Dental: Perhaps surprisingly, the peak age for dental claims is between 40 and 55. Thus, continuing dental insurance coverage past age 65 is not as expensive as some other types of insurance. Covering employees beyond age 65 will increase costs, but not as dramatically as extending most other insurance benefits. Group Life Insurance: Employers who extend group life insurance benefits to those beyond age 65 will face significant cost increases if the same benefit levels are continued. For this reason, many plans which continue benefits beyond age 65 do so subject to reductions in benefits. Pension contributions: In all provinces, pension contributions to Registered Pension Plans or pension accruals must continue beyond 65. The only exception is if the plan has a maximum service rule, in which case if the maximum limit is attained after age 65, accruals could stop. Note that in Québec, the law requires that the benefit earned at age 65 be increased actuarially, but there is no requirement to add accruals after age 65. Manitoba has proposed a new rule that the greater of the two (actuarial increase or additional accruals) be provided for postponed retirement. Also note that under the Income Tax Act, accruals must cease by the end of the year the member attains age 69, and the pension must also commence at that point, even if the member is still employed. Long Term Disability (LTD) & Workers’ Compensation: Almost all Canadian LTD plans terminate coverage at age 65. This coincides with the availability of Canada Pension Plan (CPP) benefits and benefits under most pension plans. The cost of continuing LTD coverage past age 65 is significant, although many plans in the United States continue coverage to age 70, particularly if a disability is incurred after age 60. LTD coverage may be especially desirable from the employer’s point of view, since both Ontario and Newfoundland & Labrador have provided for workers’ compensation coverage to cease at age 65, even if an employee keeps working. That raises a host of questions for employers if an over-65 employee is injured at work. In particular, legislation prevents workers covered by workers’ compensation from suing their employers for workplace injuries. Will that limitation still apply to workers over 65 if they no longer receive workers’ compensation coverage? Will employers be subject to lawsuits for the costs of their medical treatment and lost wages? Continuing LTD coverage may help offset at least some of an employer’s potential liability for workplace injuries to its 65-plus workers. Adjusting to the Change: Performance Management It’s only fair that employees who choose to keep working past age 65 be expected to maintain their productivity. Mandatory retirement has sometimes been used to let employers off the hook when dealing with aging employees whose performance is declining. It was often much simpler to let things go with the knowledge that the employee was nearing age 65, rather than deal with the performance issues directly. That will no longer be a sensible approach, since it will no longer be certain that an employee will leave at age 65. Instead, employers will need to continue their normal performance management practices throughout an employee’s career. In addition, employers need to make sure that older employees are given equal |
