Govt Actuary in warning on compulsory income cover due to stakeholder effects

The Government Actuary says income protection insurance may need to be compulsory as a result of stakeholder.
Speaking at a Unum-sponsored symposium on disability in London last week, Gov- ernment Actuary Chris Day-kin claimed many employers will no longer provide staff with protection for long-term illness or disability, leaving the Government to fill the gap with state benefits.
He believes many employers will switch to stakeholder and employees will lose out on benefits associated with traditional occupational schemes such as income protection. He said this unintentional result of Government policy may lead it to consider making income protection compulsory.
Daykin said: “There is a need for an extra layer of provision through income protection coverage. Everybody needs income protection and there is a need for private provision. It is worth asking if private provision of income protection should be compulsory.
“Stakeholder pensions exa-cerbate the problem because of the move to individualisation of provision. Typically, old-style defined-benefit schemes offer better ancillary benefits than defined-contribution schemes or stakeholder.”
Fiona Price and Partners director Donna Bradshaw says: “Everyone should have income protection. It is the one type of protection that people have little .
“But I do not think making it compulsory would be a great vote winner and the Government would probably not be brave enough to do it.”