Julie-Ann MacCormick: “We started doing this in March last year so it’s just been a year. But because the more complex mental illness cases go on for several years, we don’t really know the true outcome yet. But what we have seen is a lot more people on graduated return to work.
“So, in the past they probably haven’t even been aware that the policy allows for top-up pay so they can gradually re-introduce themselves to work when it’s appropriate. If somebody has a mental illness, sometimes it’s very difficult for them to be bothered to deal with the sort of minutia of their contract and realise that these things are available. Trying to make them aware of these things in the simplest terms and letting them get that benefit is making a real difference.”
As suggested during the previous Mental Health Roundtable last December, there appears to be a disconnect between the proportion of death claims attributable to suicide and the proportion of TPD claims attributable to mental health issues.
Figures provided by IFS Insurance Broking, involving a sample of four large funds, showed the suicide rates at 14.3 per cent (of death claims), 15 per cent, 9.7 per cent and 12 per cent. Only three funds had figures for mental health related TPD claims, which were: 4.5 per cent, 2.4 per cent and 33 per cent.
Greg Staunton said that TPD claims often involved an overlay of conditions, including depression and anxiety, and the (lower) figures probably were an understatement. He said that income protection insurance was very low among industry funds, as it has historically been an opt-in product, which usually meant a take-up rate of less than 5 per cent.
Staunton predicted, however, that most big funds would have income protection insurance as part of a default option within three to five years.
Colin Tate: “Before we wrap up does anyone want to expand on Simon’s concern back to the industry about what happens post retirement?”
Gerard Parlevliet: “I can make a couple of comments… I think it would be fair to say that the industry’s only just starting now, having been in a 20-year accumulation phase, to start putting its mind to that post retirement. It’s something we need to take seriously. I don’t even think that allocated pensions necessarily are the total solution. Because if you promise people that you’re going to look after them in their retirement till they die, and the money runs out, how are they going to come and say ‘the money’s run out’? So I think there’s more work that can be done there…