coverage, with current agreements with provinces supporting single payer pharmacare. In the letter, the CLHIA said this risks disrupting the coverage of nearly four million Canadians for their diabetes medications and contraceptives.
“A better approach is to target scarce public resources to those who do not have existing drug coverage. Savings from not duplicating existing prescription drug access via employer plans could be reallocated to expand access for those who need drug coverage to a greater number of medications.”
Read: Innovative Medicines Canada calling on feds to clarify impact of pharmacare on private drug plans
The submission also highlighted access to virtual care, noting more than 10 million Canadians had access to employer-funded virtual care through their workplace benefits plans in 2023, amounting to more than half a million virtual care visits. However, the CLHIA also noted that virtual care in a country as diverse as Canada — and, in many cases, remote — can create significant health improvements for people across the country.
The letter called on the government to provide flexibility to address out-of-pocket payment for care without removing access to employer-funded virtual care. “The federal government should protect access to health care by permitting and encouraging employer-funded virtual care through clarifying its January 2025 interpretations of the Canada Health Act.
“CLHIA would be happy to work with Canada on a clarification that would protect access through the employer-funded model while ensuring Canadians do not pay out of pocket for health care.”
Read: How national health-care legislation could impact benefits plan sponsors’ virtual care offerings