Employee Wellbeing & The State Benefits Gap

In Industry News by Claire Ginnelly

UK workers overestimate state benefits, yet few companies have any protection in place.

Research has shown that workers overestimate how much support they would receive from the government if they found themselves unable to work due to an illness or disability. Yet only a tiny proportion of UK SMEs have suitable protection in place to safeguard their employees financial security. This suggests that both a huge protection gap and enormous opportunity exist.

Many workers overestimate state support entitlements

Research conducted in 2016 by Canada Life Group Insurance revealed that a large proportion of workers overestimate just how much support they would receive from the government if they fell ill or become disabled and were unable to work.

According to the research, the average worker expected to receive 70% more from the government than they actually would, highlighting a potentially serious error of judgement.

At the time the research was conducted, the average worker thought they would receive £172 per week from the government via the Employment and Support Allowance (ESA). Just over a third (34%) thought they would get more than £200 per week.

However, the actual amount individuals who qualified for the Work-Related Activity Employment and Support Allowance (ESA) (for those who could be assisted back to work) could get was £102.15 per week.

Furthermore, fast forward to today and the entitlement for workers in the work-related activity group has fallen to just £74.35 a week.

In 2016, 53% of workers said they could not live off the ESA payment if it was their only form of income, while 33% could not do so even if they still had their current level of savings or other household income. Moreover, 46% said they would not be able to meet their mortgage or rental payments if they lost their income and had to rely on ESA. 

Now, with the ESA payment considerably lower and the cost of living higher, workers would likely struggle even more. This suggests that most UK workers would find themselves in serious financial difficulty if they were suddenly unable to work today. 

Only a tiny proportion of eligible SMEs have group income protection in place

Right now, with the effects of the COVID-19 pandemic still sending shockwaves through many SMEs across the country, much focus is being placed on business survival. While revenue and productivity will be top priorities for most, they are things that are directly impacted by the health, wealth and happiness of staff. Therefore, SMEs that do not consider employee wellbeing stand to potentially lose out.

One of the best ways to afford peace of mind for employees — especially in the face of rising uncertainty — is to put suitable financial protection in place. However, as it stands, only around 1.14% of eligible UK SMEs have group income protection in place. While this is just one product from the wider group risk range, it’s one that is particular relevant given the current situation.

Furthermore, with full group income protection cover typically costing between 1% and 2% of gross payroll, it represents excellent value for the peace of mind it provides for both employers and employees alike.

If you do not currently have any protection in place for your employees, speak to our award-winning group risk team. Their knowledge and experience will help ensure you select the products that are right for you and your employees.

Claire Ginnelly is the Managing Director of Premier Choice Health and has been in the private medical insurance industry since 1991. All her experience has been gained working for large insurance companies managing the distribution of health insurance products through intermediaries. She has held senior positions within Standard Life Healthcare, as Head of Intermediary Sales, and Groupama Healthcare, as Head of Distribution.