Liz Walker, COO at employee benefits specialist Unum, explains how Group Income Protection can help SMEs manage rising National Insurance costs while supporting employee wellbeing.
The government’s recent UK Budget introduced an increase in the rate of employer National Insurance Contributions (NICs) from 13.8% to 15% and a reduction to the NIC threshold from £9,100 to £5,000 a year. As a result, since 6 April, employers are paying a higher rate on a larger portion of every employee’s income.
With these increasing financial pressures, businesses are seeking effective ways to manage these additional costs; from recruitment freezes to salary sacrifice options and even cuts to employee benefit packages.
However, group income protection (GIP) policies often include embedded services that go beyond financial cover for employee absences and lead to cost savings in other areas. Proper engagement with these added-value features – such as mental health support, vocational rehabilitation and access to everyday lifestyle assistance – can help employers address employee wellbeing proactively.
For example, by supporting employees in returning to work sooner or preventing long-term sickness absence, employers may reduce expenses related to recruitment, training, or temporary staffing. At the same time, improved employee health and morale can enhance productivity and reduce turnover, delivering indirect financial benefits.
Indeed, research from WPI Economics commissioned by Unum1, found that employees with access to workplace health and wellbeing support are 35% more likely to report being happy at work and 34% less likely to say that they are currently looking to for a job with a different employer.
But GIP policies can also offer a practical solution to rising costs because they include the option to insure employer NICs for claims in payment, helping employers gain financial stability and strengthen their workforce management strategies.
This optional feature allows businesses to include employer NIC liabilities in their GIP cover. It not only supports budgeting for long-term employee absence but also helps mitigate the financial uncertainty that can arise from additional NIC-related costs. For businesses navigating an ever-changing economic landscape, this feature represents a valuable tool for strategic workforce planning.
Including this feature in a GIP policy offers predictable financial planning, allowing employers to forecast costs with greater accuracy which, in turn, enables better resource allocation. It also provides enhanced absence management support, so businesses can manage liabilities linked to long-term absence, becoming more financial resilient as a result.
The optional NICs cover can form part of an employer’s wider strategy around workforce resilience and employee support. While it serves as a financial safeguard for the business, it can also enhance the employee benefits package – especially if positioned and communicated effectively.
It’s important to note that this benefit is not included automatically in GIP policies. Employers must actively select it when setting up or reviewing their coverage. Additionally, as with any insurance policy, specific terms, conditions, and exclusions apply. Employers should consult their policy documentation or their insurance provider for detailed information.
Integrating NICs cover within a GIP policy isn’t merely about cost management – it’s part of a broader strategy to reduce financial risks while supporting employees during challenging times. By exploring this option, employers can prepare for unforeseen circumstances and take a proactive step toward long-term stability.