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DWP opens door to IP auto-enrolment debate

DWP calls on the insurance industry to make the case for employer income protection.

The Department for Work and Pensions has opened the door to introducing auto-enrolment for income protection by calling on the industry to make its case to Government.

Only 7 per cent of employers offer income protection to their employees, according to Government figures. Insurers have been calling on the Government to nudge employees towards IP in a similar way to pensions auto-enrolment.

A senior DWP source says the Government is yet to be convinced of the need for auto-enrolment, due to the low take-up of employer protection policies, but is open to debate on the matter. 

The source says: ”If we are to see movement on Government involvement then we want to see evidence on it [IP employer take-up] beginning to grow substantially. Why don’t employers want it? Insurance firms and employers need to come up with a coherent story to get us to do it. It’s just not a majority game right now and there is some resistance, I don’t know why but there is.”

The DWP source also questioned the role of regulated financial advisers in helping the low paid. He says charities are better placed to help people in financial difficulty.

He adds: “Advice is very difficult and you end up with informal advice from family and friends which is the most trusted area. Getting advice on a regulated basis is a tough one.”

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