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Calling time on benefits culture: work must always pay and be seen to pay

Work and Pensions Secretary Iain Duncan Smith

Millions of people abandoned on welfare will benefit from the most radical overhaul of the system in a century, as Work and Pensions Secretary Iain Duncan Smith sets out plans to revolutionise the existing benefits system.

 

A series of options focus on ensuring work always pays and is clearly seen to pay. They include allowing people to keep more of what they earn as they move into work whilst withdrawing benefits at a single, more reasonable rate as people start to earn more money.

 

The options could see a major reform of the number and type of tax credits and benefits available and the way in which they are withdrawn when people move and progress in the workplace.

 

They would combine elements of the current income-related benefits and tax credit systems and bring out-of-work and in-work support together in a far simpler system.

 

If the reforms take place then any income protection insurances which either deduct state benefit or are designed to top-up state benefit, will need to be amended,

 

A simple system would enable bold insurers to design simple full cover and top-up policies, in line with new government proposals for simpler insurance products that we can all understand.

   

Income protection insurance: News update: 6 August 2010

 

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