The Pensions Bill has begun its reading in Parliament. Will the creation of the National Employment Savings Trust open the market to businesses never before involved in providing financial support to their employees and create opportunities for advisers to cross-sell group risk and employee benefits products?
Paul Avis, Canada Life
With the creation of NEST, we have looked to countries where similar schemes already exist, such as Australia, in order to assess their effectiveness. From these, we surmise that it will have a gradual impact upon the market.
As many of our group risk clients already have pension arrangements for their employees that are equivalent to or provide more generous benefits than NEST, there is likely to be relatively little impact on existing business.
Nonetheless, although it is tempting to try and predict possible outcomes, we should allow time for the dust to settle before looking for changes to market attitudes.
When we do undertake product and market development, due to NEST it will be focused on simple products. These are ones which are easy-to-buy, flexible and serve the needs of large groups of employers. These packages must be affordable and relevant, through the inclusion of group income protection (GIP), critical illness and perhaps specific sums of assured-for-life benefits.
In addition, value-added schemes such as EAP need to be highlighted to employers looking to maximise the cost-effectiveness of their spending. Features such as employer online legal helplines and second diagnosis services can come as part of the package - and can supersede the value of insurance in the minds of some employers.
With Welfare Reform, the Equality Act and reductions in state disability benefits, GIP may become especially valuable as many insurers now offer vocational rehabilitation as a standard part of it. Advisers are well placed to capitalise on this opportunity.
Howard Hughes, Simplyhealth
NEST will ensure that wherever people work, a company pension scheme is something to expect, not just nice to have. Therefore, businesses will need to think about their total staff benefits package.
If employers want to retain good employees, and attract new staff, a healthcare package could be just what they need to put them ahead of the competition.
This does provide an opportunity to cross-sell affordable health benefits, such as health cash plans. These provide benefits, such as cash back for dental and optical costs, that employees will regularly use and value.
Of course, businesses will have the extra cost of pension contributions to deal with and this may mean that pay increases are pushed further back. However, employees still have rising inflation to deal with.
Simplyhealth's Simply Cash Plan starts at just £1 per employee per week, yet their perceived value for employees is much greater. Benefits such as these can help show that employers value their staff, despite not being able to give a pay rise.
Also, with the retirement age increasing, employers need to think about the long-term health and wellbeing of their staff. A health cash plan is an affordable way of doing this.
It is also worth remembering that NEST will affect employees, who will suddenly see pension payments being deducted from their pay. This will particularly hit those on low incomes. By providing a health cash plan, employers can help staff financially while also contributing to the health and wellbeing of their workforce.
