Default Retirement Age – Health Benefits

Group Risk and Private Medical Insurers have been celebrating the exception of their insurances from the new regulations around the default retirement age coming into force from this April. I should think a number of employers are also relieved that they don’t have to continue to offer these insured benefits to an increasingly older workforce with the likely increased costs. However, there are a couple of questions still unanswered.

The first is that no reference is made to benefits that an employer has chosen to self fund, e.g. Healthcare Trusts for Private Medical Care. If such self funding arrangements don’t fall within the exception, then this has major implications on the cost of the healthcare risk for employees working beyond 65. I have yet to see any clarification on this point.

Secondly, whilst not having to include over 65s in health related insurances looks on the face of it like a cap on potential liability, employers need to understand the positive impact such insurances can have in getting sick older employees back to work more cost effectively.

This will be new territory for actuaries because as far as I’m aware, there has been no research into the potential costs of insuring the employed over 65s – there has been no previous need.

But with people living longer and currently having to work longer to fund their retirement, there will be a need for such actuarial analysis so that employers can make the right funding decisions.