Salary Protection schemes are often those most valued by members as it gives great security and peace of mind. Schemes are designed to pay a benefit bringing the member back to 75% of their pre-illness salary, the highest amount allowed by law. Currently salary protection premiums qualify for income tax relief which helps to make the most important form of cover the most cost effective.
The need for such a scheme arises as in the event of an employee suffering a long term illness, employers cannot continue to pay a salary on an ongoing basis. Most permanent pensionable employees in the public sector are paid a full salary for 6 months followed by 6 months of half pay. There are differences from one profession to the next with teachers for example receiving 12 months full pay.
Once sick pay entitlements run out, employees may be entitled to claim a Disability Benefit or Invalidity Pension from the Department of Social Welfare. Depending on length of service history they may also qualify for an Ill Health Early Retirement Pension from their employer. In both instances the member’s income will be significantly lower than their pre-illness salary.
At present public sector employees are looking to secure their finances but also to minimise any financial outgoing. It is important that this level of cover is maintained but at the lowest possible cost to the member. Existing schemes currently operated may very well be operating with costs, commissions and margins far above where they need to be. Ensure the best deal for your members by asking PSRA to review your salary protection scheme.