Key Points
- The Welfare Reform Act places greater responsibility on employers to provide vocational rehabilitation and support to help employees enter and remain in the workplace
- As the Equality Bill goes through parliament, it should give clarity on the legality of ceasing group risk benefits at a specific age
- Employers that maintained the status quo of their death-inservice benefits post-A day will be planning their changes
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The group risk landscape is changing, says Katharine Moxam, spokesperson for Group Risk Development
Amidst the doom, gloom and pension scheme closures of 2009, a quiet workplace reformation has been taking place that may have gone unnoticed. Welfare reform has received little fanfare so far, but it reflects common thinking across the major political parties. It is gathering more pace in 2010 and is set to arrive on the corporate
doorstep with a thud before the year is out.
The Welfare Reform Act has profound implications for employers because it sets out a framework that will see virtually everyone who currently claims benefits embarking on a pathway to work. Seen in a broader context – for example, the National Institute for Health and Clinical Excellence guidelines for managing absence and mental health and the reform of the sick note system – it places far greater responsibility on employers to provide vocational rehabilitation and support to help employees enter and remain in the workplace.
But what else does the change in thinking bring? Conditionality and greater personal responsibility do not begin and end with disability provision. Financial distress caused by the impact of personal disaster that could have been insured against and the UK’s poor saving habits are themes where the government has recognised a more prominent role for insurers. However, the role that employers play still has to be acknowledged, as has the potential for greater use of voluntary benefits facilitated by employers.
Elsewhere in our industry, as the Equality Bill progresses through parliament, we anticipate clarity around the legality of ceasing group risk benefits at a specific age. Employers will finally be able to revisit their benefits package to arrive at a combination that is fit for purpose going into the future. Compared with the extraordinary challenges employers have faced over the past couple of years and the innovative ways HR professionals have worked to keep jobs in place, facilitating a more cohesive and relevant benefits strategy ought to be a piece of cake.
Pension closures
As defined benefit (DB) pension plan closures continue into 2010, HR professionals have an opportunity to ensure that by including a reappraisal and restructure of ill-health and sickness absence provision (not just reviewing pension provision), employers get something back in return. By setting up a group income protection policy in place of ill-health early retirement, they can avoid future unfunded exposure, give staff a well-received new benefit and lay the foundations for a healthier work culture. Also, efficient use of group risk added-value free or discounted services can release savings to reinvest elsewhere.
With 2011 approaching, employers that maintained the status quo of their death-inservice benefits post-A day will be planning their changes. Wouldn’t it be great to see some real innovation here instead of the usual attempt to replicate what has gone before? After all, they have had five years to think about it. The group risk industry often highlights the ‘protection gap’ for staff, but it also exists for employers where a promise is unfunded or where there are unforeseen liabilities (the 2009 holiday pay rulings, for example). Employers seeking to ensure their benefits package is still fit for purpose will discover group risk options that cross over the group risk and healthcare silo boundaries.
Going into 2010, the group risk industry is well placed to deliver benefits and services to employees that offer increased protection to them and their families from financial distress, while also offering employers protection from the increasing burden that welfare reform will place upon them.
Read more articles from Thought leaders: The year ahead