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Welfare Reform Act - May 08
On the 3rd May 2007 the Welfare Reform Act was given Royal Assent. One of the main areas of change in the Welfare Reform Act is the overhaul of Incapacity Benefits. The aim of the act is not to just help and support long-term absentees back into work but also to stamp out the perception of benefits as an alternative to working for a living.
The reform encourages the use of services such as absence management, which will assist employers in the resolution of existing absences and claims, and in establishing effective absence and claims management policies for the future.
How will it work?
In October The Welfare Reform Act will replace Incapacity Benefit and Income Support with the new Employment and Support Allowance (ESA). The new ESA is intended to be a far simpler system as the assessment process will consider what an individual is capable of doing rather than concentrating on what they cannot do. It will also consider what help is needed to manage their return to work.
The ESA will not label people as incapable of work and will reward those that take steps to make a return to the workforce, providing targeted financial support for those with ill health and disability.
Alongside the ESA will be the Personal Capacity Assessment (PCA), which will be the new assessment process used to assess eligibility for benefit and the support needed for a return to the workplace. The PCA will shift focus from someone’s disability to their ability to work and consider what help can be provided inline with the new legislation, such as the Disability Discrimination Act.
In comparison to current incapacity benefit the ESA:-
• Provides an increased incentive to get back to work
• Is likely to be harder to obtain
• Does not increase with the longevity of the claim
• Does not include additional payment based on age or for adult dependents
• Individuals with the most severe disabilities, who will qualify for the support allowance will receive higher benefits than those who have the capability to work
• There is greater emphasis on early intervention
• Is likely to be harder to obtain
• Does not increase with the longevity of the claim
• Does not include additional payment based on age or for adult dependents
• Individuals with the most severe disabilities, who will qualify for the support allowance will receive higher benefits than those who have the capability to work
• There is greater emphasis on early intervention
How will this effect benefits?
Post reform Group Income Protection is likely to become an increasing indispensable feature of an employers benefit package. Following the reforms employers may wish to remove all reference to State Benefits. For example Group Income Protection cover can be provided as a flat percentage of salary, no longer offsetting the final benefit against the state incapacity benefit.
One thing remains certain, being in work is good for you; and employers need to be doing all they can to support employees during periods of absence and in retuning to and remaining in work. Using an insurer that has a has a dedicated rehabilitation, claims and absence management experts is a cost effective way of ensuring employees are adequately supported through periods of ill health.
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The Beckett Investment Management Group
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Tel: 01284 754500 | Fax No: 01284 773701
8 Nursery Court, Kibworth Business Park, Harborough Rd, Kibworth, Leicestershire, LE8 0EX
Tel: 01162 756181 | Fax No: 01162 494435
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