Age campaigners The Employers Forum on Age (EFA) has called for an exemption to protect insured benefits in responding to the government’s consultation document on phasing out the Default Retirement Age (DRA).

EFA has raised concerns about the operation of benefits such as income protection (permanent health insurance), death in service and critical illness cover which are typically designed to provide for payment until retirement.  The EFA says such schemes, which are usually provided through group risk policies, are threatened by the removal of the DRA because they require a terminal age at which payment will cease.

Rachel Krys, campaign director, says: “We have been liaising closely with the insurance industry and consulting with our members and believe it would be helpful if an exemption was introduced to permit the continued use of a terminal age, and this might sensibly be set at the State Pension Age for men. If no exemption is provided, such schemes would need to be redesigned and it is likely that employers would increasingly switch to income protection arrangements which cap payments after a specified period of years. This would reduce benefits for some employees and would inevitably increase the burden on the state.”

For more from the EFA on the removal of DRA, see the new issue of Recruiter, out tomorrow (27 October).