MONTREAL, June 23, 2025 – As Canadian employers grapple with heightened economic uncertainty and greater financial pressures on budgets, steering the right course on benefit strategy is more challenging than ever. This is according to a survey by WTW (NASDAQ: WTW), a leading global advisory, broking and solutions company. As a result, companies are turning to smarter spending, sharper focus and using benefits as a strategic tool to drive engagement, retention and purpose.
The 2025 Benefits Trends Survey found rising benefit costs to be the top issue (73%) influencing Canadian employers’ benefit strategies in 2025, up from 40% in 2023. Other top concerns include rising mental health issues (55%), competition for talent (54%), expectations for an enhanced employee experience (43%), and cost of living (32%).
“After a long period of high benefits inflation and in the face of a possibly weakening economy, employers are taking a step back and looking to focus on what drives real value for employees and the business. That means targeting support and spending on the benefits that matter most, enabling personalization and helping employees make better decisions,” said Anne-Marie Nawar, Canadian Health & Benefits Insights & Solutions Leader.
As the cost of medical care continues to grow in Canada, employers face greater challenges in delivering their strategy in key areas such as wellbeing programs (32%), leave benefits (30%) and health benefits (26%).
To address these concerns, employers are shifting their strategy. Few are expanding their benefit portfolio, choosing to instead focus on extracting value from their current offerings and improve financing, employee experience, analytics and administration.
Compared to just 10% in the past year, 55% of employers plan to reallocate or rebalance spend in the next three years. 64% plan to tackle high costs by enhancing value or switch to better-value vendors across health, retirement and risk benefits. Almost half (44%) plan to tackle high-cost medical conditions.
Eager to address employee pressure points, companies are also looking to improve the following priority areas over the next three years: mental health, maximizing value, health benefits, financial wellbeing and retirement benefits. Many plan to increase their use of communication and use nudges and navigation solutions to influence behaviors and enhance the employee experience. Regularly reviewing vendor performance, including employee feedback, is also a key action employers are taking.
“Organizations are facing more pressure than ever to deliver the right benefits strategy. Finding innovative solutions for old and new challenges and reallocating spend on benefits that deliver true value is a good start. There is still a long way to go to address these pressure points, but employers are headed in the right direction by focusing on what matters most to their employees,” said Nawar.
The 2025 Benefit Trends Survey was conducted from early March to mid-April. Respondents include 145 Canadian employers, representing a broad range of industries in both the private and public sector.
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