Duncan Smith told the Sunday Telegraph that he wanted to see new products developed that would enable people to access money when they were sick, unemployed or in need of care.
The comments, which have been supported by a Number 10 spokesman in a report in The Guardian, have been perceived as the first government acknowledgement of an interest in involving the private sector in reducing the sickness benefit burden on the state.
“We need to support the kind of products that allow people through their lives to dip in and out when they need the money for sickness or care or unemployment,” Duncan Smith was reported as saying in the Sunday Telegraph.
A Number 10 spokesman told The Guardian: “PM shares the work and pensions secretary’s view that we should be doing more to encourage people to take personal responsibility for how they manage their affairs.”
Duncan Smith’s comments hint at early access to pension-like long-term savings products, but group risk professionals have suggested that an insured solution will be needed if workers going off sick are to receive an amount that is significant enough for them not to need state support.
Grid spokesperson Katherine Moxham says: “The government has taken a big step towards involving the private sector in pensions with auto-enrolment. Arguably the next step would be to look at sick pay.
“The door is clearly open for some form of dialogue. Iain Duncan Smith has his Universal Credit rolling out, plus Fit for Work, and this could be the next job.
“We have had our own internal debate in the industry as to whether auto-enrolment for group income protection is the answer. We are not good at compulsion in the UK, but if you look at what Fit for Work is trying to achieve, and consider that some countries such as Australia have mandatory rehabilitation services, we could see FFW given more teeth.
“Other alternatives are auto-enrolment, tax incentives or nudges through the Department of Health’s Public Health Responsibility Deal.”
Ellipse chief executive John Ritchie says: “The language used talks of fortune funds – but this is all about an insured risk, not something that you pay into and then draw from. Because if you get sick when you are young, you will have nothing there.
“Now is the time for the insurance industry to demonstrate that it can get people back to work more efficiently than GPs plus ESA outsourcers.
“This is more complex than saving for retirement. So if the government want insurance capital to engage with this project then they need to be thoughtful and grown up with the industry about any consultation they may launch.”
