Words by Paul Avis, Marketing Director of Canada Life.
Reproduced with the permission of Canada Life.
Since the arrival of automatic enrolment, more people are joining a company pension scheme. This would usually link with Group Life Assurance; however this window also provides the perfect opportunity to commoditise the benefits of Group Income Protection (GIP). If employers are creating financial stability when their employees retire, why are they not protecting them now? Surely a priority benefit should be protecting an employee’s income now, and not just in retirement?
GIP provides an income for employees during a time of need. If an employee is unable to work as a result of illness or incapacity, and they satisfy the requirements of a claim, they will receive regular payments to replace any loss of earnings. As part of a suite of ‘immediate benefits’, GIP is the cornerstone of a benefits package and should be a priority benefit purchase. Not only does it provide an income for the employee while they are unable to work, but also enables pension benefits to continue being funded and mortgages, credit card bills or car loans to be paid.
With financial security at the forefront of an employee’s mind in the current economic environment, and particularly considering the removal of Work Related Activity Component (WRAC) this year, the value of GIP will continue to be enhanced. There is little support for people who need income tomorrow, so those who rely wholly on the State will struggle unless they have an additional source of income.
Should a serious illness or accident occur, how else will employees continue to pay their bills or contribute to their pension without earnings? A pension will benefit the employee in 20, 30 or 40 years but Group Income Protection can do so in 13 or 26 weeks. Why put so much emphasis on a deferred income when the current income may be threatened if an employee goes off sick tomorrow?
With cover for employer National Insurance Contributions and employer/staff pension contributions available, as well as a basic income benefit, employees can be kept in service and continue to be covered for much needed private medical/cash plans and death benefits, all the while still continuing to contribute to their pension.
So be brave and provide a benefit that makes sense. Auto-enrolment effectively means that pensions are taken care of, however you have to get to retirement first! Put immediate benefits like GIP in place and argue that while the employee is with the organisation they can be brilliantly looked after and therefore more productive and engaged. Ultimately, this can aid attraction, retention and increase employee satisfaction.