About a week ago I entered a post regarding the abolition of the Default Retirement Age, and the possible impact on employee benefits. https://www.jelfgroup.com/blog/2011/01/default-retirement-age-the-impact-on-employee-benefits/.

Well, a week is a long time in blog-sphere, and I am pleased to tell you that I now have some good news (not something that I often get to say in this blog to be honest).

It appears that the problems around Insured Group Risk benefits (which appears to include Group Life, Group Income Protection and Group Medical polices) have actually been recognised, and a specific exemption is being introduced so that employers will NOT have to continue to cover employees for these benefits past State Pension Age (SPA). Of course SPA is also on the rise (albeit it relatively slowly, SPA will increase to age 66 by 2020), but this is much less of an issue than potentially having to insure any number of older employees with an open-ended commitment.

So good news. As far as I can tell though, there are a couple of details still to be confirmed on this:

• Only insured benefits are mentioned. Does this mean that employers that self-insure (in whatever fashion) are also exempt?
• It is unclear what will happen where the policy is not necessarily between employer and employee (the self-employed, partners etc)

What now?

For most employers this will be a sigh of relief. However, it’s worth pointing out that employers can (and some will) still set an earlier contractual retirement age, as long as this can be justified (and please do take legal advice on this one folks). In such cases, Group Risk benefits can cease at this earlier date.

It’s also worth reviewing your Group Risk policies to ensure that the cessation dates for cover dovetail with the new SPA. This will avoid any loss of cover, or shortfall to be made up by the employer.

Finally, it is still possible to continue cover for an employee post SPA if required, subject to medical evidence and the insurers usual requirements for such employees.

There remains one major concern though, and that is to do with Group Pensions. I will cover this off in a separate post in the next few days.

Hope this helps.

Best regards

Steve