Changing workforce demographics require employers to offer a benefits package that supports employees’ diverse needs, but where does group risk fit?
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- The number of people of state pension age is projected to increase by 31% from 12.3 million in mid-2012 to 16.1 million by mid-2037, so employers need to consider older employees’ health needs .
- Legacy group risk benefits tend to have been brought together at different times and for different reasons within an organisation, so employers need to consider their relevance in the context of their whole benefits package.
- Employers need to align the needs of their business with the needs of their workforce to ensure that their group risk provision is fit for purpose.
The number of people of state pension age, which will increase from 66 years to 68 years for men and women between 2034 and 2046, is projected to increase by 31% from 12.3 million in mid-2012 to 16.1 million by mid-2037, according toNational population projections, 2012-based statistical bulletin , published by the Office for National Statistics in November 2013.
Many of these i ndividuals will opt to continue working, either because of financial need, or simply because of a desire to remain in employment. This poses a monumental challenge for employers when it comes to supporting their employees’ diverse health and wellbeing needs.
Doing nothing or limiting employee benefits provision for certain grades of employees or for certain age groups, such as those post-state retirement age, is not an option for employers, according to Ron Wheatcroft, technical manager at Swiss Re and a guest at the Employee Benefits Group risk roundtable debate, sponsored by MetLife and hosted in September.
He says: “There is no doubt that the marketplace is changing. I think it’s very easy for employers to say there is a termination point at which they will no longer provide benefits, but I just don’t think that the world is going to be like that in the future. Benefits packages are going to have to reflect the needs of the workforce, which will potentially range in age from anything between 20 and 80 and that is a huge challenge.”
There is increasing pressure on the sandwich generation
With this vast age range of employees comes a multitude of health and wellbeing issues , particularly for the sandwich generation that is having to care for both children and elderly parents.
Chris Minett, managing director of AgeingWorks, an organisation that helps employers to manage their ageing workforce, says: “We’re looking at the impact of an ageing society on a workforce and call it a ‘sleeping tiger’. We are not just talking about older workers but about working carers and about ex-pats and long-distance staff who may not take up an overseas assignment because their mum and dad or their partner’s parents are a bit shaky, or who may leave an assignment early because of some sort of eldercare issue, which is going to be ongoing.”
Minett believes that the continued demise of the National Health Service will put further pressure on employers to support the health needs of employees, as well as their families.
“The care burden is going to increase for families as responsibility is shifting, and then, by default, organisations that previously said this is not really their business have had to accept that they have to start doing something because this is impacting their employees,” he adds.
This is where group risk benefits can prove useful, providing that employees know that they are on offer and exactly how they can support them. For example, employers could easily engage with their sandwich generation about the importance of group income protection (Gip) for employees whose salary is supporting three generations of family.
Tom Gaynor, UK employee benefits director at MetLife, says: “It comes down to who employees go to work for and what these people need, but not just when an employee dies.”
He says that employees are currently too preoccupied with group life benefits and ensuring that their family receives a lump sum if they die, rather than focusing on how their family would cope financially if they were on long-term sick leave without pay. “Employees need to make sure that they are still earning for their families for the next five to 10 years and that is where they need to start looking,” he adds.
Employers need to consider their workforce challenges
Katharine Moxham, spokesperson for industry body Group Risk Development, believes that group risk benefits are an essential part of a modern benefits package because they help employers to manage such risks. “It’s about people risk and how employers incorporate that into their business strategy, planning and risk management programmes,” she says.
But she adds that employers must ensure that their group risk benefits provision is fit for purpose, particularly organisations with legacy benefits because of the rapidly changing needs of employees and their families.
“The benefits will have been brought together at different times by different employees for different reasons within an organisation, so my advice to employers would be step back, look at their whole benefits programme and question why it was done, whether it is still relevant, whether it does what the organisation wants it to do and pull it all together,” she says. “Employers need to consider whether their group risk benefits could work better for them.”
Banu Gajendran, occupational health, safety and wellbeing manager at Allianz UK, is assessing the challenges that come with an ageing society and the potential impact on the workforce in order to help her identify the health and wellbeing benefits provision the organisation requires. “We’re looking at employees’ needs, not just in the workplace but outside of work, such as employees with caring responsibilities , which is not just parents, but employees with elderly relatives,” she says.
She is also looking at the complex health conditions facing staff. “It is about how to address these as a caring, sharing employer and what else we could do on top of what we are doing already,” she adds.
An engaging benefits package will offer value
David Manning, a principal at Mercer Marsh Benefits, says that an engaging benefits package should offer value to both employees and employers, which is why group risk benefits should be a core feature.
“An ageing workforce also means that employees are going to be ill and that different types of illnesses will raise their heads because of employees’ lifestyles, so employers have got to have a benefits package that reflects that by way of adaptability and value at the point that it is needed,” he says.
He goes on to say that staff engagement in the group risk market depends on an employer having an effective communication strategy . “If anything is going to be valued and perceived to be valued it must be communicated effectively,” he says. “We do not do that in the group risk market. This is about how employers communicate with a 25-year old and with a 70-year old and how they make sure they constantly reinforce their benefits culture.”
Manning adds that group risk benefits are not just a one-off contract of employment but part of a wider benefits strategy that employees should witness and value every time they go to work.
Employers must prove the financial value of benefits
But employers must also consider the financial value of benefits provision to help to secure finance director buy-in, which is no longer about recruitment and retention cost savings, according to MetLife’s Gaynor. “I think all the discussion about whether benefits are there to attract and retain employees has run its course,” he says. “I cannot think of an occasion when any employee has said that they are, or are not, joining an organisation because of its life assurance or because of the way it offers Gip.”
But AgeingWorks’ Minett disagrees and says that group risk benefits support can help to retain key employees, particularly senior women who typically leave their organisation because of eldercare responsibilities. He says that employers should identify why staff leave their organisation and consider benefits support that may help to retain them. “Employers need to consider if there is a way of understanding, say, an eldercare issue and asking whether they could provide some tools and resources to delay or even prevent an employee’s exit altogether,” he adds.
Gaynor says that employers should instead highlight the value-added services that group risk benefits offer, such as employee assistance programmes and counselling, which can complement their overall benefits package and boost their employee value proposition.
“A lot of this debate is not about an insurance solution, but it is something that insurers should be right at the heart of,” he says. “If insurers working with employers and intermediaries are able to put a whole load of things in place that prevent staff from being off work and therefore making group risk claims, then the affordability issue that some employers have will be alleviated and organisations will be able to afford insurance for more staff and eventually we will be able to see market growth.”
Employers must identify pressing healthcare concerns
Employers without the time, resources or inclination to undertake a root-and-branch benefits review can simply structure their workplace health and wellbeing support into short-term and long-term goals.
Mercer Marsh Benefits’ Manning says: “Employers should consider the most effective interventions that they need to make right now. The longer burn piece is about the things that employers need to put into play that will slowly help to make sure that their employees do not have to take time off work again.”
This requires employers to source a range of employee data to help inform which interventions they need to introduce to their workforce, including sickness absence and claims data from any existing group risk policies.
Minett says: “Employers need to engage with their staff more deeply and find ways to collect this information more effectively.”
Whatever an employer’s approach to group risk, Swiss Re’s Wheatcroft says that employers should align the needs of their business with the needs of their workforce to ensure that their group risk provision is fit for purpose.