Tax break ‘would extend GIP to extra 1.5 million people’
The Association of British Insurers (ABI) has called on the government to introduce a tax incentive for employers purchasing group income protection (GIP), which it claims could extend coverage to a futher 1.5 million employees in the UK.
Their analysis shows a tax incentive, as part of a larger package of measures, could mean coverage increases from its current levels at 7% to reach 12% after five years. Plus, the increased coverage could also save the Exchequer more than £220m over five years.
The ABI also called for the government to encourage employers to issue an annual protection statement to their employees in order to make them aware of the combined sick pay and benefit entitlement in the event of an absence from work due to health reasons.
When you consider that in 2015, the group risk industry paid out £347 million in annual income protection benefits, the implications of increasing that coverage are huge!
This highly valued benefit can:
- complement absence management procedures as it provides proactive support with rehabilitation back to work;
- save employers money, due to savings on occupational sick pay and other indirect costs;
- provide additional support with EAP, legal support and employee rehabilitation through health and wellbeing guidance and programmes;
- provide emotional as well as financial support for employees.
Raluca Boroainu-Omura, the ABI’s assistant director, health of health and protection, warned that households in the UK are among the most financially exposed in the developed world.
“Serious illness and death often lay bare the fragility of households in the face of economic shocks. Our suggested measures are a win-win, with more consumers being protected while saving the government money,” she added.
We will be following this with great interest and will update you as this proposal develops. In the meantime, if you would like more information please contact your Jelf consultant.