2023 Consultants Report: How are consultants helping plan sponsors make the most of their benefits, retirement data?

“It was really key in terms of looking at our whole package come annual review time to make a case to the business for enhancements,” says Lauren McDougall, people experience advisor at Xero Canada. Her team also works with Xero’s group benefits broker to gain insights into which parts of the plan employees are using the most. “A lot of the changes we make primarily come from the insights of our people.”

Read: North American employers not maximizing benefits data compared to global counterparts: survey

Plan sponsors are increasingly turning to their consultants for help tapping into and interpreting their benefits and retirement savings data. From benefits claims trends and employee survey results to pension or savings contribution and participation rates, these data sources are giving plan sponsors a clearer view of what employees need and want.

The trend has sped up over the past few years, as insurance carriers make more data and analysis tools available, the coronavirus pandemic prompts plan sponsors to rethink their benefits offering and a tight labour market forces employers to compete for talent.

“Benefits program data goes beyond informing the plan; it also ties into employee engagement and satisfaction,” says Taylor Valee, senior consultant and team lead of national enterprise group solutions for People Corporation Inc. “It’s being applied in so many ways that it wasn’t tradtionally thought about before, but plan sponsors are really starting to see that tie between health claims and where they’re sitting in terms of attraction and retention of talent.”

Making proactive changes

Sherry Shaw, vice-president and practice lead of group benefits consulting at Cowan Insurance Group, says plan sponsors are “much more sophisticated because they know the data is out there” and regularly ask to draw connections from different aspects of their plan to identify the common health concerns facing plan members and opportunities for intervention.

“Before, it was always a little bit of ‘test and try,’ but now, because we can do modelling, they can make relatively informed, statistically accurate decisions that will be impactful.”

Read: 2023 BPS coverage: Diabetes, asthma, ADHD account for high drug claims in 2022

In the case of diabetes, which is a significant cost driver in many plans, some plan sponsors are now adding health coaching and other supports, notes Shaw, and focusing on preventative solutions for pre-diabetic employees, which she calls a major shift in thinking. “It’s driving their behaviour to be more proactive than reactive.”

Claims and usage data can also be used to help plan sponsors gauge employee engagement with internal health and wellness initiatives, says Valee. Recently, a plan sponsor she works with hosted a week of mental-health and wellness programming. “And like clockwork, the next month we saw an increase in mental-health claims — practitioners, not drugs, because people were going on their employer’s digital platform and using it. There’s a lot you can do with that data to shape your health and wellness programs.”

Michèle Boisvert, health business partner and lead of operations and technology at Mercer Canada, says she’s seeing more employers asking to conduct employee surveys or focus groups, feedback mechanisms that she thinks have been overlooked in the past. “This is crucial to have alignment. Yes, we have market data and trends, but you need to make sure it’s what your employees actually want and value and addresses their perceived gaps in the benefits program. And for every generation, this is different.”

Plan sponsors are also frequently asking to benchmark their offerings against employers of similar sizes or within the same industries, says Valee, then refreshing their plans, if necessary, to stay competitive in a tight labour market.

Read: 2023 Group Benefits Providers Report: Prioritizing partnerships, personalization and prevention

While Boisvert says requests to benchmark traditional health plans are common, Mercer is also starting to receive requests from some employers for data on the market prevalence of innovative benefits, such as fertility and gender affirmation supports and digital health solutions. “With that data, they can position themselves as early adopters.”

Data availability, consistency still challenges

Plan sponsors have better access to data than in past years, but barriers still rem-ain to getting the full value out of it.

The types of benefits and retirement plan data available differs between carriers, something multiple consultants say they have to navigate when getting access to the kind of plan metrics that employers are interested in or when benchmarking clients against their peer groups.

“If carrier A can’t provide [a certain] kind of reporting, we can talk about what’s available in the marketplace,” says Teresa Norris-Lue, vice-president of pension and retirement consulting at Cowan. “The degree to which carriers provide certain information varies a fair amount.”

Access to timely data for benchmarking purposes can be a challenge, says Leanne Bayley, employee benefits and pension consultant at Selectpath Benefits and Financial Inc. She works with third parties that have an easier time accessing current market trends rather than previous end-of-year data. “It’s something we’re being asked about all the time to make sure our employers are attractive to great employees. We’ve always been able to measure that, but [the detail is] much finer now.”

While large employers have the ability to dive deep on claims trends and disease states in their employee population, smaller plan sponsors are much more limited in what they can see, says Dave Patriarche, president of Mainstay Insurance Brokerage Inc., who works with many small employers.

To protect employees’ privacy, companies with fewer than 10 staff can’t receive any claims data. Even if an employer hits the 10-employee threshold, if there’s one claim of a certain nature — such as a high-cost drug claim — they won’t be able to receive data on it. Employers with 25 or more employees can receive more data, such as the top drug identification numbers claimed by plan members.

Read: Information security, data privacy an increasing concern with flexible working: study

“It’s almost impossible to manage plans [for employers with fewer than 10 staff],” says Patriarche. “The daily conversation is how to get information to help the [plan sponsor] if the insurer [can’t] share what the drug is, what the problem is, if it’s ongoing or not ongoing.”

However, consultants have other ways to help smaller employers leverage data. People Corporation turns to data from its own plan sponsor client base as well as industry reports, surveys and benchmarking data to provide those employers with the bigger picture. “If you just look at one small organization’s data, that can be skewed a bit and the findings might be a bit more biased,” says Valee. “We can take a pool of small organizations in the 10-to-20 employee space . . . and they can still make data-driven decisions.”

Dialling into plan member behaviour

On the retirement side, using data to track investment performance and monitor service providers has become a key part of compliance and governance, says Brett Jennings, national defined contribution advisory leader for Mercer Canada.

Both Jennings and Norris-Lue say employers are now looking to use plan data to ensure strategic outcomes for employees, such as boosting retirement readiness or increasing contribution rates.

Norris-Lue works with plan sponsors to analyze plan member participation, contribution and withdrawal rates, as well as members’ investment selections and engagement with their record keepers’ digital tools, using the insights that emerge to guide their communications strategy. “On the theme of low participation rates, the focus may be on raising awareness of the plan and making it simpler for people to enroll. We may make recommendations on investments based on how [the current lineup] is being utilized.”

Read: 2023 Top 100 Pension Funds Report: How to improve retirement outcomes across diverse plan member groups

With data on retirement plan members’ investing behaviours, dates of birth, salaries, lengths of service, job titles and account balances, Mercer can conduct retirement readiness analyses for plan sponsors that assess employees’ ability to retire without outliving their savings. “It can help you identify vulnerable groups, how women are impacted differently than men or even look at employee classifications based on their job or income level to understand how successful your program is,” says Jennings.

Rejean Tremblay, Aon’s chief commercial officer of wealth for the East region, says the consultancy conducts analyses on employees’ happiness with their retirement program versus its cost and how plan sponsors can boost member satisfaction for the same cost or reduce costs while maintaining current levels of satisfaction. The analysis involves surveying employees and offering them tough decisions between various plan components, such as an earlier retirement age or indexed pensions for life, to determine what’s most important to them and optimize the plan accordingly.

But Jennings says plan sponsors first need an overarching strategy or goal for their retirement savings plan before digging into their data. Having a broader vision informs the type of data they pursue and how to evaluate the results, he adds, noting that, without one, plan sponsors won’t know what to do with the insights they ultimately receive from an analysis project.

As a hypothetical example, he describes a plan sponsor that learns through a retirement readiness analysis that most employees won’t be ready to retire until age 67 — that conclusion, he adds, invites more questions that only a strategy can address. “Are we comfortable with that? Can we make improvements and spend more dollars or are we going to communicate around the program because employees are leaving money on the table? . . . The problem with doing projects without setting a strategy is you have great results, but if you don’t know the direction or outcomes, in principle the data means nothing.”

Future applications

Jennings expects to see DC plan sponsors take more of an interest in tracking plan members’ actions in the decumulation phase, such as understanding when they retire and whether they’re using their account balances to buy annuities or transfer their funds to a decumulation product like a registered retirement income fund or a life income fund.

Read: ACPM urging CAPSA to prioritize decumulation in draft 2023-2026 strategic plan

The U.S. market is already moving in this direction, he notes, and more in-plan decumulation options are becoming available in Canada. However, according to an October 2022 C.D. Howe report, fewer than five per cent of programs administered by Canada’s largest insurance companies currently offer decumulation options. “As drawdowns become more impactful in DC plans, plan sponsors will pay more attention.”

In the human resources space, Tremblay is seeing data analysis start to move into the realm of workforce managment, such as assessing a prospective hire’s personality fit for an open role or measuring the happiness or performance levels of a company’s employees segmented by location, education, background and more.

Some insurance companies have already started using plan members’ claims data to make connections and send targeted messages that point them towards other relevant supports in their plan. Boisvert expects this to continue to ramp up and for plan sponsors to similarly personalize their communications. “There’s a great opportunity to be more precise, . . . but without being invasive. It makes it more personal and meaningful.”

Kelsey Rolfe is a Toronto-based freelance writer.