In this post, we'll cover:
- How TPAs are Consolidating
- How this shift will have negative effects
- Alternative Solutions
How TPAs are Consolidating
The selection for Third Party Administrators (TPAs) in Canada has always been few and far between. This general lack of competition in the market has created an environment where the TPAs have the majority of the control over price. With only a handful of major players in the game, unions have been left with no choice but to choose one of them and pay their fee.
People Corporation is a Canadian organization that has been buying up companies in the group benefits industry. They own over 30 benefits related companies that deal with group benefits, administration, group retirement, health and welfare, pension, human resources and law firms.
A brief list of organizations owned by People Corporation are Coughlin, BPA, Benefit Partners, and Health Source Plus.
As of December 14th, 2020, Goldman Sachs purchased People Corporation for $1.13 billion. This means that the majority of the TPAs and benefit related services in Canada are now owned by a large American investment bank. If you thought there was a lack of competition before, it is even more scarce now.
With the consolidation of the majority of the Canadian TPAs, Goldman Sachs will have absolute control over the prices typically set by a market. Goldman Sachs IS the market now. The need for innovation, improved services, lower prices, and better customer service all goes out the window with competition. If there is no competition, there is absolutely no reason for them to improve in any of these areas because there is no alternative to satisfy your needs. Healthy competition has gotten society and organizations to where they are today. Without the need for growth and innovation, we become stagnant.
To sum it all up, this could make for:
- a market with little innovation
- a lack of new services/improvements
- poor customer service
- high prices
- no need or desire for advancement
There aren’t many alternative solutions out there, but one that is starting to catch on is in the technology space. Software that allows unions to manage and administer their pension in-house, to be specific. Collective bargaining agreements are all unique and have tons of rules, but our advanced software platforms are customized to each collective bargaining agreement (and to each union) to ensure that each transition is executed flawlessly. The benefits simply begin there and continue to become apparent with better processes, instant access to crucial data and more time to focus on the members needs.