Budget 2015: Unum urges govt to consider tax relief to grow GIP

clock

Unum is not backing industry discussions around auto-enrolment(AE) for group risk and is instead calling on the government to introduce a temporary tax relief for SMEs with group income protection (GIP) plans.

The insurer is urging the government to revisit this as part of the 2015 Budget - as SMEs are expected to drive the UK's future economic growth.

Unum said sickness absence which currently "represents a significant barrier for firms" could be easily tackled through encouraging SMEs to take up group IP through the incentive of tax relief. 

John Letizia, head of public affairs at Unum said: "We believe that an effective, sustainable, long-term strategy should include both state action and raising awareness of private solutions such as income protection. "

He added: This will support employees and assist them with a speedier return to work; ease the costs of absence for employers and help them to retain valuable staff; and ensure significant savings to the government - a positive outcome for all.

"A tax relief is the best and most pragmatic policy option going forward, as there have been numerous policy precedents of successive governments introducing targeted tax reliefs for SMEs. Many providers fully recognise that to be the case.

"Besides, if employers were to offer a back-up plan to their employees to similar levels as other countries where such protection is more widely available, this could save the government £300m each year. This could be used to fund the tax relief and provide an alternative solution to the budget issue rather than just cutting more benefits."

Against auto-enrolment 

Meanwhile, Unum has disagreed with debates that group risk products should be included in a possible next phase of auto-enrolment (AE).

However, Letizia said: "I do not believe that the case has been made for this."

He added: "Provision for old age is a universal need, therefore AE for pensions makes sense for all. Although we believe that everybody should be protected against the risk of not being able to earn an income due to illness or accident, we don't think a mandate on employers to offer this to all their employees is the right answer, given that some employers may decide to self-insure, and some employees may decide they do not need it due to their personal circumstances.

"So providing choice to employers and employees is critical and AE may not be the answer in this case. Employers, especially those in the small and mid-size segments, would benefit more from a rebate to help them offset the cost of the cover."

More on Income Protection

Why we still need to talk IP

Why we still need to talk IP

"Increasing sales starts with education"

Matthew Chapman
clock 14 March 2024 • 3 min read
Cirencester Friendly pays out £9.3 million in 2023

Cirencester Friendly pays out £9.3 million in 2023

Nearly half of claims were from Millennials

Jaskeet Briah
clock 14 March 2024 • 2 min read
British Friendly pays out £5m in IP claims

British Friendly pays out £5m in IP claims

Provider pays out 89% of new IP claims in 2023

Cameron Roberts
clock 11 March 2024 • 1 min read

Highlights

COVER Survey: Advisers damning of protection insurer service levels

COVER Survey: Advisers damning of protection insurer service levels

"It takes longer than ever to get underwriting terms"

John Brazier
clock 12 October 2023 • 5 min read
Online reviews trump price for young people selecting life and health cover

Online reviews trump price for young people selecting life and health cover

According to latest ReMark report

John Brazier
clock 11 October 2023 • 2 min read
ABI members with staff neurodiversity policy nearly doubles

ABI members with staff neurodiversity policy nearly doubles

Women within executive teams have grown to 32%

Jaskeet Briah
clock 10 October 2023 • 3 min read