Insured benefits and the State Pension Age

16 January 2012 |

Employers who want to withdraw insured benefits from employees who have reached the state pension age (the “SPA”) should be aware that it may not be as straightforward as it first appears.

Background

The Equality Act 2010 contains an exception which, with effect from 6 April 2011, permits employers to stop providing insurance, or related financial services, when the employee reaches the greater of age 65 or the state pension age (the “SPA”).  ‘Related financial services’ is not defined but is likely to include benefits such as life assurance, permanent health schemes and private medical treatment.  Employers may also provide insurance, or a related financial service, only to those employees who have not attained the greater of age 65 or the SPA.

Due to the language used in the drafting of this exception it is possible that the exception will only apply if the employer stops providing insurance benefits immediately the employee reaches age 65 (or the SPA if greater).  If an employer chose to provide benefits beyond this age, to age 69 for example, then the employer may have to objectively justify the decision to stop providing benefits at age 69.

What steps should employers take?

The options available to employers are therefore either to (i) ensure that the insurance policy they have in place to provide these benefits terminates on the employee reaching age 65 (or the SPA if greater), or (ii) continue to provide benefits to employees whose are aged in excess 65 (or the SPA if greater).  If the employer elects for option (ii) above, then the employer must be able to objectively justify the decision to stop providing the insured benefit at whatever age the employer has chosen.

Commentary

We would therefore advise that, to avoid having to objectively justify withdrawing the benefit at any age other than 65 (or the SPA if greater), the employer ensures that the benefits are not provided once the employee reaches age 65 (or the SPA if greater).

Resources

The Equality Act 2010 paragraph 14 of Schedule 9

For further information or to discuss the issues raised, please contact Guy Abbiss, Stephen Wright or David Widdowson on +44 (0) 20 3051 5711.

Disclaimer

Content is for general information purposes only. The information provided is not intended to be comprehensive and it does not constitute or contain legal or other advice. If you require assistance in relation to any issue please seek specific advice relevant to your particular circumstances. In particular, no responsibility shall be accepted by the authors or by Abbiss Cadres LLP for any losses occasioned by reliance on any content appearing on or accessible from this article. For further legal information click here.

Circular 230 disclosure

To ensure compliance with requirements imposed by the IRS and other taxing authorities, we inform you that any tax advice contained in this article (including any attachments) is not intended or written to be used, and cannot be used, for the purpose of (i) avoiding penalties that may be imposed on any taxpayer or (ii) promoting, marketing or recommending to another party any transaction or matter addressed herein.

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