Legal & General is adjusting the bonus for early notification on its group schemes by reducing the m...
Legal & General is adjusting the bonus for early notification on its group schemes by reducing the minimum number of lives covered needed to qualify for the feature from 500 to 250.
The benefit gives a 5% rebate on premiums for companies that notify the provider of at least 80% of long-term absences, which it counts as sick leave exceeding four weeks.
L&G has also responded to developments in employment law by saying that group income protection (IP) products can help plug the growing chasm in workplace contracts.
It spoke out following the rulings over holiday pay from the European Court of Justice which decreed that a person on long-term sick leave still accrues and is entitled to holiday pay.
James Walker, group protection technical manager for L&G, said: "This provides advisers with an excellent opportunity to promote group IP to new clients. With this ruling potentially increasing the cost of long-term sickness to employers, there is an excellent opportunity to promote the benefits of the product. Group IP, L&G added, could also help fill the gap between defined benefit and defined contributions benefit pension schemes for employees retiring early on the grounds of ill health.
An employee on a defined benefits scheme may use their pension to bridge any gap between leaving work at an early age due to ill health and normal retirement age. In comparison, those on a defined contributions scheme do not have this option.
The provider said group IP could reduce the hole by providing an income until the age of 65 rather than having to utilise an employee's contributions to buy an early annuity.
Glenn Laming, group protection sales director at L&G, said: "The closure of many final salary schemes and the recent economic turbulence has seen even more employers moving to money purchase solutions. Advisers have a real opportunity to add value to employers by using group IP to fill this protection gap."
