Friends Provident welcomes the Government's confirmation that the Default Retirement Age (DRA) for the UK workforce is to be removed. The corporate benefits provider believes the move recognises the increasing contribution older workers make to the UK economy.
The announcement also addressess the unintended consequences for group risk products by granting an exemption for these benefits. Friends Provident believes this is absolutely the correct decision and argues this will ensure group risk products remain a core part of an employer's benefit package. The provider suggests this exemption will allow employers greater control over their costs.
Martin Palmer of Friends Provident says, "The confirmation that the default retirement age will be axed is welcome news. Not only does it provide greater individual choice and freedom to work as long as people want to but it also provides employers with a clearer mandate to control their costs, specifically on group risk products.”
Employers will be able to place an age limit on employees' eligibility for group risk benefits. Employers must treat employees equally regardless of age, but in the provision of income protection, death-in-service benefits and health insurance they will be permitted to limit cover to employees below the age of 65. This will rise in future in line with the state pension age.
The government believes that it is in the wider interest that these benefits continue and wants to support the inclusiveness of group risk insurance, where the spread of risk allows cover to be provided to individuals who might otherwise be unable to obtain cover or only get cover on unfavourable terms.
The almost universal insurance industry joy that older employees may lose out on a range of benefits is very curious. Perhaps it needs reminding that the age limit is an option, not a compulsion, and energy would be better spent in working out cost-effective ways to offer cover to all employees, however old they are; otherwise the insurance industry will continue to portray itself as ageist and inflexible.
Income protection insurance news: 22 January 2011