Employers face cost increases in their employee insurance premiums as the average age of the workforce continues to rise, according to research by Towers Watson.
It found that when an organisation’s average employee age rises by five years, its group income protection premiums could increase by more than 50%.
The research also found a similar link between workforce age and insurance cost for group life assurance cover and private medical insurance benefits.
It found that a change in the average employee age from 35 to 40 could result in a 40% increase in premium costs for group life benefits.
Meanwhile, a rise in the average age from 40 to 45 could also result in a 50% premium increase, while a rise from 45 to 50% could result in a 60% increase in premiums.
Philip Percival, head of the Fit Age programme at Towers Watson, said: “It is no secret that employees are starting to work later into their 60s and 70s, and this is having an impact on the average workforce age in many organisations.
“The additional liabilities and costs associated with this shift can take organisations by surprise if they are not prepared.
“Understanding the financial situation of a workforce is very important for organisations wanting to gauge if and when older employees are likely to retire.
“While many organisations are benefiting from the experience and knowledge associated with older workers, they may not have a clear picture of the overall financial situation of their employees, leading to impaired workforce planning.
“However, by informing and educating workers early on about how to achieve the retirement income they want, [organisations] can help to reduce their own costs and liabilities.”
