The longevity timebomb has started to tick a little more audibly recently as the issue of who pays for social care
has been thrust into the media spotlight.
This has always been a contentious issue guaranteed to get the average baby boomer hot and bothered. But it promises to feature heavily in debates in the runup to the general election.
We all know longevity is increasing. The Office for National Statistics predicts that in 2033 there will be 3.3
million people in the UK aged 85 and over compared with 1.6 million today. Although longer life is to be celebrated, it does not mean we will all enjoy good health. While life expectancy has increased by 77 days per year since 1980, healthy life expectancy has only increased by 49 days, revealing a growing gap between the two. If there is an increasing chance that more of us will need care in later life who will pay for it?
The issue of reforming and funding long-term care remains unresolved. The Department of Health issued a green paper in July 2009 setting out various funding options, including a private or state-run insurance scheme to pick up some costs, either on a voluntary or compulsory basis. But the consultation was subsequently derailed by both the Government and the opposition announcing new funding policy proposals.
The latest heated discussion has been ignited by Labour floating the idea of a compulsory charge – perhaps as much as £20,000 – which could be taken from a person’s estate after death. The Tories have dubbed this a “death tax”, indicating that reaching any cross-political consensus on funding is a long way off.
The political parties should be brave and, instead of exchanging short-term ideas and concepts, reach out and firmly grasp the long-term care funding nettle. We have the baby boomer generation currently edging towards later life with a greater possibility
of needing care but without the slightest idea of how this should be funded. The UK needs to face this demon straight on. Any solution must
give people clarity. They need to understand what they have to pay, what quality of service they will get in return and under what conditions.
A funding settlement could mean the evolution of new and better insurance products, a better mechanism of how equity release can help people
use the value of their house while remaining in it and an improved advice service.
Any solution also has to be robust enough to face up to political changes. Like pensions, care in later life is too important to be subject to changes in Government or minister. The settlement must have longevity. We need to understand the funding challenges before we can
collectively find an answer.
Rachel Vahey is head of pensions development at Aegon