L&G in ill-health protection launch

Legal & General is launching an income protection product designed to offer members of DC pension schemes ill health insurance typically covered by DB schemes.

The launch of the product, which is called Workplace Recovery, is designed to be of assistance to employers making the switch from DB to DC who want staff to continue have access to some form of disability cover.

L&G says the trend towards DC means many employees no longer benefit from the protection afforded by most final salary schemes which often provided important protection for those suffering with ill health.

Most members of final salary schemes are entitled to an early ill-health pension based on their salary and actual service, plus all or part of their potential service. An individual in identical circumstances in a money purchase scheme is faced with using their accumulated pension fund to buy an annuity but there can be a huge discrepancy as the money purchase member will be faced with losing the benefit of future contributions and fund growth, says L&G.

The insurer says nearly half of men and one third of women retired before their state retirement age and 30 per cent of early retirements were caused by ill health.

Workplace Recovery offers payments of up to 75 per cent for a limited term or up to normal retirement age, which can be paid to the employer or direct to the individual.