16/12/2014

By John Letizia, Head of Public Affairs, Unum


With the General Election only a few months away, political parties are busy consulting and listening to stakeholders on what policies they should include in their manifestos. There is no doubt that the actual election campaign will be dominated by the usual policy areas of the economy, law and order, education, health and Europe. However, I have no doubt that 2015 is set to be a big year for health and wellbeing. The new government will need to tackle head on significant challenges such as an aging workforce, the rise of mental health problems, the financial impact of sickness absence on both the private and public sectors, while at the same time ensuring high levels of economic productivity and a strong economy. Frankly, the time to act is now with medium to long term policies and solutions rather than just tinkering here and there. Some policy consensus and continuity would also be greatly welcome.

Long-term sickness absence is more common than many people think and continues to be a challenging issue. One in ten people will have to leave work for over six months due to illness at some point in their working lives. Even more worryingly, 90% of these people will not be eligible for financial support from their employers or the state. The long term impact can be huge – Unum’s research shows one in four people who leave work for health reasons fall into poverty.[1] Both employees and employers would benefit if more workers had greater protection for their personal welfare.

Some progress has already been made in terms of preventing sickness absence. With resilience becoming a key concern, employers are beginning to sit up and realise that they need to offer more choices about how, when and where employees can work. The government is already taking steps to address this, having implemented the right to request flexible working earlier this year, and with shared parental leave set to be introduced in April 2015.

We will also see the launch of the government’s Fit for Work Service, designed to provide advice and support to both employees and employers on long term absence and return to work plans. However, whilst this is a step in the right direction, it is also crucial that the government addresses employee wellbeing from both a holistic and financial perspective.

So how can the new government in 2015 make a difference and ensure UK businesses make health wellbeing a key and integral part of their modus-operandi? Unum has recently published a “manifesto” with four clear policy asks, which has asked the main political parties to consider while they consider policy options for the forthcoming General Election.

Introduce temporary tax relief for SME employers who offer all employees Income Protection

Income Protection saves taxpayers’ money by reducing welfare payments when people are unable to work and cutting the length of time people need to be off sick. To recognise these savings and incentivise greater take up of Income Protection, the government should introduce temporary tax relief for employers who provide Income Protection for all their staff.

All relevant Government-backed advice services should explain how to prepare in case you are unable to work because of ill health

People in the UK greatly underestimate the risk of being off work long-term and also overestimate the level of financial support they will receive from their employers and the state. This means they are unprepared when something does go wrong, but if they were better informed they could make smarter decisions about their back-up plan.

All relevant government advice services, such as the Money Advice Service, should include advice on how to prepare in advance of injury or ill health. This should include all sources of advice on: retirement planning, the Fit for Work Service, Age Positive, long-term physical and mental health conditions, welfare, healthy workplaces and being a good employer.

The Government should carry out regular economic evaluations of sickness absence, how to minimise it and how to help people manage financially when ill

There has been some evidence that the government is doing this, for example the recent Fuller Working Lives report, which summarised how people leaving the workforce early impacted on their health, pensions, income, careers and on the public finances. Another example is the Frost/Black Review which provided invaluable insights in to the impact of sickness absence in the UK and led to important reforms.

However, there needs to be a systematic programme of research and action. To minimise sickness absence, it is vital that we have strong evidence about the effects of sickness absence and the best value solutions to help people return to work.

Create an interdepartmental Government study to explore whether auto-enrolment can be used to improve access to other financial products

Pension auto-enrolment proved an innovative way to encourage personal and employer responsibility for financial planning that should benefit both parties and the taxpayer.

Between the election and 2018, as auto-enrolment beds in and minimum pension contributions step up to 8 per cent, the incoming government should begin interdepartmental work to understand the costs and benefits of using the auto-enrolment model to mitigate other financial risks that people are overexposed to.

Whatever the outcome of the next election, the new government must take more proactive steps to support the financial security and wellbeing of UK workers. To make this a reality, government, business and employee groups need to work together to find long term workable solutions.