Oracle is considering pulling forward its flexible benefits election period and moving away from offering some insurance products on a group basis in order to comply with the forthcoming age discrimination legislation.
It currently offers a number of insurances – including life assurance, private medical insurance, income protection and critical illness cover – which are subject to age-related pricing through its flexible benefits scheme. Possible alternatives involve offering these perks on a group basis at a flat rate to employees or inviting insurance companies to contract directly with staff, without the company being a party to the arrangement.
Chris Wilson, compensation and benefits director Oracle UK, is awaiting clarification on whether its existing system could be objectively justified under the new legislation." We are getting some confusing feedback. It looks as though you might be able to defend it through the objectivity clause but, as a company, I am not sure we want to go down that route."
If Oracle was to adopt single pricing, Wilson fears that it may be exposed to adverse selection, whereby the product becomes expensive for young employees but more attractive to older workers.
"The way insurance pooling works, you want to spread your risk," he added. Due to time constraints, Oracle may also have to cut short the contractual period for its current scheme which expires after 1 October, the date when the legislation comes in, and launch a new election process prior to this date. But Wilson said that the firm may have to get clearance from the Revenue to bring forward its election times.
Another area that Wilson is reviewing is income protection, which is currently offered to those aged up to 60 years. If employers offer income protection to all staff, even those beyond the default retirement age of 65 years, Wilson fears firms could be severely exposed unless cover is limited to a specified period.