New Forsa Salary Protection Scheme

[The_Verve]

Hi all,

The public sector union Forsa have announced a new unified Salary Protection Scheme (75% of salary, dovetailed with decreasing sick pay) to replace the four schemes which were legacy from before the consolidated union was formed in 2018. The new scheme has specified illness cover (25% of salary) and death benefit (twice annual salary) integrated also, along with a number of ancillary benefits such as access to an online doctor for prescriptions and sick certs, and a will writing service. It is underwritten by New Ireland Assurance.

The new scheme has a headline cost of 1.99% gross salary, broken down to 1.44% disability benefit, 0.32% death benefit, 0.18% specified illness, 0.05% medical immunity benefit. I'm going to ignore tax relief for the sake of simplicity. Existing scheme members will be given the benefit of opting out of the additional benefits later this year if they prefer.

Further details can be found here, hopefully you can view:

New Fórsa salary protection scheme launched

A new 80,000-member strong salary protection scheme was launched on 1st June. The culmination of two years of work and packed with new benefits, the Fórsa Salary Protection Scheme offers Fórsa members and their families a financial safety net if they suffer ill health or death.

forsatradeunion.newsweaver.com

My question is this - on my previous scheme it was .99% for just salary protection/disability benefit, and now it's 1.44% ,which means an almost 50% increase in this cost and only a a few fringe new benefits like the online doctor service, does this seem reasonable? I've heard these public service schemes tend to be quite good given the sheer volume of members but a 50% increase seems a lot, even if the figures are low in absolute terms. I can appreciate the advantage of the union offering a single integrated product to maximise benefits for members and for simplicity sake, but surely consolidation should have led to a cheaper product.

My old scheme was previously with Aviva who appear to be the most reliable when it come to paying out, based on advice of posters on here, whereas now it is with New Ireland, would this be a matter of concern?

I've only had a cursory look through the initial document so happy to be corrected if I have missed anything.

 

[Groucho]

"....existing executive and clerical scheme members can opt out of the full benefits prior to September and maintain the income protection benefit only at a cost of 1.44% of gross salary.

It's hard to see the benefit for you of being asked to pay an extra 0.45% of salary to retain what you had before.

However, the FORSA document also claims that "Had the schemes remained separate, it’s likely that there would have been significant increase in rates for all the schemes."

So perhaps Aviva would have jacked up the rates too, or closed down the scheme.

Alternatively, the new all-singing, all-dancing scheme has losers and winners and you're one of the losers!

 

[Protocol]

I pay 0.86% gross for Income Protection in the PS.

The Plan provides a Disability Benefit of up to 75% of salary less any other income that you may be entitled to (e.g. half pay, Ill Health Early
Retirement Pension, Temporary Rehabilitation Remuneration, State Illness Benefit or State Invalidity Pension).

Irish Life is the underwriter.

There is auto-enrolment by my employer.

 

[The_Verve]

"....existing executive and clerical scheme members can opt out of the full benefits prior to September and maintain the income protection benefit only at a cost of 1.44% of gross salary.

It's hard to see the benefit for you of being asked to pay an extra 0.45% of salary to retain what you had before.

However, the FORSA document also claims that "Had the schemes remained separate, it’s likely that there would have been significant increase in rates for all the schemes."

So perhaps Aviva would have jacked up the rates too, or closed down the scheme.

Alternatively, the new all-singing, all-dancing scheme has losers and winners and you're one of the losers!

I missed that line about likely increases, no surprise I suppose that inflation and general insurance increases in recent years taking their toll in this market also.

Well this is just it, I'd imagine the vast majority of clerical and executive office-based workers have a much lower risk profile than health sector and some outdoor local government workers who are more likely to have an accident that could be claimed off these schemes. I can actually swallow that to an extent, I believe in union solidarity even if it costs me a bit more.

I also just spotted in the press release 'The merger of the schemes will also stabilise the price, while ensuring fairness and equal access for all union members' which is possibly a tacit acknowledgement of this.

I pay 0.86% gross for Income Protection in the PS.

The Plan provides a Disability Benefit of up to 75% of salary less any other income that you may be entitled to (e.g. half pay, Ill Health Early
Retirement Pension, Temporary Rehabilitation Remuneration, State Illness Benefit or State Invalidity Pension).

Irish Life is the underwriter.

There is auto-enrolment by my employer.

Would you be able to say what union/sector this falls under? A treat of a rate to have.

 

[Protocol]

Cornmarket is the broker.

The employer has maybe 2,500 staff, higher education sector.

There are at least two unions, one of which is SIPTU.

The documents about the salary protection scheme don't mention any specific trade union.

The premium was 1.16% before a 2014 review.

I think the key cause of the fall in premium in 2014 was the auto-enrol facility, agreed with the unions. I presume this meant hundreds of young staff joined the scheme, and so the insurer could cut the fee to 0.86%. I have no proof of this, but it makes sense?

2018 review - Cornmarket and employer "involved all insurers in Group Protection", result was to retain Irish Life, same premium, same benefits.

 

[NoRegretsCoyote]

I missed that line about likely increases, no surprise I suppose that inflation and general insurance increases in recent years taking their toll in this market also.

Bond prices have fallen a lot though so I would have thought insurance should be becoming cheaper. I know this can take a long to feed through to prices.

The new scheme has a headline cost of 1.99% gross salary, broken down to 1.44% disability benefit,

I think a lot of this depends on your age, personal circumstances, and overall level of wealth. If I was 30 and had a young family and a mortgage I would insure against disability. If I was five years to retirement with a mortgage paid off I wouldn't be so keen as the potential lifetime drop in income would be pretty small.