As gender pay differences become more important for employers to manage, Group Risk Development (GRiD) the industry body for the group risk protection sector, is urging employers to ensure that any group risk benefits they offer doesn’t exacerbate the situation. These benefits can include employer-sponsored life assurance, income protection and critical illness protection products.
The suite of group risk benefits generally offers financial pay-outs as a multiple or percentage of salary. Typically, group life benefits are paid as a lump sum, or as a survivor’s pension, group income protection benefits are payable via payroll as reduced salary and group critical illness benefits are paid as a lump sum. Employers need to be aware that any differences in the salaries they pay will be reflected in any financial payments made from the group risk benefits they offer, i.e. if salaries are lower, financial benefits will be lower.
“We’re hearing a lot of debate about the gender pay gap, and we believe that a crucial area that isn’t being discussed is the impact on employee benefits, and group risk benefits in particular,” says Katharine Moxham, spokesperson for GRiD. “Group risk benefits have long been recognised by employers as providing a financial lifeline when most needed, at times of ill-health, disability and death. Many employers are looking hard at how they pay men and women, and it’s important they realise that there is generally a direct correlation between salaries and group risk benefits. Any differences don’t just affect take-home pay, but any financial pay-outs from these benefits too.”
Group risk benefits are some of the most cost-effective benefits that can be offered, with costs from just 0.5 per cent of payroll. However, research from GRiD shows that their cost is routinely over-estimated. With some employers doubtless in a situation where they’re going to be reviewing, if not increasing, salaries for some of their workforce, providing group risk benefits will be some of the most affordable costs they’ll need to budget for.
Moxham notes: “Group risk benefits are some of the most valued by staff, and it’s important that employers that offer them, communicate them effectively to their staff. Remuneration packages are going to be scrutinised, and good-news stories will help engender loyalty and improve engagement.”