A third of employers closing DB pension schemes are still unsure how to replace the ill-health early retirement provision, with 20 per cent having completely overlooked the issue, according to Group Risk Development.
Research for industry trade body Grid shows 35 per cent of employers closing DB schemes are still considering the issue of how to manage ill-health early retirement provision, while 17 per cent have replicated the ill-health early retirement provision through an insurance policy.
The research found 19 per cent of employers said their employees will still be able to take enhanced ill health early retirement under the closed pension scheme.
Grid spokesperson Katharine Moxham says: “Closing or revising a DB scheme has clear implications for corporate pension policy but it can also leave a hole in a company’s health and sickness provision which shouldn’t be ignored. So when closing a DB scheme it’s vital for employers to revisit their sickness provision to ensure it remains robust enough to protect their business and their employees. Worryingly our study suggests that many employers are unsure how best to do this.
“Implementing a group income protection (GIP) policy where employers offer staff access to insured protection cover if injury or illness prevents them from working for a prolonged period could be an option.
“GIP is a highly valued employee benefit which sets the foundations for a healthier work culture as well as helping companies avoid unfunded exposure. Setting up a scheme typically has an ongoing cost of around 1 per cent of payroll.”