Research conducted by YouGov on behalf of the Society has shown that a significant number of the British people have not put adequate safeguards in place to protect against a loss of earnings resulting from an inability to work.
53% of workers surveyed said they would depend on the state in the event of being unable to continue to work due to illness or injury, but 41% think they would last less than three months before they ran into financial difficulties.
Although employment contracts will vary, workers who are off sick for four or more days in a row are entitled to a minimum of £88.45 through Statutory Sick Pay which is paid for 28 weeks by the employer.
Thereafter, the claimant has to make an application for Employment and Support Allowance. An assessment rate of £57.90 per week for under 25s and £73.10 for over 25s is paid for up to 13 weeks and then either £102.15 or £109.30 per week depending on circumstances thereafter.
The current UK average earnings is £488 per week so even a temporary reliance on SSP or ESA would result in a significant financial shortfall for many British workers.
At this moment, over 2.5 million people have been unable to work for three months or more and are claiming illness-related benefits. Cirencester are now warning that Britons are at risk of enduring income shortage with their ‘it won’t happen to me’ attitude and lack of either savings or financial product to protect their income.
Rebecca Young, Head of Marketing at Cirencester Friendly commented:
“These findings should serve as a warning to the adviser community and UK population as a whole. Protecting earnings is an important aspect of sound financial planning; those who are unable to work due to illness or injury face a dramatic reduction in their income which in turn, results in difficulty making mortgage repayments or paying rent, buying food and paying bills. Responsible advisers have a duty to ensure that their clients have put adequate safeguards in place should the worst happen.”
