Income Protection Insurance

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1 Income Protection Insurance (Cover in the event of long-term incapacity) Members Guide - from April

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3 The company has taken out insurance cover designed to give you continued income in the event of your long-term incapacity, right up to age 65 if necessary. Your rights under this cover are governed strictly by the terms set by the insurance company to which the application for long-term incapacity benefit must be made, and whose terms and conditions governing that benefit including medical reports, are to be met by you. This guide provides an outline of the main features of the scheme, the full terms of which are contained in rules which are available for inspection on request to the Guardian Media Group Pensions Department. John Woodman Pensions Manager 3

4 You ll be covered automatically as long as you are actively at work on the date you become eligible Amendment/Discontinuation Please note that this benefit is conferred by the company at its absolute discretion and the company reserves the right to amend or discontinue this scheme at any time. In this event, benefits already in payment would not be affected. Eligibility for Membership/Cover Your terms of employment indicate whether or not you are eligible for this scheme. Medical evidence will not normally be required and you will be covered automatically as long as you are actively at work on the date you become eligible. Higher paid employees may need to provide medical evidence and you will be notified if this applies to you. Cover under this scheme ceases on termination of employment. Life Assurance Cover Members of the Lifestyle Plan are covered for death benefits as described in the relevant sections of the literature. The pay figure used for the purpose of the death benefits is the highest 12 months gross pay in the last 48 months. This basis would continue to apply during any period of sickness absence until benefit under this income protection scheme commences. At that time the death benefit cover would be calculated according to the above basis and would then be increased at the end of every 12 months by the increase in the Retail Price Index (RPI) subject to a maximum of 5% p.a. and a minimum of 0% p.a. 4

5 Benefits Short term sick pay Your terms of employment indicate the arrangements applicable in the event of your sickness or incapacity. These arrangements are generally intended to cover short term periods of absence. Long term sick pay This insurance cover providing income protection is intended to provide cover for much longer periods and the scheme has therefore been set up to provide benefit after 12 months continuous incapacity, continuing up to age 65 if necessary (or until earlier recovery or death). Benefits are usually payable after 12 months continuous incapacity The benefits would be paid in the event of your being unable, by reason of illness or injury, to perform the material and substantial duties of your occupation and not following any other occupation (see Claims Procedure on page 7). Income benefit The benefit provided under the insurance is 50% of your gross pay. For the purpose of the income protection insurance, your gross pay is based on your fixed pay during the 12 months prior to the start of your incapacity plus the average of all items of variable pay over 36 months prior to the start of your incapacity (or such shorter period as applicable if the period of employment is shorter). State Incapacity Benefit Where applicable, this is paid separately by the State, in addition to income benefit paid from the company insured scheme. 5

6 Pension Contributions In addition to the income payable to you, the income protection insurance will also provide on-going contributions for pension purposes in respect of your own contribution amounts (excluding AVCs and ECs) and the company s contributions based on the age related scale for the Lifestyle Plan or the fixed rate for non-contributors. These contributions will be calculated on your gross pay as defined above and will be based on your contribution status immediately prior to the start of your incapacity as follows:- STANDARD CONTRIBUTOR:- Employee Contributions Employer Contributions TOTAL HALF RATE CONTRIBUTOR:- Employee Contributions Employer Contributions TOTAL CONTRIBUTIONS PAID TO THE LIFESTYLE PLAN 5% 8% - 12% 13% - 17% 2.5% 4% - 6% 6.5% - 8.5% For full rate and half rate contributory members, the relevant company contribution increases according to the normal age related scale of contributions for the Lifestyle Plan. You would continue to be treated as contracted-in to the State Second Pension and would pay full National Insurance contributions on your income benefit. You could choose to pay additional voluntary contributions to the Lifestyle Plan out of your continued income as described in the main Lifestyle Plan literature in which case the employer top up of 50% would continue to apply. Increases Both your own income from this insured scheme and the on-going pension contributions, if applicable, will increase in line with the Retail Price Index (RPI), subject to a maximum of 5% p.a. and a minimum of 0% p.a. NON CONTRIBUTOR:- Employee Contributions Employer Contributions TOTAL 0% 2.5% 2.5% 6

7 Further Details Benefit is normally payable after 12 months continuous incapacity. However, in certain circumstances it may be possible to link separate periods of incapacity within the first 12 months where they are related to the same illness. Full benefit is paid when no other occupation is being followed. Proportionate benefit is paid when, as a direct result of incapacity, a new and less remunerative occupation is taken up, or if with medical consent a claimant returns to the former employment on a part-time basis and at a reduced income. The proportionate benefit is calculated in proportion to the loss of earnings, but allowance is made for cost-of-living increases. Certain restrictions may apply in respect of employees resident overseas. The maximum benefit which an employee may receive from all income protection insurances (including any additional personal income protection insurances) is three-quarters of preincapacity income less an amount equal to basic State Incapacity Benefit payable to a single person plus on-going pension contributions.there is a further overall limit for higher paid employees and you will be notified if this applies to you. On leaving employment, cover under the income protection insurance ceases. Benefit Claims Procedures The procedure for claiming benefit under the Scheme would normally begin after about 30 weeks of incapacity. A claim would need to be submitted to the insurance company through the Company Doctor who would need to be satisfied that you were totally incapacitated and unable to follow your normal occupation as a result of a disabling physical or mental condition. You would need to provide the Company Doctor and the insurance company with all the information they need to assess your claim and to give authority to contact your own GP/Specialist for details of your medical condition. You would then be advised whether or not you would qualify for benefit in principle. Following the assessment of your claim you would then be able to make formal application to accept the benefits. The benefit is intended to apply to those who are permanently incapacitated therefore on your acceptance of the benefit you would be treated as having left your job. In practice the benefit would be paid through the company payroll and you would continue to be liable for income tax and National Insurance contributions in the normal way. The benefit is continued up to age 65 as long as medical evidence supports the claim. Proof of continued incapacity would be obtained as and when required and may include up-to-date reports from your GP or independent medical examination. 7

8 The Pensions Department Guardian Media Group plc Centurion House 129 Deansgate Manchester M3 3WR Tel: Fax: