- The IFoA has called for an auto-enrolment style system to increase take-up of income protection products.
- This could reduce State expenditure on benefits and allow greater support for those in most need.
- Has also called for better alignment between benefits and insurance.
The Institute and Faculty of Actuaries (IFoA) has today (Friday 17 February 2017) responded to the Department of Health (DH) and the Department for Work and Pensions’ (DWP) Improving Lives: The Work Health and Disability Green Paper.
The IFoA believes that Insurance plays an important role in meeting many of society’s needs; and in helping people to protect themselves from unforeseen events and costs. It states that it is vital that the right balance is struck between State, employer and individual responsibility, allowing the development of a framework that is both sustainable and provides an adequate safety net.
The IFoA’s consultation response also states that:
- Despite its clear advantages, take-up for income protection products remains low owing to a lack of awareness of the benefits amongst both employees and employers. A flexible system of automatic enrolment could help to increase group income protection coverage.
- Increased coverage could reduce State expenditure on out-of-work benefits, meaning that State funding can be targeted to those most in need of additional support should their health stop them from working.
- If people are going to use insurance it is important that there is better alignment between State benefits and insurance, otherwise people who save hard to contribute towards insurance could end up losing out.
Colin Wilson, President of the IFoA said: “The advantages of income protection products are clear – they provide an effective safety net against unexpected loss of earnings. We believe the Government should do more to increase the uptake of these schemes. This could range from communicating their advantages to employers and employees to instituting a pensions-style auto-enrolment scheme with the ability to opt-out, to expand coverage. This would allow a reduction in State benefits expenditure and the redeployment of these savings to those with the greatest need.”
About the Institute and Faculty of Actuaries
The Institute and Faculty of Actuaries (IFoA) is a royal chartered, not-for-profit, professional body.
Research undertaken by the IFoA is not commercial. As a learned society, research helps us to fulfil our royal charter requirements to further actuarial science and serve the public interest.
Actuaries provide commercial, financial and prudential advice on the management of a business’s assets and liabilities, especially where long term management and planning are critical to the success of any business venture. They also advise individuals, and advise on social and public interest issues.
Members of the IFoA have a statutory role in the supervision of pension funds and life insurance companies. They also have a statutory role to provide actuarial opinions for managing agents at Lloyd’s.
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