Employment Contract -sick pay and car allowance

marybelle01

Southend1 wrote: »

Strange because I've always had a company pension scheme that would allow for early retirement due to incapacity. I can't quite see where this PHI fits in.

But not all pension schemes offer that. And few that do pay out 75% or more of salary. If you consider the payout of PHI, given you have no employment expenses, you would be as well off as working. It doesn't compensate for the illness, but it certainly gives peace of mind.

Southend1

marybelle01 wrote: »

But not all pension schemes offer that. And few that do pay out 75% or more of salary. If you consider the payout of PHI, given you have no employment expenses, you would be as well off as working. It doesn't compensate for the illness, but it certainly gives peace of mind.

I suppose so, but it's odd that firms in the financial sector are unable to provide pension schemes that provide ill health retirement options!

getmore4less

One company(IT, PHI is quite common for the top end) the PHI that was index linked,

The long term sick got pay rises while the rest of the company was on a long term pay freeze.

hcb42

I had PHI and was in the hotel sector - and I had no pension at all..it is possible.

marybelle01

Southend1 wrote: »

I suppose so, but it's odd that firms in the financial sector are unable to provide pension schemes that provide ill health retirement options!

Ah. I see the point you are missing. PHI is not retirement. PHI is "income replacement", which a pension is not. Even the best retirement schemes do not replace income - they provide a pension which is a proportion of salary or contributions. PHI replaces salary, and it is possible to have PHI which replaces 100% of salary (although that is very expensive, and unnecessary for most people as employment is an expense - if you are no longer in employment then your expenditure reduces). PHI is a better term than early or ill-health retirement, and although employers don't have to have both, many do. I suspect that the reason why the finance sector generally have both is because they own most of the companies that offer them! One of my friends on PHI in the banking sector (and not a high flyer) has 85% of her wage paid for the rest of her working life, and will then get her full pension, assuming she does not become fit enough to work again.

Bean_Counter

Back to the original question, I would agree that the car allowance is not payable. I have also known at least one place where people on long term sick have had to return their company car until they came back to work.

Southend1

marybelle01 wrote: »

Ah. I see the point you are missing. PHI is not retirement. PHI is "income replacement", which a pension is not. Even the best retirement schemes do not replace income - they provide a pension which is a proportion of salary or contributions. PHI replaces salary, and it is possible to have PHI which replaces 100% of salary (although that is very expensive, and unnecessary for most people as employment is an expense - if you are no longer in employment then your expenditure reduces). PHI is a better term than early or ill-health retirement, and although employers don't have to have both, many do. I suspect that the reason why the finance sector generally have both is because they own most of the companies that offer them! One of my friends on PHI in the banking sector (and not a high flyer) has 85% of her wage paid for the rest of her working life, and will then get her full pension, assuming she does not become fit enough to work again.

Ah I see the distinction now. So if you had a company DB pension that allowed medical retirement by making up the pensionable service to retirement age and paying out the pension based on that, AND PHI you could end up with double bubble. I guess it's not normally necessary if you have a decent company pension but useful if you don't.