Pensions - Articles - The hidden cost of the State Pension Age rise


Legal & General warn employers to review their Group Protection Policies

 Employers should be making changes to their group income protection policies following the abolition of the default retirement age and increase in state pension ages, Legal & General will warn tomorrow.
  
 Speaking to financial advisers on a webinar tomorrow morning, Legal & General will say that the increase in state pension ages could leave employers who provide group income protection benefits with financial difficulties if they do not update their policies.
  
 The abolition of the default retirement age will mean that employers can no longer make employees retire at 65. It also means that employers must not use age as a reason to not provide benefits or provide different levels of benefits to employees. 
  
 However, an exemption in the new regulations mean that employers are not obliged to provide insured group income protection benefits beyond the greater of age 65 and the state pension age. Consequently the increase in state pension age could mean there may be a gap between what they’ve promised to pay the employees and what they’ve insured under their policy. 
  
 Commenting on the situation Diane Buckley, Legal & General’s Group Protection Managing Director, said:
  “It is important that employers are made aware of the consequences the changes to state pension ages will have on their group protection policies. I would urge HR managers and employers to review their policy needs now.”
  
  
 Notes:-
 Legal & General’s Webinar will take place on Friday 8th June from 10.00- 10.30. James Walker, Legal & General Facilitator Technical Manager, and Phil Kennedy, Legal & General Group Protection Sales Director will lead the discussions. They will be joined by Chris Ford from Jelf Group and Jamie Barnes from Enrich Benefits. 
 Legal & General’s approach to getting people back to work
     
  •    Every year, around 350,000 make a transition from work to incapacity benefits - many of these people could, and want, to go back to work (Working for a Healthier Britain, Dame Carol Black’s Review of The Health of Britain’s Working Age Population, March 2008). Responsible employers can look after their staff by supplementing state sickness pay with enhanced and prolonged sick pay at a reasonable cost. Legal & General’s Group Income Protection cover, Workplace Recovery, can provide additional benefits in the form of early intervention and rehabilitation to help employees back into the workforce more quickly and effectively.
  •  
  •   Group Protection (or Group Risk) benefits are provided by employers to their employees. They provide employee benefits that are paid if an employee dies in service or while they are unable to work because of illness or injury.  The Group Protection market covers approximately 1.8 million people for income protection insurance and over 7.3 million people for life insurance cover. Legal & General’s Group Income Protection policy, Workplace Recovery, has a proven track-record of helping employees make the journey back into work. Our Group Protection portfolio is already large and growing. We have over 180,000 people covered by a Group Income Protection Policy. Of those covered, approximately 2,000 could benefit from our rehabilitation services every year.
  
 The need for specialist intervention: 15% of GPs often see patients who have been dismissed from their job during an illness
     
  •    Britain’s family doctors routinely see patients who have been dismissed from their job during an illness. The new findings, in research conducted by ComRes in March 2010 on behalf of Legal & General, show how some employers are struggling to manage workplace ill health and absence.  The survey also shows that 50% of GPs saw patients who have been dismissed from their job during an illness ‘a few times a year’.
  
 The Government’s sickness and absence review
     
  •    The government is beginning to review the way it handles absence in the workplace. The review, announced by the Department of Work and Pensions, is led by Dame Carol Black and David Frost.
  •  
  •   The review, which is jointly sponsored by the Department for Work and Pensions and the Department for Business Innovation and Skills, will include a panel of experts from business, trade unions and health representatives and will be conducted in the context of the Growth Agenda.
  •  
  •   It will also feed into the wider Employment Law Review, which is looking at measures to reduce red tape and remove the burdens on business, encourage growth and maximise flexibility for employers and employees.
  •  
  •   Also announced is an additional £12 million of funding for health and work programmes, including the Fit for Work Service and Occupational Health Advice lines. Both have already proved highly successful in providing support for both employers and individuals in the early stages of sickness absence.

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