Group benefits exception included in DRA removal

An exception for employers offering group risk benefits has been included in Government plans to scrap the default retirement age (DRA).

It should mean that businesses presently offering benefits such as income protection or private medical insurance to their workforce will be able to restrict eligibility to those under the previous retirement age.

The announcement is likely to provide a huge sigh of relief for the industry which had feared huge premium increases and compliance issues for companies could result in a significant hit to the market.

The government said it would help employers adapt to the removal of the DRA by introducing "an exception so that there are not unintended consequences for employers that currently voluntarily offer group risk insured benefits (income protection, life assurance, sickness and accident insurance, including private medical cover)."

"There had been concern that removal of the DRA could lead to increased costs and uncertainty for businesses by in effect removing the cut-off point beyond which such benefits are currently no longer offered," it added.

Katharine Moxham, spokesperson for group risk trade body Grid, said the organisation was delighted that government had recognised the value of group risk protection benefits.

"By allowing an exemption for group risk benefits the Government has recognised the points that Grid and others have made and a potential barrier to their continued provision has been removed," she said.

"Although employers may have to make small changes, they will not be left facing a blank cheque and will be able to retain these socially useful benefits. This is increasingly important in light of the welfare reform programme.

"And by letting employers take the same practical approach as the State does with working age benefits (which cease at State Pension Age) group benefits will remain affordable and available to the majority of those employees who most need them," she added.