The document summarizes the conclusions and recommendations of the Commission on Funding of Care and Support in the UK. The Commission was tasked with recommending how to meet the costs of care and support through a partnership between individuals and the state, how people can protect their assets from the costs of care, and how public funding for care can be best used. Key recommendations included implementing a £35,000 lifetime cap on individual costs for care, extending means-testing to reduce costs for those with lower assets, and reforming contributions for general living costs in care facilities. The Commission estimated the cost of the reforms at £2 billion annually and that they would disproportionately benefit those in the lowest income groups. International models of funding

1. Where Next for Care?
18 October 2011

2. Welcome
Baroness Sally Greengross, ILC-UK
Jane Curtis, Institute and Faculty of Actuaries

3. The Future of Care Funding
Andrew Dilnot
Commission on Funding of Care
and Support

4. Fairer care funding
Conclusions and recommendations of the
Commission on Funding of Care and Support

5. Conclusions and recommendations of the Commission on Funding of Care and Support
The Commission’s remit
The Government asked the Commission to recommend:
– how best to meet the costs of care and support as a
partnership between individuals and the state;
– how people could choose to protect their
assets, especially their homes, against the cost of care;
– how, both now and in the future, public funding for
the care and support system can be best used to
meet care and support needs.

6. Setting the context

7. Conclusions and recommendations of the Commission on Funding of Care and Support
The number of older people is increasing
Growth in the number of older people in England 2010-2030
100%
80%
60%
40%
20%
0%
65-69 70-74 75-79 80-84 85+ 7

8. Conclusions and recommendations of the Commission on Funding of Care and Support
Flexible societies are good at adapting
Proportion of UK population aged 65 and over
25%
20%
15%
10%
5%
0%
1901 1921 1939 1961 1981 2001 2021 8

9. Conclusions and recommendations of the Commission on Funding of Care and Support
Social care is one element of state support
Public spending on older people in England 2010/11
£150bn
Social care
NHS
£100bn
£50bn
Social security
benefits
£0bn 9

10. Conclusions and recommendations of the Commission on Funding of Care and Support
Funding has not kept up with demand
Expenditure and demand: older people’s social care (2009/10 prices)
£8.0bn Demand
£7.5bn
Expenditure
£7.0bn
£6.5bn
£6.0bn
2005/06 2006/07 2007/08 2008/09 10
2009/10

11. Conclusions and recommendations of the Commission on Funding of Care and Support
Care costs are uncertain and can be very high
Expected future lifetime cost of care for people aged 65 in 2009/10
£300k
£250k
£200k
£150k
£100k
£50k
£0k
0% 20% 40% 60% 80% 11
100%

12. Conclusions and recommendations of the Commission on Funding of Care and Support
Fear is the natural response to current system
Maximum possible asset depletion for people in residential care
5% 25% Median 75% 95% Percentiles
100% of housing
wealth
80%
Maximum possible asset depletion
60%
£150k lifetime
cost
40% £100k
£75k
20%
0%
£0k £50k £100k £150k £200k £250k £300k £350k £400k £450k £500k
12
Assets on going into care

13. Conclusions and recommendations of the Commission on Funding of Care and Support
A cap removes the risk of very high costs
Expected lifetime costs for people going into care in 2010/11, by percentile
£200k
£150k
£100k
£50k
£0k
0% 20% 40% 60% 80% 13
100%

14. Conclusions and recommendations of the Commission on Funding of Care and Support
A cap removes the risk of very high costs
Expected lifetime costs for people going into care in 2010/11, by percentile
£200k
£150k
£100k
£50k
£0k
0% 20% 40% 60% 80% 14
100%

15. Conclusions and recommendations of the Commission on Funding of Care and Support
And offers significant asset protection
Maximum possible asset depletion for people with £150k residential care costs
5% 25% Median 75% 95% Percentiles
100% of housing
wealth
80%
Maximum possible asset depletion
60% Current system
40%
20%
£35k cap
0%
£0k £50k £100k £150k £200k £250k £300k £350k £400k £450k £500k
15
Assets on going into care

16. Conclusions and recommendations of the Commission on Funding of Care and Support
But we also need to reform the means test
The effect of extending the means test on the amount of support people receive
100%
80%
60%
40%
Current
system
20%
0%
£0k £25k £50k £75k £100k £125k
16

17. Conclusions and recommendations of the Commission on Funding of Care and Support
But we also need to reform the means test
The effect of extending the means test on the amount of support people receive
100%
80%
60%
Reformed system
40%
Current
system
20%
0%
£0k £25k £50k £75k £100k £125k
17

18. Conclusions and recommendations of the Commission on Funding of Care and Support
Extending the means test helps the poorest
Maximum possible asset depletion for people with £150k residential care costs
5% 25% Median 75% 95% Percentiles
100% of housing
wealth
80%
Maximum possible asset depletion
60% Current system
40%
20%
£35k cap
0%
£0k £50k £100k £150k £200k £250k £300k £350k £400k £450k £500k
18
Assets on going into care

19. Conclusions and recommendations of the Commission on Funding of Care and Support
Extending the means test helps the poorest
Maximum possible asset depletion for people with £150k residential care costs
5% 25% Median 75% 95% Percentiles
100% of housing
wealth
80%
Maximum possible asset depletion
60% Current system
40%
20%
£35k cap with extended means test
0%
£0k £50k £100k £150k £200k £250k £300k £350k £400k £450k £500k
19
Assets on going into care

20. Conclusions and recommendations of the Commission on Funding of Care and Support
The reforms reduce the costs individuals face
Initial level of wealth Maximum spend on care
£40,000 £9,000
£50,000 £12,000
£70,000 £18,000
£100,000 £28,000
£150,000 £35,000
20

21. Conclusions and recommendations of the Commission on Funding of Care and Support
Care for people of working age
Age Maximum spend on care
Under 40 Free care
40 to 50 £10,000
50 to 60 £20,000
60 to 65 £30,000
65 + £35,000
21

22. Conclusions and recommendations of the Commission on Funding of Care and Support
General living costs
− People in residential care would need to make a
contribution towards their general living costs (such as
food and heating).
− People have to pay these costs if they live at home.
− Believe this contribution should be fixed - recommending
between £7,000 and £10,000 p.a. (as the maximum
possible contribution).
22

23. Conclusions and recommendations of the Commission on Funding of Care and Support
All spending: £697bn
23

24. Conclusions and recommendations of the Commission on Funding of Care and Support
All spending: £697bn
Social care and disability benefits for adults: £27bn
Education: £61bn
The cost of reform: £2bn
Defence: £44bn
NHS: £103bn
Social security for older people: £85bn
24

25. Conclusions and recommendations of the Commission on Funding of Care and Support
We are also recommending other reforms
− A major campaign to improve information and
advice
− Better information and needs assessments for carers
− More consistent, portable assessments with a
national eligibility threshold
− Better integration of health and social care
We also think there will be an opportunity for the
financial services sector to help people with their
contributions.

26. Thank you
Commission on Funding of Care and Support
www.dilnotcommission.dh.gov.uk

27. Conclusions and recommendations of the Commission on Funding of Care and Support
Who benefits from the reforms?
Public expenditure on social care, by income quintile
£2.5bn Reforms
Current system
£2.0bn
£1.5bn
£1.0bn
£0.5bn
£0.0bn
Bottom 2 3 4 Top 27

28. Conclusions and recommendations of the Commission on Funding of Care and Support
Who benefits from the reforms?
Additional public expenditure as a proportion of income, by income quintile
1.4%
1.2%
1.0%
0.8%
0.6%
0.4%
0.2%
0.0%
Bottom 2 3 4 Top 28

29. Conclusions and recommendations of the Commission on Funding of Care and Support
Who could pay for the reforms?
Additional tax paid, as a percentage of income, if reform were funded through
direct taxes, by household income quintile
0.25%
0.20%
0.15%
0.10%
0.05%
0.00%
Bottom 2 3 4 Top
29

30. The Future of Care Funding
Panel Debate
Andrew Dilnot
Julia Unwin, JRF
Jane Ashcroft, Anchor
Jules Constantinou, Gen Re

31. Paying for Care: The International
Context
Dr. Doug Andrews
University of Southampton

32. Paying for Care:
The International Context
Doug Andrews
University of Southampton
October 2011

33. Overview
• The views expressed are mine and not
necessarily those of my employer or any
professional body of which I am a member
• Provide background on a project in progress
for the Actuarial Profession
• Outline differences in approaches to funding
• Draw some conclusions about insurance

34. Objective of Actuarial
Profession’s Project
• To identify gaps in the publicly available
literature regarding LTC, particularly with
respect to funding
• Actuarial Profession wishes to be in position
to play its part in the public interest by
working collaboratively with other bodies
and disciplines to develop long term
solutions

35. Background on Project
• University of Southampton awarded project
based on a response to a call for proposals
• Large research team & partnering required
• ILC-UK conducted primary research for 5
countries
• NASI conducted primary research for USA
• Andrews, Power, Stott – key report writers
• 5 other researchers & many expert reviewers
contributed

36. Steps in the Process
• Conduct primary research
• Produce gap analyses
• Write interim report
• Forum held Oct. 14 to provide input to the
Actuarial Profession
• Write the final report

37. Primary Research
• Gathered information on 10 countries
• Developed a template based on information
requested
• Used a referencing approach for both
general and country-specific references

38. Types of Gap Analysis
• Gaps in publicly available information
regarding LTC data and information
• Gaps in the use of Private Financial Services
Solutions (PFSS) by country

39. Oct. 14 Forum Considered
• Data and gaps identified, especially in
respect of funding LTC and the
development of PFSS
• Opportunities for collaboration to contribute
to the development of funding and PFSS
solutions and to provide information
regarding the costs and benefits of
implementing Dilnot’s recommendations

40. Spectrum of Funding Approaches
• Norway – largely state provision but
unfunded
• Germany – compulsory funded national
insurance
• In between – mix of state provision, self
funding, and PFSS
• Adopting Dilnot would increase state
provision and reduce self funding required

41. Developed Pre-funding:
Singapore’s ElderShield
• Provides for people with severe disabilities
• Covers residential facilities or home-based
costs but on indemnity basis
• Premiums paid from age 40
• Means-tested subsidies
• 3 private insurance providers
• Minimal state provision – personal
responsibility

42. Developed Pre-funding: USA
• Highly fractured financing system
• Medicaid available to those of very low
means
• Comparatively large PFSS market
• Traditional PFSS products: gradual shift
from reimbursement to cash benefits
• Other PFSS include disease-specific
insurance, annuities and reverse mortgages

43. Developed Pre-funding: Japan
• 79 aspects of health assessed
• Determines eligibility for 7 levels of support
• Financing is shared responsibility: 50% from
public funds & 50% by premiums (age 40)
• Accommodation, utilities & meal expenses
excluded from insurance benefit
• Sickness Hospitalization Insurance most
common followed by Cancer Insurance
• PFSS market is shrinking

44. The Pressure of Demographics
• Countries with greater aging challenges
have tended to take more action
• OASR indicates actives per elder (65 and up)
• Japan: 2.63 in 2010, 1.24 in 2050
• Germany: 2.98 in 2010, 1.56 in 2050
• Norway: 3.97 in 2010, 2.28 in 2050
• UK: 3.60 in 2010, 2.41 in 2050
• USA: 4.61 in 2010, 2.58 in 2050

45. Questions Regarding the Mix
• Different countries have different
preferences for government-provided and
mandated approaches
• All countries recognize that family should
play some role
• Mental health needs to be addressed
• Upper bound of 4% of GDP for all care costs
– but how should the cost be borne?

46. Reasons Given for Not
Purchasing PFSS
• Price too high
• May not require care
• Uncertain what the state will provide &
often over-estimate state provision
• State provision may change by the time care
is required

47. Concluding Observations
Regarding Dilnot
• Would define state provision
• Would specify the extent of the individual’s
responsibility
• Would remove questions regarding eligible
expenses
• All positives for a PFSS market
• Questions remain about the cost

48. Lunch Break
Afternoon session will resume at 13.15

49. Welcome Back

50. Housing and Care

51. The Role of Extra Care
Dr. Dylan Kneale
ILC-UK

52. The role of Extra Care:
Perspectives from three
Extra Care Housing
Providers
Dylan Kneale
ILC-UK and Actuarial Profession Day Conference, October 18th 2011
The International Longevity Centre-UK is an independent, non-partisan think-tank
dedicated to addressing issues of longevity, ageing and population change.

53. Health, social care and housing among
the ageing population
• Housing:
• Lived in same house for 40+ years (17% 1993/4; 24% 2007/8)
• Rising levels of under occupancy?
• Rising levels of housing wealth?.....Rising inequality? (Older people
still biggest consumers of social housing)
• Less retirement housing being constructed
• Health care:
• Compression of morbidity? (Zaninotto et al 2010)
• Non communicable diseases (stroke, dementia)
• Social Care:
• Rising cost; Unequal provision; Who pays?
• Rates of receipt of domiciliary care at home declining…
The International Longevity Centre-UK is an independent, non-partisan think-tank
dedicated to addressing issues of longevity, ageing and population change.

54. Extra care housing
What is it? Little consensus….
Wide spectrum of self-designated extra care housing
Some common principles of extra care housing:
 Ergonomically designed
 Flexible and continually adapting care packages delivered onsite
 Communal facilities
 Group activities
 Independent homes within small-medium sized retirement communities
 Usually age specific
 Leasehold tenure as well as rental tenure
 Community balance of care needs
The International Longevity Centre-UK is an independent, non-partisan think-tank
dedicated to addressing issues of longevity, ageing and population change.

55. Extra care housing
What do we know about extra care housing?
The International Longevity Centre-UK is an independent, non-partisan think-tank
dedicated to addressing issues of longevity, ageing and population change.

56. Research Questions
 1. What is the social profile of extra care housing residents
and how does this compare with residents in the community
setting?
 2. Can extra care housing be considered a home for life for
older people?
 3. Does residence in extra care housing facilitate healthier
and more independent life?
 4. What impact does residence in extra care housing have
on the uptake of overnight hospital beds?
 5. What inferences can be made about the costs and
benefits of extra care housing?
The International Longevity Centre-UK is an independent, non-partisan think-tank
dedicated to addressing issues of longevity, ageing and population change.

57. Data and Methods
 Data: Longitudinal data from 3 partners on almost 4,000 residents of extra
care housing since 1995;
 British Household Panel Survey; English Longitudinal Survey of Ageing;
Survey of English Housing (descriptive)
 Limitations/Challenges
1. Characteristics of residents Descriptive analysis
2. Extra care housing as a home for Event history analysis (Lognormal and
life Competing Risks); Propensity Score Matching
3. Extra care housing as a healthy Event history analysis (Competing Risks);
home for life Propensity Score Matching
4. Extra care housing and hospital Zero inflated negative binomial regression;
beds? Propensity Score Matching
5.N Inferences on the costs and Descriptive analysis
benefits of extra care housing?
The International Longevity Centre-UK is an independent, non-partisan think-tank
dedicated to addressing issues of longevity, ageing and population change.

58. Characteristics of residents
 Gender
 Age
 Living arrangements
 Additional care needs
 Health shocks that may predict entry to extra care housing:
 Stroke
 Dementia
 Parkinson‟s disease
The International Longevity Centre-UK is an independent, non-partisan think-tank
dedicated to addressing issues of longevity, ageing and population change.

59. Characteristics of residents
The International Longevity Centre-UK is an independent, non-partisan think-tank
dedicated to addressing issues of longevity, ageing and population change.

60. Extra care as a home for life I
Length of time until exit (all exits)
First quartile (25%) Median (50%)
All residents 3.1 6.5
Male 2.6 6.0
Gender
Female 3.4 6.7
Proportion of extra care residents remaining
1.00
0.75
0.50
0.25
0.00
0 5 10 15
analysis time (years)
No additional care needs on arrival Very low care needs on arrival
The International Longevity Centre-UK is an independent, non-partisan needs
Low - Moderate care needs Moderate to High care think-tank
High care needs on arrival Very high care needs on arrival
dedicated to addressing issues of longevity, ageing and population change.

61. Extra care as a home for life II:
Competing Risks Framework
Risk 1: moving to
Risk 2: death
an institution
All residents 8.2% (6.7-9.9) 25.0% (22.4-27.5)
Male 6.4% (4.3-9.1) 30.6% (26.0-35.3)
Gender
Female 9.1% (7.2-11.3) 22.0% (19.2-25.1)
No additional support
5.5% (4.0-7.3) 16.8% (14.2-19.6)
package
Level 1 (very low package
12.8% (6.8-20.8) 29.6% (20.0-39.7)
needs)
Health Status/Care Needs Level 2 (low support
17.5% (11.7-24.4) 39.8% (31.6-47.6)
on Arrival package)
Level 3 (moderate support
11.9% (5.2-21.5) 41.0% (28.3-53,1)
package)
Level 4 & 5 (high or very
9.9% (4.9-17.1) 56.9% (46.1-66.3)
high support package)
50-64 6.8% (2.8-10.9) 10.2% (5.8-16.3)
65-69 6.2% (3.1-11.0) 13.0% (8.2-19.1)
70-74 6.0% (3.4-9.8) 18.2% (13.3-23.7)
Age Group
75-79 9.0% (5.8-13.0) 24.6% (19.4-30.2)
The International Longevity Centre-UK is an independent, non-partisan think-tank (21.3-33.5)
80-84 8.0% (4.8-12.3) 27.2%
85+ 12.7% (8.5-17.7) 49.0% (41.8-55.8)
dedicated to addressing issues of longevity, ageing and population change.
N 1,189 1,189

62. Extra care as a home for life III
All community match sample Domiciliary care match sample
Age 65+ Age 75+ Age 80+ Age 65+ Age 75+ Age 80+
Model 1 Model 2 Model 3 Model 4 Model 5 Model 6
Models adjusted for Sub-hazard Sub-hazard Sub-hazard Sub-hazard Sub-hazard Sub-hazard
Age, Sex, Living ratio of ratio of ratio of ratio of ratio of ratio of
Arrangements, Year moving to an moving to an moving to an moving to an moving to an moving to an
institution institution institution institution institution institution
1.776 1.216 0.905 0.694 0.532* 0.316**
Extra care housing
(0.659) (0.471) (0.463) (0.207) (0.167) (0.121)
N 1714 1034 624 1630 1028 634
The International Longevity Centre-UK is an independent, non-partisan think-tank
dedicated to addressing issues of longevity, ageing and population change.

63. Extra care as a healthy home for life
 Diminution in loss of functional ability?
Time to increase in care package
1.00
0.75
0.50
0.25
0.00
0 2 4 6 8 10
analysis time
No additional care needs on arrival Very low care needs
Low-moderate care needs Moderate-High care needs
The International Longevity Centre-UK is an independent, non-partisan think-tank
High to very high care need on arival
dedicated to addressing issues of longevity, ageing and population change.

64. Extra care as a healthy home for life
 Conceptualising „risk‟ of health improvement
Risk: improvement in
health (decrease in care
needs)
All residents 24.0% (20.6-27.5)
Male 25.7% (19.5-32.3)
Gender
Female 23.8% (19.3-27.5)
No additional support package 30.8% (24.7-37.1)
Level 1 (very low package needs) 16.3% (9.4-24.8)
Level 2 (low support package) 26.0% (19.1-33.5)
Health Status/Care Needs on Arrival
Level 3 (moderate support
15.3% (7.5-25.6)
package)
Level 4 & 5 (high or very high
14.9% (7.9-24.0)
support package)
Court 9.2% (5.8-13.7)
Village or Court development
The International Longevity Centre-UK is an independent, non-partisan think-tank (27.4-36.8)
Village 32.1%
N dedicated to addressing issues of longevity, ageing and population change. 603

65. Falls in extra care
 Falls (fractures), stroke and heart disease account for the main
financial burden of older people‟s health care
 Within extra care setting, most accidents represent falls (“loss of
balance”, “got up too quick”, “turned around”)
 Ergonomic adaptations? Group exercise classes?
 Compare rates for small sample size with sample from ELSA
 Matching indicative of a lower rate in extra care (49% vs 31%)
 Sample size – caution – indicative evidence
 Men susceptible to falls in extra care setting?
The International Longevity Centre-UK is an independent, non-partisan think-tank
dedicated to addressing issues of longevity, ageing and population change.

66. Extra care and overnight hospitalisation I
 Number of available beds for geriatric medicine declined by 61%
(1987-2008); Bed blocking an issue
 Comparison group
 Inverse care law – evidence in BHPS (or other effect?)
 Incidence rate is higher than in overall community sample BUT
reflects length of stay
 Number of episodes of admission consistently lower in extra care
sample i.e. less people go to hospital in the extra care sample, but
those that do stay longer
 Closely matched comparison group overall incidence lower in extra
care sample
 Mechanism?
The International Longevity Centre-UK is an independent, non-partisan think-tank
dedicated to addressing issues of longevity, ageing and population change.

67. Extra care and overnight hospitalisation II
8
Predicted Annual Incidence Rate of Hospitalisation
7
6
(nights per year)
5
4
Control
3
Extra care
2
1
0
65+ 75+ 80+ 65+ 75+ 80+
Full community sample Advantaged community sample in receipt of
domiciliary care
The International Longevity Centre-UK is an independent, non-partisan think-tank
dedicated to addressing issues of longevity, ageing and population change.

68. Extra care and inferences on costs
 Social care costs (median community care package and extra care)
The International Longevity Centre-UK is an independent, non-partisan think-tank
dedicated to addressing issues of longevity, ageing and population change.

69. Extra care and inferences on costs II
 Initial social care costs of extra care housing may be higher
than if remaining in the community
 But, because of higher probability of transition to institutional
accommodation , long-term costs lower
– Planning for retirement
 Cost of lower rate of hospitalisation
 Cost of reduction in package
The International Longevity Centre-UK is an independent, non-partisan think-tank
dedicated to addressing issues of longevity, ageing and population change.

70. Conclusions
Extra care housing:
1. Supports some of the most vulnerable in society
2. Appears to be a home for life for the vast majority
• Compared to those with similar characteristics appears to be
lower rate of transition to institution; plausible mechanism (age,
living arrangements, gender, in receipt of care at home)
3. Associated with fewer inpatient stays
4. Associated with fewer falls
5. Is a healthy home for life
The International Longevity Centre-UK is an independent, non-partisan think-tank
dedicated to addressing issues of longevity, ageing and population change.

71. Policy Recommendations I
1. Policy-makers need a co-ordinated response to providing housing,
health care and social care for our ageing population.
2. Policy-makers should make specific pledges to increase the level of
provision of extra care housing.
3. The proposed National Planning Policy Framework should champion far
more robustly the housing needs of older people.
4. Policy-makers should recognise and encourage private sector
development of extra care housing.
5. The findings in this report suggest that policy-makers drafting the Health
White Paper should explicitly consider and make specific pledges to
increase the role of housing with care.
The International Longevity Centre-UK is an independent, non-partisan think-tank
dedicated to addressing issues of longevity, ageing and population change.

72. Policy Recommendations II
6. Policy-makers should enhance and sustain programmes of education and information
for those who are retired and newly retired to plan their housing and financial futures.
Furthermore, consumers need reassurance that policy changes will not negatively
impact their retirement decisions.
7. Any National or Local Falls Prevention Strategy should include housing as a key
component of preventing further falls.
8. Receipt of Attendance Allowance opens a gateway for many older people to access
extra care housing, through helping to finance monthly care costs and to help access
other benefits. We would urge policy-makers to ensure that all who are eligible to claim
Attendance Allowance do so which could enable greater numbers of older people to
support a stay in extra care housing.
9. Further research is needed into the extra care housing sector.
The International Longevity Centre-UK is an independent, non-partisan think-tank
dedicated to addressing issues of longevity, ageing and population change.

73. Thanks for your attention
Full report available:
www.ilcuk.org.uk
Further information:
Dr Dylan Kneale, International Longevity Centre
dylankneale@ilcuk.org.uk
The International Longevity Centre-UK is an independent, non-partisan think-tank
dedicated to addressing issues of longevity, ageing and population change.

74. Housing and Care
Julia Unwin
Joseph Rowntree Foundation

75. Julia Unwin, Chief Executive, Joseph Rowntree Foundation
and Joseph Rowntree Housing Trust

76. Our purpose
Search
Demonstrate
Influence

77. Our work programmes and aims
Empowerment
Poverty
Place
• to examine • to contribute • to identify
the root to the ways of
causes of creation and enabling
poverty, ineq development people and
uality and of communities
disadvantage, strong, sustai to have
and identify nable and control of
solutions inclusive their own
communities lives

78. Housing matters
© Mike Robertson

79. Care and repair

80. Not just about older people

81. Our credentials

82. Extra-care housing

83. Roles and responsibilities contested
 Decisions to move in
 Nominations and allocations decisions
 Different expectations of housing with care
 Buildings and facilities provision, management &
maintenance
 Health and safety
 Promoting well –being
 Safe-guarding and duty of care
 Managing increasing care and support needs
 Moving on and end-of-life

84. Common cross-cutting issues
 Regulation, complaints, user consultation and
involvement
 Costs and affordability
 Older people’s preferences being overlooked or not
heard

85. Conclusion
 Housing with care not a solution for everyone
 But is a valuable option
 Better housing and support for older people is needed
 We need a range of housing, health and social care
services for the whole ageing population – across
generations and across different stages of our lives

86. Joseph Rowntree Foundation
Visit our website www.jrf.org.uk
www.twitter.com/jrf_uk
www.twitter.com/juliaunwin
www.facebook.com/JosephRowntreeFoundation

87. Housing, Wealth and Care
Jon King
More 2 Life Ltd

88. Introducing
Jon King
Managing Director
More 2 Life Ltd

89. Structure
KRS Group
(Holding Company)
Equity Release & Care Fees Lifetime Mortgage Lender
Planning Service

90. Historical Perspective
• Link between Equity Release/Care
• Problem of resident status in the home
• Gradual move to domiciliary care
• Estimated 750bn of housing wealth held by people 65
years and over*
* Source – KRS Group

91. Key Retirement Solutions Research
• 84% of those aged 65 years and above would choose care
in the home
• One in five people aged over 65 could pay the £35,000 cap
proposed in Dilnot
• Only 2% of the over 65‟s have made financial provisions for
ill health in retirement

92. Product Development
• Products designed to meet needs
• Flexibility
• Draw down products
• Impaired terms - underwritten

93. Conclusions
• 1.4 million hours of care bought each year
• Important future for Equity Release in care funding
• Further product innovations needed

94. Final Thought…
• £4 trillion in housing wealth overall in the UK,
which double the value of our pension assets*
* Source - FT

95. Housing and Care
Panel Debate
Andrea Rozario, SHIP
Julia Unwin, JRF
Dylan Kneale, ILC-UK
Jon King, More 2 Life Ltd

96. Care Funding: The role of the
private sector

97. Care Funding: The role of the
private sector
Otto Thoresen
Association of British Insurers

98. Care Funding: The role of the
private sector
Steve Groves
Partnership

99. The Role of the Insurance Sector
Steve Groves
18 October 2011

100. The Role of the Insurance
Sector
 I am going to jump around a little!!!
 Aim to identify the role of the insurance sector over the
medium to long term
 To address question requires consideration of three not
necessarily aligned groups
– Consumers
– Policymakers
– Insurers
 Taking the policy environment as read given previous
speakers

101. The Dilnot Review
 Much to welcome
– National assessment
– Public Debate about Care
– Need for better information and Advice
 Overall adds an important third option to the debate
 Some Concerns
– Widely misinterpreted
– Complex to implement

102. Statement of the Incredibly
Obvious........
“The role of the
Insurance Sector
is to take
Insurance Risk”
[Steve Groves, FIA]

103. The Traditional Small Print.....
 Care Annuities at point of need are a classic insurance
proposition
– On an individual basis the outcome is highly uncertain
– On a portfolio basis its relatively predictable (for those with
15years of high quality data)
– Insurance industry exists to pool these risks and allow
consumers to swap uncertainty for certainty
 Pre-Funded Care Insurance actually has two problems to
overcome:
– No one wants to buy it
– No one wants to provide it

104. Why Immediate Needs
Annuities Work
Consumer
 Customer understands need; no longer an issue
with denial / priorities
 Simple to explain
 Deal known at outset; no subjectivity
 No claims assessment – automatically pays until
death
 No uncertainty over future social and political
landscape
 Reasonable Tax treatment
Insurer
 Adequate information to assess likely insurance risk

105. Why Pre-Funded Care
Insurance doesn’t Work
Consumer
 Denial; “It will never happen to me”
 Prioritisation; “Live for today”
 Claims assessment; scepticism that insurers will pay out
 Reviewable premiums
 Too Complex
 Economic Free Riders
Insurer
 Impossible to assess insurance risk accurately enough to
guarantee terms
 Guessing how many people will claim
 And how long they will live in claim
 Over a 50 year plus timeline
 So product have reviewable premiums and deal is not known at
outset

106. If I were Minister for Social
Care
 Accept Consumers will not save specifically for Care
 Focus on Middle England
– Poorest will always be state funded
– Richest will always be self funded
 Drive ISA and Pension Savings
– Woefully low at the moment
– More assets in the hands of retirees is key to a medium term solution
 Tackle Free-Rider Issues
– Want people to save and secure guaranteed income via either Pension or Care
annuities
– Free up product regulations so pension annuities can be more efficient for
care funding
– Partnership model via Disregard on Guaranteed Income (analogous to MIR in
Pension Reform)

107. Therefore the Role of the
Insurance Industry is.......
 Help Customers understand the need to accumulate assets for Later Life
– Engage at outset
– Communicate progress and implications
 Focus Not just on High Net Worth but also on “average” customers
 Deliver simple, high quality, low cost accumulation vehicles
– ISA
– Pension
 Manage Care Longevity Risk
– Provide guaranteed annuity products
– Innovate to combine with Retirement pension products

108. Care Funding: The role of the
private sector
Dr. Ros Altmann
SAGA

109. Private and confidential: not for onward distribution DRAFT /
ISSUE x.x
Future of Care Funding
Role of the Private Sector
ILC-Actuarial Profession Conference
18th October 2011
Presentation by
Dr. Ros Altmann, Director-General, The Saga Group
Twitter: @SagaRosAltmann

110. Care in Crisis
 Worse than pensions crisis as population ages and care needs rise
 No money set aside privately, not enough publicly
 Can‟t just tell people to wait longer!
 No integration of Care with NHS – no incentives to save money on
NHS
 Local authorities cutting spend from already inadequate levels
– No ring-fencing of new money
 NHS is the most expensive option – and the safety net!
– NHS will run out of resources
110

111. What’s gone wrong – funding of care?
 Policymakers focus later-life income on only pensions
 No private pre-funding for care (and billions in pensions is not
enough)
– No savings incentives for care
 Insurance can‟t deliver unlimited costs cover
 Public funding falling as demand rises
– New money not being ring-fenced
 Stark means test: £23,250 – many use all their assets and fall back
on state
111

112. Vital elements to improve care funding - Challenge to Government
 Information and education – only 7% of self-funders get proper
advice
 Tax incentives for care saving plans – workplace incentives?
– Care ISAs
– Care Annuities
– Insurance (pricing?)
– Family Care Plans
 Equity release
112

113. Using the home
 A house could be considered precautionary savings or insurance
policy
 Asset is there, but not for care! - political problem
 1 in 4 over 55s still has a mortgage,
– Average mortgage £61,000, average house value £231,000
– But would people then be slower to repay their mortgage?
 Local authority deferred payment plans
113

114. Insurance
 Immediate needs annuities – only 8,000 a year
 Standard annuities provide regular income but won‟t cover high care
costs
 Long-term care insurance is a market failure
 Pooling risk makes sense
 Developing insurance could improve prevention
– e.g. burglar alarms, locks for house insurance
114

115. Conclusions
 Two big challenges:
– Delivery of care efficiently and cost-effectively
– Funding care adequately in advance, not at point of need
 Partnership approach makes sense
 Role of private sector to help pre-funding
 Will it encourage new products for care? Not on its own
 You can argue with the detail but reform is essential – avoid long
grass!!
115

116. Where Next for Care?
Concluding Thoughts
Baroness Sally Greengross
ILC-UK

117. Where Next for Care?
18 October 2011