Under new Government legislation due to be phased in over the next five years, employers will be obliged to enrol all staff into a qualifying pension scheme. A significant number of employers questioned in the Grid study currently offered employees group risk protection benefits. But almost half – 49 per cent – of the employers that do not already offer group risk protection benefits said they would also consider implementing a group life scheme once pensions auto-enrolment becomes law – potentially making major inroads into the country’s growing protection gap.
Grid says inadequate provision of life insurance is a major issue for the country as a whole and it’s growing fast. Latest industry reports put the national life protection gap at £2.4 trillion, equating to half the UK adult having a life protection gap averaging £100,000.
Grid says the UK should look to the experience of Australia, which implemented a highly successful programme of auto-enrolment for pensions with life and disability benefits also available. It points out this strategy has revolutionised the system there.
But Grid’s study suggests that cost could be a key barrier to such success – 49 per cent of employers who do not currently provide group risk protection benefits said they would find the compulsory pension contributions hard enough to fund and would not therefore consider introducing life assurance as well.
Katharine Moxham, spokesperson for Grid, says: “It’s extremely encouraging to see so many employers are prepared to consider implementing group life alongside pensions auto-enrolment. Implementing a group life assurance policy alongside auto-enrolment would involve a relatively small additional cost compared with the pension contributions that employers will have to make.
“Surely the Government has a role to play in encouraging more employers to invest in this benefit? Grid is putting forward a simple, ready-made solution in response to the Government’s Consultation on Simple Products which could provide the boost employers need to put such a scheme in place.”