Insured benefits and the State Pension Age
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.
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.
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).