Income Protection Insurance weird deduction

[Pullmybrainout]

My employer has told me that the payment amount for their group income protection will be 65% of salary minus £5312.
When I queried what the £5312 related to, they said it was old sickness state benefits which are no longer paid.
Looking online, I see some articles from around 2016 mentioning that insurers will need to look at amending the terms of their policies now that £5312 isn’t paid in sickness benefit.
Has anyone come across a similar issue with this deduction still being made? I’ve only been with the company a few months and my contract T&C are quite vague but don’t mention that deduction at all.
I only work part time so that deduction makes a big difference to the % of salary I will get.
Any advice or comments would be welcome.

help please

Are you actually off sick and getting the insurance payout? I am assuming not as you say you have only been there a few months. If you are not in a position currently to have to use it, could you arrange your own private income protection insurance as a top up to give you the cover you need?

Yes, I am off sick and the insurance will be payable from next month so I am trying to get clarification if the terms of the policy now.

You will receive 65% of your salary in total.

£109.40 per week (after the 1st 3 days) will be statutory sick pay which your employer is legally liable to pay to you.

The insurance element will then top it up to 65%.

Looks like the figure for SSP in the paperwork hasn't been updated in line with current SSP rates.

Forgot to add, up until 2016 employers could reclaim all or part of their SSP payments depending on the size of the business. Now they can't reclaim anything but they are still liable to pay you at least the full amount of SSP no matter how much they may choose to top your pay up with by another means.

Providing you meet the criteria of the insurance scheme you will get your 65%. If you don't you'll just get SSP.

Hello, thanks for replying. The SSP ends before the insurance kicks in. Apparently the £5312 is the amount that the old state benefits used to pay out (ESA and WRAC).

Sorry again, no edit button on the app. Employer SSP reclaim was abolished in 2014 not 2016

Sorry I’m not being clear. My question is whether £5312 should be deducted from the 65%, given that deduction is outdated and relates to sickness state benefits which no longer exist. It seems that the terms of the insurance policy are very old so I was wondering if anyone else has run into the same issue

You have confused me now OP.

You say you have only been in post for a few months yet SSP (which is payable for up to 28 weeks) is about to run out?

Once that happens your employer will give you a form SSP1. For most people employment will end at this point as the SSP1 enables you to claim the relevant state benefit instead. I don't know much about current benefits so I'm not sure if that would be UC, ESA or something else. Seems probable that your insurance payout would then top up that benefit to your 65%, but as your benefit is likely to be means tested it could be more or less than the £5k.

You need to speak to the insurance Co.

As @HollywoodTease has explained, your employer will pay you £109.70 per week (£5,688 per year). The insurer will then top that up to 65% of your pay.

This is why they refer to it as a deduction. You get part from employer and part from them. They reduce what they pay by the amount the employer pays.

It’s possible the insurer might top it up by slightly more than they should because their terms are outdated. They are using the old rates of SSP (£5312 per year) rather than the new rates (£5688 per year), so possible you might get an additional £7.23 per week (£376 per year).

This isn’t right. The SSP stops before the insurance kicks in. The £5312 relates to old state benefits (ESA and WRAC)
No one seems to understand what my query is.

Your query is understood in so far as you have provided information.

If you want more detailed answers you would need to provide more information, or rephrase the question. You say you have only been with the company for “a few months” but SSP is payable for 28 weeks so is there a reason it is running out soon? It sounds as though the policy has been written to run alongside SSP, but in your case it is kicking in after SSP is exhausted - is there a reason?

Although either way, the terms of the policy are what they are, and if your employer has already paid you all the SSP then you will get the payout from this policy with the reduction applied (assuming you meet the terms of the policy).

As has been said, you may find other benefits kick in once SSP has been exhausted.

It is quite unusual for a policy like this to apply within the first 2 years, so do check you are entitled to it. More normally within the first 2 years an employer will simply let you go. Obviously I hope you are entitled to it, but do check.

I think OP you would have to ask your employer to share a copy of the policy document, so you could check the current terms.

It wouldn’t be unusual for say a pension scheme to have an old deduction that doesn’t apply anymore, because the terms have never been updated for changes in benefit levels. I am not an expert on PHI but I can imagine it being similar, particularly if the employer just renews every year rather than taking it out to market for better rates.

Thanks for your reply @AuntieJoyce. I’m relieved that someone can understand what I was asking!
HR has already sent me a cut and paste of the policy details they say apply to me but they have different categories for different employees so I am checking with the union whether my terms match those that were agreed (as part of a TUPE transfer).
I can understand that employers would be happy to just renew each year with the old terms because the policy would be cheaper than if the insurance paid out the whole 65% without the deduction. It is quite unfair to the employees though when the deduction was originally included because the employee would get that amount in state sickness benefits.
If the union does say that 65% was agreed as part of the TUPE transfer then I guess my employer will need to make up the shortfall between what the insurance company pays them and what they have to pay me.

You were very clear in what you asked. Good luck with it!

@Pullmybrainout sorry to jump on your post. I am wondering what the outcome was of the benefits (non existent)deducted from your policy payments. I am in a similar position having WRAC deducted from mine that doesn’t exist I’ve challenged work they just say that’s the terms of policy . Thanks in Advance

Hi @Antoniaxxxx Sorry you are in the same position.

I tried to take advice on this from various sources but really wasn’t well enough to follow it through.

I am getting new style ESA and PIP at the moment though, so that more than offsets the deduction.

Maybe try applying for those if you haven’t. Good luck