Unum urges next government to focus on building a healthier, more productive workforce
18th May 2017
Employee benefits expert Unum has published a new report making four key recommendations it believes the next government should take up as a matter of urgency to improve the health and productivity of UK workers:
- Introduce a temporary tax break for SMEs to invest in Group Income Protection (GIP) to improve people’s work and health outcomes
- Deliver a coordinated plan to build the financial capability of working people so they can prepare for the risk of becoming too ill to work
- Trial a protection statement that shows working people the chance of becoming too ill to work, the income they could expect from their employer and the state, and signposts them to information on how to improve their financial resilience
- Create a robust and pragmatic regulatory environment that supports innovation and economic growth while protecting policy holders.
The report states that too few working people with long term health problems get the support they need from their employer to stay in work. Ill health among working age people already costs the economy around £100 billion a year and by 2030 21 million working age people will have a long term health problem.
However, many employers support their staff by investing in GIP. It helps employers prevent and reduce long term sickness absence and provides highly effective support to employees with health problems to stay in or return to work. It also provides a financial income for employees when they are too unwell to work long term. However, 7.8 million people in the UK work for small and medium sized organisations (SMEs) with 10-249 employees and Unum estimates less than five per cent of them have GIP from their employer.
In its Improving Lives Green Paper, the government recognised that encouraging more employers to invest in GIP could reduce the number of people falling out of work for health reasons and help the economy. Hence, Unum is calling on the next government to “introduce a temporary tax break for SMEs to invest in group income protection.” Unum was the first organization to put forward proposals for a tax break in its 2015 general election manifesto published at the end of October 2014.
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Unum is also calling for bold government action to improve the financial capability of working families so they can prepare for the risk of becoming too ill to work. Fifty per cent more working people report money worries than in 2006 and financial stress costs the UK £121 billion a year. Despite years of well-intentioned but badly implemented government initiatives aimed at helping working age people to make better financial decisions, the sad truth is that 40 per cent of people have less than £100 in savings.
The company also recommends that the government "trials a protection statement that shows working people the chance of becoming too ill to work, the income they could expect from their employer and the state, and signposts them to information on how to improve their financial resilience." Employees could access the statement online or it could be included with their P60 at the end of the tax year.
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In its final recommendation, Unum is urging the government to look again at how insurance companies are regulated. The world of work is changing at a fast pace and insurance companies need a regulatory environment that lets them innovate to provide competitive products that supports employers, employees and indeed the whole UK economy. Unum does not advocate the scrapping of Solvency II but urges the government to "create a robust and pragmatic regulatory environment that supports innovation and economic growth while protecting policy holders."
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Commenting on the new report, Peter O’Donnell, Chief Executive of Unum UK, said: "Whoever wins the election, the next government will continue to face the same big challenges as previous ones, namely a fast changing workforce with more long term health problems, low productivity, and low levels of financial education and resilience. We are setting out four key policy priorities that the next government should adopt so people get the support they need from their employers to stay in work and to prepare them in case they become unwell to work long term."
Notes for editors
- The report is available here
- Ill health among working age people costs the economy around £100 billion a year. Most of this cost comes from the lost economic output when people are too unwell to be in paid work. Department for Work and Pensions and Department of Health (2016) Work, Health and Disability Green Paper Data Pack
- By 2030, 21 million working age people will have a long term health problem. NICE (2015) Guideline scope, Workplace health: support for employees with disabilities and long-term conditions
- Less than five per cent of employees in organisations with 10-249 employees have GIP. Based on Unum market data on GIP coverage and ONS data on employer sizes
- Unum’s 2015 manifesto is available from http://www.unum.co.uk/media/unum-calls-on-government-to-make-income-protection-back-up-plan-for-uk-employees
- The data on financial capability and resilience are taken from the report by the Financial Advice Working Group for HM Treasury and the Financial Conduct Authority (2017) Financial well-being in the workplace: a way forward