New thoughts for a new year?
As we enter the new year we would like to encourage employers to some new thoughts around both the workplace and Employee Benefits provision. And for the first such idea of the year we would refer our readers (again) to the recently published Government document ‘Improving lives: the future of work, health and disability’.
As we mentioned last year, the report is a far reaching affair with many aspects of health and work explored, and one such issue is that of the provision of Group Income Protection (GIP) cover provided for employees by employers.
A few words of explanation for the uninitiated may be required before we go any further here…
Aims of a Group Income Protection policy
A GIP policy aims to provide an income to an employee when they are unable to work for a long period owing to illness or injury. So employees with such cover in place are much less exposed to financial hardship in the event of a lengthy health-related absence from work, whilst the sponsoring employer is also relieved of the costs and moral dilemmas that surround salary continuance for those unable to work. So GIP is clearly an important and welcome addition to any benefits package.
Improving lives: the future of work, health and disability
So having established what Group Income Protection aims to deliver, let us return to the “Improving Lives” document which includes the following text:
“The Government would like the industry to consider developing a product that retains the positive aspects of GIP but which overcomes the existing challenges (complexity, perceptions of cost and benefit) and therefore is likely to be more widely taken up.”
Now all publicity is good publicity, so the fact that Group Income Protection features in the Government document is clearly a good thing. Yet the not over subtle subtext appears to suggest that GIP – in its current form – is seen as unnecessarily problematic and expensive for employers to provide. And the numbers covered by such policies do appear to support that assertion, with only 2.2 million of the UK’s 32 million working population currently covered by such an arrangement through their workplace.*
Yet the above conclusion may actually be rather misleading. The Employee Benefits industry has worked hard in recent years to make GIP policies both more accessible and more supportive to employer and employee alike. Examples of progress here include free access to health-professionals for return to work advice and assistance (which can often significantly shorten the duration of absence) and policy options to better contain and control the costs of the insurance. So the issue is probably no longer one of access, benefit, complexity, or cost.
So what is the problem?
The real issue probably continues to be that UK employers and employees don’t yet universally understand the importance of this cover. This may be because employees believe that the welfare state will provide an adequate level of financial support in the event of long-term absence. This is often not the case however, and way back in 2014 we set out the actual facts. The reality is that the state often fails to provide an adequate replacement income for a long-term absent employee. Add to this the fact that in 2015 the UK had the largest Disability Protection Gap in Europe* and the case for GIP coverage virtually makes itself.
It is also worth mentioning one additional benefit for employers. Given that the numbers currently covered under Group Income Protection plans remain relatively low at present, it follows that employers that do offer – and communicate well – such an offering will doubtless have a recruitment and retention edge on many of their competitors. This is a significant point that many more employers should consider given the war for talent that is currently underway in the UK.
So when considering the make-up of your benefits offering in 2018 (and beyond) we would strongly encourage all employers to “think GIP”.