Chris Read: Integrating LTC into pension planning and provision

Chris Read asks: How do we integrate long-term care provision into future retirement products?

My mother is 92 and requires full-time care. Like many of her generation, as we pass the D-Day anniversary she vividly recalls her days as teenager in the war, in her case, in Malta. She could differentiate a German bomber from an Italian bomber no less, by the tone of its engines as they flew overhead to bomb the harbours around Valletta.

As time moved on, when her mother needed full-time care in the 1970s, care was delivered at the family home. The extended family would be involved in one way or another. Malta has a long tradition in the provision of long-term care for the elderly.

Services provided by the church and by the state have been in existence for centuries to step in when the family was not able to provide. However, continuing to live at home within the community that they know has always been the expectation.

As economic development over the past two decades has accelerated, those strong family ties have loosened as society has become wealthier. The immediate family is less inclined to provide this care. In Malta and I suspect in many other countries, this task has been taken up by immigrants, mostly from Southeast Asia and the Philippines in particular.

Now that my mother needs full-time care herself, my siblings and I also must make decisions for providing this. For the moment, we have chosen to have this care delivered in the family home. My mother now lives in England, on the south coast, close to Portsmouth. Her care providers are originally from a number of sub-Saharan African countries including Zambia, Malawi and Uganda. Before Brexit, her carers would have come from a different mix of countries.

Thorny topic

Financing long-term care has been a debate that the industry has had for many years. It has been a thorny topic of discussion without too much government attention. It keeps being put on the ‘too difficult to solve’ pile.

UK government policy on long-term care was last updated in May 2015 by the Conservative and Liberal Democrat Coalition Government. However, the devastation wrought by Covid-19 also shone a spotlight on the strained state of long-term care provision. Now is surely the right time for a renewed national focus on the provision of long-term care strategy?

There is an opportunity to question the separation of pensions from long-term care provision. As more and more of us are likely to live longer and will need long-term care, shouldn’t retirement propositions also take this into consideration?

What is ‘retirement’ today?

Furthermore, it creates the question ‘what is retirement’ today? Of course, each person will face different circumstances as they approach the end of their full-time working lives. Pension products that focus on maximising asset growth and the provision of flexible or guaranteed income are missing a more holistic approach.

Today, retirement is no longer the ceasing of full-time paid work and the wholesale substitution of that income with pension benefits. Retirement is now an extended period of one’s lifetime in which income from pensions is just one piece of an often-complex retirement income pie.

Even though we are no longer in the EU, the European Pillar of Social Rights offer a beacon that could guide governments to developing pensions fit for the post-Covid-19 world. The Pillar has 20 principles from equal opportunities and access to the labour market, fair working conditions and social protection and inclusion.

Under Principle 15, there is a phrase that everyone in old age has the right to resources that ensure living in dignity. Under Principle 18, everyone has the right to affordable long-term care services of good quality, in particular homecare and community-based services.

How can pension propositions best serve not only income in retirement but the delivery of community geriatricians and occupational health professionals to carry out domiciliary medical visits? How can it provide respite to families who take care of elderly relatives? Should there not be consideration for dementia activity centres, meals on wheels, continence services, handyman services, active ageing centres and social workers providing psychological support, guidance and assistance?

There are pension products emerging on the market that could provide the foundation for supporting long-term care that blend flexibility of income with guarantees.

The next step is to extend these products to ask the question, what does retirement mean to me? By examining what long-term care entails, delivery of services for long-term care could become the norm within a pension.

As dusk settles on the lives of many D-Day veterans, my mother will live through her twilight years on a pension not designed for her current circumstances.

Chris Read is group CEO of Dunstan Thomas