Group Income Protection policies
As a result of the Government’s announcement to increase the State Pension Age earlier than originally proposed, all employees aged between 39 to 47 years olds will have to work a year longer, until age 68.
The changes to be phased in between 2037 and 2039 could mean employees covered by a Group Income Protection scheme, who in the future are unable to work long-term due to illness or injury, could experience a one year period, between their Group Income Protection benefits ceasing and being able to claim their State Pension.
Group Income Protection policies may require a change in the law before they recognise an increase in the State Pension Age something that could take a number of years given the current political environment. At Aviva, we will pay Group Income Protection benefits to the new higher age for those people impacted who go off work from today, even though these changes have not yet been enacted.
This change means that for those employees impacted by this announcement, who aren’t able to work from today with a long-term illness and are covered by an Aviva Group Income Protection policy to their State Pension Age, will be covered until age 68. The additional cost in doing this will be absorbed within our current pricing.
This is an ideal opportunity to contact your clients and tell them that there could be an unexpected liability in the gap between any commitments they make to their employees in their contracts of employment, and their Group Income Protection policy. We encourage you to also approach any clients who have not yet moved their Group Income Protection policy to a ceasing age linked to State Pension Age.
Being unable to work long-term due to ill health can be stressful. We are delighted to be able to provide added certainty for those employees who go off work today in that we will continue to pay Group Income Protection benefits until they reach their new higher State Pension Age.