This report summarizes the results of a comprehensive review of the City's benefits plan for non-union employees, accountability officers and elected officials and recommends changes to the plan focussing on cost effective ways of delivering benefits.

Employee benefits are an integral part of an employees' total compensation package.  As such, the City is committed to providing a fair and comprehensive plan that is fiscally responsible to the taxpayers of Toronto while continuing to follow industry standards and best practices.  Prior to 2009, benefit costs were escalating at a rate of 10% annually.  Since that time staff  have made a concerted effort to contain benefit costs through administrative and plan design changes, including cost containment initiatives negotiated through the collective bargaining process.  As a result of these efforts, health and dental benefit costs decreased by -7% in 2012 and are anticipated to decrease by an additional -6% in 2013.

The changes recommended in this report will further assist the City in continuing to control benefit costs while ensuring that the plan remains equitable and competitive as part of the total compensation package used to attract and retain diverse and highly skilled employees.

In 2012, the City spent approximately $32.6 million to provide benefits (i.e., Health, Dental, Group Life Insurance and Long Term Disability) to approximately 4,128 non-union employees, accountability officers and elected officials.  The cost to provide this coverage for all employees and retirees (approximately 25,156 active employees and 9,637 retirees) was approximately $204.6 million or $5,900 per employee/retiree.

Table 1

 2012 Benefit Costs, Broken Down by Benefit Type

*Eligible employees receive retiree benefits up to age 65 only.  In addition, some employees who had access to lifetime retiree benefits from their former municipalities have been grandparented for this benefit.

In 2013, the cost of health and dental coverage for non-union employees, accountability officers and elected officials is estimated to decrease by approximately $1 million due to changes in the benefits plan that came into effect January 1, 2013 (as approved by City Council at its meeting held in July 2012).

The implementation of a Preferred Provider Network (PPN), in addition to potential enhanced Drug Plan Management initiatives, will assist the City in further managing and controlling these costs into the future.

Similar to most public and private sector employers who manage benefit plans for a large number of employees, the City of Toronto provides health, dental and long-term disability coverage on an administrative services only (ASO) basis while life insurance coverage is insured through Manulife Financial. The cost of the City's active benefit plan is funded through the City's approved divisional operating budgets while retiree benefits are funded through the Employee Benefits Reserve which in turn is funded by contributions from the operating budget.

The Deputy City Manager and Chief Financial Officer has reviewed this report and agrees with the financial impact information.