Only 6% of the UK’s working population are covered by group income protection (GIP), according to a roundtable report from industry body Group Risk Development (Grid).
This accounts for 1.77 million employees out of 28.98 million.
The roundtable summary also found GIP could save the government almost £4 billion per year.
In light of the Chancellor’s recent announcement of an additional £4 billion in benefit cuts planned for October’s spending review, Grid believes working with the protection industry to bridge the protection gap could deliver required benefit savings without further cuts.
Katharine Moxham, spokesperson for Grid, said: “We already know implementing GIP has significantly reduced the UK’s protection gap. So surely it is in the government’s interest to encourage more employers to invest in this benefit?
“There is certainly a strong argument for a reduction in national insurance (NI) as an incentive for offering a GIP scheme. And given the amount employers potentially save the State in this area, perhaps there is even a case to be made for increasing NI contributions for employers that do not offer a GIP scheme – after all their employees will make far greater use of the state-provided employment and support allowance, and so add greater costs to the government.”
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