|As the State Pension Age increases, both now and into the future, employers are in danger of having group risk protection policies that are not legislatively compliant. Group Risk Development (GRiD) is urging employers to check this out.|
The issue. Following the removal of the default retirement age (DRA), group risk insurance benefits (group life assurance, group income protection and group critical illness) can legally cease at age 65 or State Pension Age (SPA) as this increases beyond age 65, whichever is later.
Although SPA has already increased to 66, 67 or 68 for many people (and could go beyond that into the future) GRiD members are still seeing policies where employers have kept a fixed cease age of 65 (or worse still, 60) rather than re-defining the cease date under the insurance as “65 or SPA, if later”. This exposes them to uninsured liability for benefits that arise after that fixed age for people who reach 65 or SPA beyond that.
Put simply, where no insurance is in place and a promised benefit becomes payable, the employer will have to find another way to pay the benefit, which can be a substantial amount.
This oversight can also be reflected in contracts of employment, which should also be reviewed and amended to reflect the correct legal position, the actual intentions of the business and the insurance in place.
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