NEWS:

Press Release

For Immediate Release: 07 February 2017

Leading think tank urges retirement housing revolution to fix the housing crisis

Research finds that although 9 in 10 65-79 year olds live in under occupied houses, there could be a retirement housing gap of 160,000 houses by 2030 if Government fails to focus on last time buyers

Responding to Housing Minister Gavin Barwell’s suggestion that making it easier for older people to downsize could help solve the housing crisis, the International Longevity Centre – UK (ILC-UK) has urged Government to ensure thousands of new retirement properties are built as a matter of urgency.

ILC-UK Chief Executive Baroness Sally Greengross has also called on the Government to introduce a duty on Local Authorities to assess the needs of their older populations when making housing plans, and ensure that these needs are met before plans are put in place.

Research conducted by the ILC-UK has found:

  • Nearly 9 in 10 of the 65-79 age group live in under-occupied housing – over 50% live in homes with two or more excess bedrooms.
  • There are around 515,000 specialist retirement and extra care homes in England. However, this means that there is only enough specialist housing to accommodate 5% of the over-65 population.
  • According to ILC-UK calculations, there could be a retirement housing gap of 160,000 retirement housing by 2030 if current trends continue. By 2050, the gap could grow to 376,000.

The ILC-UK also found that those in retirement housing are significantly more likely to be living in homes with adaptations than those who do not. Approximately 87% of those in retirement housing have home adaptations, by comparison to around 60% in other types of housing.

Therefore, as well as freeing up a range of properties throughout the housing market, downsizing in later life could help to ensure more people can stay in their homes for longer, reducing pressure on the residential care sector.

Surveys conducted by the ILC-UK have also found that there are several reasons why older people do not downsize. One is a supply problem; the lack of suitable housing on the market. Another is financial considerations in terms of moving; stamp duty can be a major barrier.

Baroness Sally Greengross, Chief Executive, ILC-UK said:

'The Housing Minister is right to recognise that meeting the needs of last time buyers and encouraging downsizing is crucial to addressing the housing crisis. Downsizing can also ensure that older people live in properties that allow them to stay in their own homes for longer, and can release equity that can be used to fund social care in later live.

However, unless Government acts to encourage local authorities and developers to meet the needs of last time buyers, there could be a retirement housing gap of 160,000 retirement homes by 2030. If current trends continue, the gap could grow to 376,000 homes by 2050.

Local Authorities must have a duty to assess the needs of their older population when making housing plans, and ensure that these needs are met before plans are put in place.

Government should also consider what changes can be made to Stamp Duty to remove the perceived financial barrier of downsizing'.

Contact

Dave Eaton at ILC-UK davideaton@ilcuk.org.uk 02073400440 or 07531 164 886

The International Longevity Centre – UK (ILC-UK) is a futures organisation focussed on some of the biggest challenges facing Government and society in the context of demographic change.

Much of our work is directed at the highest levels of Government and the civil service, both in London and Brussels. We have a reputation as a respected think tank which works, often with key partners, to inform important decision-making processes.

Our policy remit is broad, and covers everything from pensions and financial planning, to health and social care, housing design, and age discrimination. We work primarily with central government, but also actively build relationships with local government, the private sector and relevant professional and academic associations.


Notes to Editors

Full references are available in The State of the Nation’s Housing. To produce The State of the Nation’s Housing, ILC-UK has analysed data available through wave 7 of the The English Longitudinal Study of Ageing and data from the English Housing Survey. The report also incorporates analysis of other official data sets including those produced by ONS and Government Departments.

The State of the Nation’s Housing is available to download at http://www.ilcuk.org.uk/index.php/publications/publication_details/the_state_of_the_nations_housing_an_ilc_uk_factpack

Survey data is available in Generation Stuck: Exploring the reality of downsizing in later life, available to download at http://www.ilcuk.org.uk/index.php/publications/publication_details/generation_stuck_exploring_the_reality_of_downsizing_in_later_life

Press Release

For Immediate Release, Thursday, 22nd December


Think tank finds that if between 2000 and 2015 the money that was used to plug private defined benefit pension deficits had instead been redirected towards wages, average salaries would be £1,473 higher.

‘The End of the Beginning? Private defined benefit pensions and the new normal’, a report by the International Longevity Centre – UK (ILC-UK) to be published in January also reveals:

  • Since the year 2000, pension contributions have accounted for an increasingly large proportion of total employee compensation. Where wages once accounted for more than 87% of total compensation, they now account for around 83%.
  • While some of those pension contributions will be for current employees, and therefore represents deferred consumption, around half has been for servicing the deficits of DB pensions which have since closed to new members.
  • The number of retirees receiving a DB pension will remain in the millions well into the latter half of this century – 3 million by 2060 and 1 million by 2070.

The collapse of BHS and concerns over the future of Tata Steel have put the sustainability of private sector defined benefit (DB) pension schemes firmly into the spotlight. These types of DB schemes promise a set payment to their members in retirement based on salary and years of service, but there are growing concerns that many such schemes and their sponsors will be unable to fulfil their promises at a time of rising life expectancy and falling interest rates.

Through new analysis of the Office for National Statistics’ National Accounts, the report finds that if the resources used to plug rising DB deficits had been directed towards boosting the pay of current workers, wages may have been, on average, as much as 6% higher (£1,473) in 2015.

While around half of all DB schemes are now closed to new members, the number of retirees receiving a DB pension will remain in the millions well into the latter half of this century – 3 million by 2060 and 1 million by 2070.


Source: Author’s calculations based on ONS National Accounts

‘The End of the Beginning? Private defined benefit pensions and the new normal’, supported by Ince and Co LLP and to be published by the ILC-UK in January will examine the scale of the DB pensions’ challenge, outlining what its implications have been for firms and employees, and how economic and demographic trends could shape the its future.

The report will make a series of policy recommendations to help ensure the long-term sustainability of both DB schemes, and the companies and employees funding them.

Ben Franklin, Head of Economics of Ageing, ILC-UK said:

While the vast majority of private sector DB schemes have closed to new members or future accrual, their impact on individuals, firms and the economy as a whole is likely to be long felt. Our analysis suggests that plugging pension deficits has acted as an opportunity cost – supporting the pensions of retirees at the cost of investing in the current workforce. This situation will not change overnight. Based on conservative assumptions about future life expectancy and mortality, we estimate that DB pensions will continue to be paid out well into the latter half of this century.

We call on government, regulators and industry to devise solutions that move away from simply securing full member benefits and towards those that build in a recognition for the wider societal and economic challenges associated with continued DB pension deficits. 

Jennifer Donohue, Head of Global Corporate and Transactional Insurance, Ince and Co LLP said:

Company executives, pension trustees and all DB stakeholders need to adapt to a society where funds of DB schemes cannot provide for forty or fifty years of  retirement. Recognition of this legacy issue, and finding solutions to it, is the responsibility of all stakeholders, corporates, the government and scientists as we face a United Kingdom where a third of all babies born three years ago are now predicted to live to a hundred years old.

There is a nascent market of “gifted structurers” who can provide short, medium and long term (some as long as sixty years) solutions to the deficits problem. These solutions need to be accepted, expanded and developed if a societal calamity is to be avoided.

Notes

‘The End of the Beginning? Private defined benefit pensions and the new normal’ will be launched on Wednesday, 18th January with a panel debate of pensions policy experts. If you are interested in attending, please contact Dave Eaton at davideaton@ilcuk.org.uk.

Contact

Dave Eaton (davideaton@ilcuk.org.uk on 07531 164 886)

About us

The International Longevity Centre – UK (ILC-UK) is a futures organisation focussed on some of the biggest challenges facing Government and society in the context of demographic change.

We ask difficult questions and present new solutions to the challenges and opportunities of ageing. We undertake research and policy analysis and create a forum for debate and action.

Our policy remit is broad, and covers everything from pensions and financial planning, to health and social care, housing design, and age discrimination. We work primarily with central government, but also actively build relationships with local government, the private sector and relevant professional and academic associations.

Press Release

For Immediate Release

21st December 2016

Struggling for a Christmas present for Nan? Take her for a meal or to the theatre.

A new report “The Missing £Billions” by the Internatonal Longevity Centre – UK (ILC-UK) and supported by Anchor, Englands largest not-for-profit provider of housing and care for older people, hightlights how people aged over 75 are missing out on leisure and social activities they want to do, resulting in a big economic hit to local economies.

  • 1.2 million over 75s want to go to the cinema more often and 1.8 million over 75s want to eat out more often.
  • Over a million people aged 75+ would like to go more often to art galleries and museums.
  • Nearly 1.8 million people aged 75+ would like to go to the theatre more often.
  • Older women would like to go out more often than men, and especially to the theatre.

The research reveals that while only a tiny proportion (between 4.7% and 7.1%) of consumers aged over 50 engage in cultural activities, such as going to the cinema, theatre, and museums, at least once a month, between a third and a quarter of the 50+ would like to do more.

While six in ten consumers aged over 50 go out to eat at least once a month, roughly four in ten of this age group would like to eat out more often.

The new research, based on new analysis of the English Longitudinal Study of Ageing reveals that as we get older we spend less: for every year beyond the age of 55, average (equivalised) household expenditure on food and groceries, eating out, clothing, and leisure declines by approximately 1%.
  
Yet the barriers to spending aren’t just about money. As we get older, we are less likely to report that we don’t have enough money to meet our needs. When asked how often they have too little money to spend on their needs, almost six in ten (58.3%) people aged over 80 reply ‘Never’, as opposed to one in four 50-54 (25.2% of 50-54 year olds).

The report highlights how older consumers with health impairments or disabilities are spending less than those without such conditions
• Older people with a walking difficulty spend on average 14.5% less than those without such a disability.
• People aged 50+ with poor eyesight spend 9-10% less on leisure and eating out.

Living in a rural area has a mixed impact on spending. It is associated with 12.1% less spending on clothes and 7.8% less on leisure activities, regardless of age, income, health barriers, and having access to a car. By contrast, people living in rural areas spend on average 7.2% more on eating out than those who live in urban areas. Over half (56%) of people aged 75+ living in rural areas have no access to internet yet a lack of internet access is associated with 28% lower spending.

The research reveals there are significant economic benefits of having internet for people with a walking difficulty: while people aged 50-64 with a walking difficulty and no access to internet spend on average £215 a week on the four items mentioned before, people in the same age group with a walking difficulty who can shop online spend on average £286, that is up to £70 more.

Cesira Urzi Brancati, Research Fellow at ILC-UK said:

‘Older people who suffer from arthritis or have walking difficulties are at risk of being more isolated, because they can’t go out as much as they would like to. We must ensure that leisure activities are as accessible as possible; also, improving internet access may help some of us spend more money as we age’

Anchor is ‘Standing Up 4 Sitting Down' as it calls on shops and retailers to do their bit to reduce older people’s loneliness and subsequent health issues by providing adequate seating in store and on the high street. This follows findings that the economy risks losing up to £3.8 billion a year through a lack of accessibility for many older people.

Anchor’s Chief Executive, Jane Ashcroft, CBE, said:

“It’s unjust for older people not to have equal access to shops and leisure activities. This generation is often cut off from the online world, so it’s crucial we enable them to connect in other ways. Standing Up 4 Sitting Down calls for change that benefits everyone. For shops, providing seating is a great opportunity to boost footfall and spending. For older people, it offers the opportunity for important social contact to tackle loneliness, encourages physical exercise, and allows a generation the chance to live later life to its fullest.”

For more information about Standing Up 4 Sitting Down and to lend your support to the campaign, go to www.su4sd.org.uk, call 0800 731 2020 or follow us on twitter using #su4sd.

Contact
Dave Eaton: 02073400440 Davideaton@ilcuk.org.uk

Derya Filiz at Anchor: derya.filiz@anchor.org.uk

Notes

“The Missing £Billions” will be published on 21st December on the ILC-UK website.

The International Longevity Centre – UK (ILC-UK) is a futures organisation focussed on some of the biggest challenges facing Government and society in the context of demographic change.

ILC-UK gratefully acknowledge the Office for National Statistics, for collecting the Living Costs and Food Survey (2014), and NatCen for the English Longitudinal Study of Ageing (2014/15). Data were made available by the UK Data Service.

About Standing Up 4 Sitting Down

Anchor is calling on shops, retailers, shopping centres and high streets to pledge on su4sd.org.uk  to maintain or increase the number of seats they provide.

The campaign aims to:

  • Provide MPs, planners, businesses and the public with a better understanding about the challenges older people face on the high street
  • Encourage a change in practice that sees the provision of seating as the norm

Shops and retailers can back the campaign by signing up at http://www.su4sd.org.uk and applying for free window stickers.
Members of the public and MPs can support by encouraging local shops and retailers to sign up for Standing Up 4 Sitting Down and engaging in conversations online using #su4sd.

About Anchor

With almost 40,000 customers in 1,000 locations, Anchor is a charity and England’s largest not-for-profit provider of housing and care to older people. Anchor provides a range of services from rented and leasehold retirement properties to residential care homes, specialist dementia care homes and retirement villages.

Press Release

For Immediate Release

5 December 2016

Think Tank urges action to improve uptake of Shingles Vaccine among older people

Responding to the news of falls in uptake of the shingles vaccination, the International Longevity Centre UK (ILC-UK) has urged a change to its eligibility guidelines.

Public Health England has reported a decline in the uptake of the Shingles vaccination in both the routine (70 year old) and catch up (78 years old) cohorts (from 61.8% in 2013/14 to 54.9% in 2015/16 and from 57.8% in 2014/15 to 55.5% in 2015/16, respectively).

In 2013, ILC-UK published “Immune Response”, calling for a lifecourse approach to immunisation and making 30 plus recommendations for policy action.

In 2015, ILC-UK launched a European Adult Immunisation Hub, which seeks to provide information and news about adult immunisation across Europe.

David Sinclair, Director, ILC-UK and Editor of the European Adult Immunisation Hub said:

“Vaccination is not just for kids. In an ageing society we need a much greater focus on improving awareness and uptake of vaccination among adults.

Anything we can do to reduce likelihood of pain is of huge importance in old age, with 6 in 10 people in their mid-70s suffering from pain.

Shingles can be a significant cause of pain in old age and vaccination is an effective way of reducing the likelihood that we will suffer from it. We must ensure that older people eligible for the Shingles vaccination take up their right to receive it.

Some parts of the country have very low coverage of the Shingles vaccine among eligible people. It is important that Public Health England and the Department of Health work to ensure that we don’t see emerging a postcode lottery in access to the vaccine.

The complexity of the age of eligibility guidelines for shingles will no doubt be hampering the ability to communicate uptake to relevant individuals. Perhaps now is the time to extend eligibility to everyone between 70 and 80, after all, all of these people are at risk and would benefit from vaccination.”

Details of who is eligible for a shingles vaccine are available here: http://www.nhs.uk/Conditions/vaccinations/Pages/who-can-have-the-shingles-vaccine.aspx

See the European Adult Immunisation Website for more information about the latest figures for Shingles uptake: http://www.adultimmunisation.eu/shinglesherpes-zoster/shingles-vaccination-uptake-falls-england/

Contact

David Eaton (davideaton@ilcuk.org.uk) 02073400440 or 07851042609

Notes

The International Longevity Centre – UK (ILC-UK) is a futures organisation focussed on some of the biggest challenges facing Government and society in the context of demographic change.


The European Adult Immunisation Hub is available at: http://www.adultimmunisation.eu/.


The Rt Hon. Stephen Dorrell, Chair of the NHS Confederation and former Secretary of State for Health and former Chair of the Health Select Committee, and Dwayne Johnson, Director of Adult Social Care, Sefton Metropolitan Borough Council have agreed to join our fantastic list of speakers at the Future of Ageing conference.

Dr Margaret McCartney, GP, author and regular contributor on Radio 4’s Inside Health, will also present at the conference. Dr Islene Araujo de Carvalho of the Department of Ageing and Life Course at the World Health Organisation will also focus on health and care issues, taking a more global perspective.

Conference attendees will also hear from:

  • John Cridland CBE, Head of the Independent State Pension Age Review
  • John Pullinger CB, National Statistician, UK Statistics Authority
  • Professor Sarah Harper, Director, Oxford Institute of Population Ageing
  • Linda Woodall, Director of Life Insurance and Financial Advice, and sponsor of the Ageing Population project, Financial Conduct Authority
  • Jonathan Stevens, Senior Vice President, Thought Leadership, AARP
  • David Sinclair, Director, International Longevity Centre - UK
  • The Rt Hon. the Lord Carey of Clifton, Archbishop of Canterbury 1991-2001

Join as at the Future of Ageing Conference on Wednesday, 9th November. Our Earlybird prices must end on 31st August, so sign up now to take advantage of this special discounted rate.

 

For Immediate Release

In an increasingly complex financial world, responsibility for financial decision-making is progressively being shifted onto the individual. Yet a new report, published by the International Longevity Centre UK, reveals we don’t know enough about how to help people be more financially savvy in their old age.

The end of compulsory annuitisation puts more responsibility on older people to actively manage their retirement income. For some older people, managing money in a digital world poses significant challenges. Others find the challenge of managing debt in old age worrisome. 

A number of studies have found that financial capability, defined as a person’s ability to manage money well, both day to day and through significant life events, is an essential prerequisite for sound financial decision-making. People with higher financial capability save and plan more for retirement, invest in the stock market and hold better differentiated portfolios, they choose cheaper mortgages, shop around for the best financial products and buy cheaper annuities. They are also less likely to be over-indebted and generally feel less anxious about their financial life.

Previous ILC-UK research has shown that of those aged over 55 with a private pension but not yet retired, only half understood what an annuity was “quite or very well”. Income drawdown was even less well understood. ILC-UK research has also revealed that older people have lower levels of numeracy than the young.

Yet, whilst there is a need to increase levels of financial capability among older people, a new review by the International Longevity Centre -UK (ILC-UK) finds that there isn’t enough evidence out there of what actually works.

‘What works? A review of the evidence on financial capability interventions and older people in retirement’ was commissioned by the Money Advice Service on behalf of the UK Financial Capability Strategy. The report carried out an extensive scoping review to establish which financial education programmes designed to improve financial capability amongst older people are effective.

The report examined different financial domains to determine which interventions were most successful in helping older people to manage their money and plan for later life. It found that while users of programmes designed improve money management generally report high levels of satisfaction and feeling more informed a lack of impact evaluation means that there is currently limited evidence of the impact of these programmes on financial behaviour.


Dr Cesira Urzì Brancati, Research Fellow, ILC-UK said:

“The world of money is becoming more complex and older people are more diverse in their experience and needs. Some older people need help understanding how to manage money. Others may need support with investments.

“We need to do all we can to reduce the risk of more older people becoming victims of scams or abuse. Helping people better understand and manage their money has to be part of the solution.

“But while there is a need to raise financial skills across our lives, our research reveals that we simply don’t adequately know how to best help people.”

David Haigh, Director of Financial Capability at the Money Advice Service, said:

“This report highlights how little we know about how best to improve the financial capability of older people.  Whilst there are a number of interventions targeted at older people, there is little reliable and robust evaluation of whether they are truly effective.

“That’s why the Money Advice Service recently announced the launch of the £7m What Works Fund.  This fund is explicitly designed to help organisations carry out a robust evaluation of interventions they are delivering to improve financial capability.  By learning more about what is really effective, we can seek to ensure resources and funding are focussed on interventions that really make a difference.

“Generally, research shows that older people are financially capable. However, they face challenges around low levels of digital literacy and lack of planning for long term care. Discovering what works and targeting effective interventions in these areas will ensure that older people are able to effectively manage their money throughout later life.”

Anna Dixon, Chief Executive of the Centre for Ageing Better, said:

"We know that financial security is an important aspect of a good later life. Building financial capability among older people as well as those approaching retirement is an important part of ensuring that people are able to manage their money in later life.

This report highlights the limited evidence on ‘what works’ to increase financial capabilities among older people in retirement. 12.2 million people are projected to face inadequate retirement incomes.

The Centre for Ageing Better wants more people to feel prepared for later life. We welcome the launch of the £7 million fund by MAS and look forward to the learning which will emerge.”


Notes
The International Longevity Centre – UK (ILC-UK) is a futures organisation focussed on some of the biggest challenges facing Government and society in the context of demographic change.

Much of our work is directed at the highest levels of Government and the civil service, both in London and Brussels. We have a reputation as a respected think tank which works, often with key partners, to inform important decision-making processes.

Our policy remit is broad, and covers everything from pensions and financial planning, to health and social care, housing design, and age discrimination. We work primarily with central government, but also actively build relationships with local government, the private sector and relevant professional and academic associations.

ILC-UK publishes new analysis to feed into FCA and HM Treasury Financial Advice Market Review


Ensuring policy and practice raises confidence in the provision of advice is key to increasing uptake, argues the International Longevity Centre - UK (ILC-UK) in their submission to the Financial Advice Market Review (FAMR).


The ILC-UK has undertaken new analysis of the Wealth and Assets Survey (WAS) (1) to feed into their submission. The analysis finds that:

 

  • Approximately 18.2 million people took out a financial product in the last two years, with nearly 3.1 million investing in risky assets.
  • Among the 43.5% who have taken out a financial product in the last two years, approximately 1 in 10 (11.2%) had been influenced by an Independent Financial Adviser. In terms of overall population, this is equivalent to approximately 2 million people.
  • Worryingly, 2.7 million people took out a financial product in the last two years without collecting any information at all.

The ILC-UK reveal that best buy comparison websites most influenced decisions about which product to take out, followed by information from providers.  In making product decisions:

  • 6.1 million people were influenced by “Best buy information, comparison website or shopped around a lot of different sources”;
  • Approximately 2 million were influenced by an “Independent Financial Adviser”;
  • Roughly 3.9 million were influenced by “Information collected from providers or providers websites”;
  • About 1.7 million were influenced by friends or family;

The ILC-UK analysis reveals that older (age 55+) consumers are significantly more likely to influenced by IFAs or providers, than by best buy information on websites.

Consumers who indicated IFAs as the most trustworthy source for retirement income advice, were significantly more likely to have been influenced by an IFA when choosing to take out a financial product.

Homeowners are also significantly more likely to be influenced by an IFA when choosing to take out a financial product. While only 1 in 16 renters (who have taken out a financial product) are likely to be influenced by an IFA, the proportion rises to 1 in 8 for homeowners.

There is greater awareness of the value of IFAs amongst those purchasing potentially risky investments. (2) ILC-UK find that the proportion of people influenced by IFAs doubles for people buying these products.

Consumers who are most financially able, i.e. those who report that they know exactly how much they have in their bank account, are also more likely to choose DIY financial solutions, by surfing best buy websites or shopping around.

The number of people not collecting any information or just relying on friends and family before taking out a financial product is large – about 4.4 million. Among them, older consumers (aged 75 plus) tend to be over-represented.

ILC-UK point out that those who are burdened by debt do not reach out. Among consumers who felt burdened by debt (approximately 17% of the sample), only about 1 in 8 (or 12.7%) received any advice at all to help them deal with their debts, and among them, 3 in 5 received advice from a free agency.

Cesira Urzì Brancati, Research fellow at the ILC-UK said:

The demand for independent financial advice is mainly driven by trust. We will not expand access to advice without action to raise trust in advice.

Sadly, advice too often does not reach those who need it the most. For some, however, overconfidence is an impediment to getting advice.

Making financial advice mandatory may not have good results. Experimental evidence from the US showed that unsolicited advice has no effect on investment behaviour – only those who want advice and ask for it will act accordingly.[1]

Our research highlights again the importance of Government and industry supporting a mid retirement financial health check. We need to ensure that people making important financial decisions in their 70s and beyond, get the support they need”.

On 1st December, the ILC-UK published Understanding Retirement Journeys, a report, supported by Prudential, which explored consumption in later life. In the report, ILC-UK called for the introduction of a mass market mid-retirement financial health check and financial advice. The Think Tank also called for the development of new rules of thumb to be built into the financial guidance process.(3)

Contact

Ben Franklin (benfranklin@ilcuk.org.uk) or Cesira Urzì Brancati (CesiraUrziBrancati@ilcuk.org.uk) at ILC-UK on 02073400440

Notes
1) The ILC-UK analysis takes advantage of the largest and most comprehensive source of information on income, wealth and assets in Great Britain, the Wealth and Assets Survey (WAS). The WAS is a longitudinal survey, which means that the same individuals are followed over time, and it is representative of all private households in Great Britain. For the purpose of our analyses, we focus on the latest wave, i.e. data collected between 2010 and 2012, and we keep only individuals aged 16+ who completed the entire interview. We are, therefore, left with a remarkably large sample of 37,601 observations.

2) By investments we mean an equity ISA, PEP, unit trust or investment trust, investment bond, stocks and shares or an endowment policy that was not linked to a mortgage.

3) See http://www.ilcuk.org.uk/index.php/news/news_posts/press_release_researcg_busts_the_myth_of_a_hedonistic_retiree_population
The ILC-UK response to the FCA and HM Treasury Financial Advice Market Review will be published on the ILC-UK website on 18th December 2015.
The International Longevity Centre - UK (ILC-UK) is an independent, non-partisan think-tank dedicated to addressing issues of longevity, ageing and population change. It develops ideas, undertakes research and creates a forum for debate.


Companies pledge to lead the way in tackling the challenges of demographic change

A group of major national and international companies have signed an open letter and pledged to “work over the next five years to help make our ageing society and economy more sustainable”.

In the letter, the companies point out that “without action, our ageing society poses a risk to the UK economy and our business''. 

The businesses highlight that demographic change today means that we are “already witnessing shortages in critical parts of our economy“.

Whilst on the one hand, the business leaders recognise the potential of older consumers. They highlight that too few people are saving enough to have a good retirement. They also point out that having a healthy workforce will be key to addressing the UK productivity, yet point out that more investment in healthy ageing needs to be made.

The businesses signing the letter argue that “action by all of us over the next five years could make the UK a world leader.”

They point out that “companies have a big part to play in tackling the challenges of demographic change.  We can create jobs for all ages. We can help our workforce age well. And we can ensure our products and services are relevant for all.”

Next week, government, industry and voluntary sector experts will come together at the first national Future of Ageing Conference. The conference, organised by the International Longevity Centre – UK (ILC-UK) will seek to kick start a debate on the role companies have to play in helping us adapt to demographic change.

Baroness Sally Greengross OBE, ILC-UK Chief Executive said: “Businesses must play a significant role in helping us adapt to our ageing society. They need to create jobs for all ages, help UK plc improve its productivity and help people to plan better for their retirement. Businesses who grasp the demographic opportunity will reap significant financial rewards. Older consumers have significant purchasing power and reaping this potential will offer economic returns. It is in all of our interests that more businesses engage with the challenges and opportunities of demographic change”.

Jane Ashcroft CBE, CEO of housing and care provider Anchor said: "We must stop seeing our ageing society as a cost. Older workers can bring wisdom and experience in the same way older consumers are fuelling our economy. We have to act now to ensure a positive future for the older people of tomorrow."

Shaun Crawford, Global Insurance Sector Leader at EY: “EY fully endorses the critical role businesses have in creating and sustaining healthy workforces that deliver the benefits for employers, individuals and communities. EY’s own research has clearly established the link between wellbeing, productivity and performance. Taking care of physical and psychological health is critical to enjoying life;working at older ages to sustain household incomes and as longevity continues to increase, improving the proportion of this extended life in good rather than in poor health.”

Steve Groves, Chief Executive Officer, Partnership said: "Partnership is pleased to add its support to the ILC-UK led pledge to work towards helping make our ageing society and economy more sustainable. The challenges associated with demographic change are significant and it is important that these are addressed as a priority. With an ever growing older population, with few saving enough for a good retirement, it is essential that more is done to encourage and stimulate a pensions savings culture and equip people with the skills and interest to engage more in the process."

Gary Shaughnessy, CEO of Zurich UK Life, said: “Increasing life expectancy and chronic under-saving could leave many people facing a shortfall in retirement. The insurance industry is rising to the challenge by encouraging more people to save and developing new products that support them in later life. The Government also has a role to play by fostering a stable pensions system that incentivises long-term saving."

Douglas Anderson, Partner at Hymans Robertson and Founder of Club Vita, said  “Attitudes around the age at which we retire are turning on their head. The mass ‘early retirement’ programmes of the 1980s and 1990s are likely to be confined to the annals of history. Average life spans have increased by around four years since then. Importantly, there is growing evidence of the health benefits of working longer - and into what is currently considered ‘retirement age’ but in the future may not. Club Vita data shows that those who begin drawing pensions at 70 live a year longer than those retiring at 60. Gradual work-to-retirement transitions, instead of a clean break, look increasingly sensible to employers as well as employees. Employers should respond accordingly and make it easier for employees to phase down working avoiding a later retirement cliff edge. This would improve productivity, staff engagement and crucially also help prevent career blockages for younger generations keen to move through the ranks.”

Gary Day from McCarthy & Stone, the UK’s leading retirement housebuilder, said: “The population is ageing rapidly but the UK’s housing stock is not suitable to cope with this change. There is a lack of choice when older people come to move to properties that are designed for them in later life. This impacts negatively on a range of areas – poorer well-being, higher public spending on health and care, and blocked housing chains. We need to raise our focus beyond starter homes and greatly encourage the building of more retirement properties and housing suitable for older people across all tenures.”

Fiona Dunsire, Chief Executive Officer, Mercer said: “Mercer’s Age Friendly Employer Research showed only a fraction of companies have implemented ‘age friendly’ policies to help them retain and attract older workers. Tactics like age-specific wellness programmes, reviews of pay equity across comparable jobs across age bands, age discrimination checks, training targeted at older workers and line manager training are still only offered by a handful of employers. Employers need to be doing more to develop corporate policies that allow their business to tap into this talent pool. We strongly advocate that companies investigate their workforce planning need to establish the extent of the impact of an ageing society on their businesses.”

Martin Jones, Chief Operating Officer at Home Instead Senior Care, a UK national homecare provider which specialises in care for older people, said: “We are already committed to creating jobs for all ages. We have CAREGivers in their 50s, 60s and 70s whose life experience make them brilliant assets for our business which delivers relationship-led homecare for the UK's ageing population. We simply do not see age as a barrier to a career in care with us and we provide ongoing training to promote personal development, no matter what a person's stage in life."

Bruce Moore, Chief Executive of Housing & Care 21, said: “As a specialist provider of housing and care services for older people, we can see clearly the challenges that an ageing population presents to society, and the different ways in which we can work together to meet these challenges and make sure people can continue to enjoy healthy and active lifestyles in later life. We must also not lose sight of the contribution older people can continue to make to our society, given the right opportunities and support.”

Rachael Saunders, Age at Work Director, Business in the Community said “More and more employers are making the most of the increasing asset of skilled, knowledge able and networked people that longer working lives offer. Making the most of this asset does mean changing how workplaces operate – responsible businesses are leading the way”.

Colin Taylor, Chief Executive Officer, Key Retirement said: “As an organisation focussed on the financial wellbeing of our older population we wholeheartedly support this initiative by ILC-UK. As a company who specialises in financial advice and support for the over 55s we fully understand the importance of ensuring that as our society ages we must continue to innovate and provide financial solutions which give both genuine and tangible values to the wider ageing population.”

Signatories to the letter and pledge are:

Jane Ashcroft, Chief Executive, Anchor

Andy Briggs, CEO, Aviva UK Life

Nick Sanderson, Chief Executive Officer, Audley Retirement

Rachael Saunders, Age at Work Director, Business in the Community

Shaun Crawford, Global Insurance Sector Leader, EY

Jilly Forster, Chair, Forster Communications

Bruce Moore, Chief Executive, Housing and Care 21

Douglas Anderson, Partner at Hymans Robertson & Founder of Club Vita

Martin Jones, Chief Operating Officer, Home Instead Senior Care

Stephen Lowe, Group Director, Just Retirement

Colin Taylor, Chief Executive Officer, Key Retirement

Fiona Dunsire, Chief Executive Officer, Mercer

Gary Day, Land and Planning Director, McCarthy and Stone

Andrew Rear, Chairman, Munich Re UK Services

Steve Groves, Chief Executive Officer, Partnership

Phil Loney, Group Chief Executive, Royal London

Romana Abdin, Chief Executive for Simplyhealth

Gary Shaughnessy, UK Chief Executive Officer, Zurich Insurance plc

Denise Keating, Chief Executive of The Employers Network for Equality and Inclusion,
and Chair of the Age Action Alliance Healthy Workplaces Group.

Contact
Dave Eaton (davideaton@ilcuk.org.uk) or David Sinclair (davidsinclair@ilcuk.org.uk). Tel 02073400440

Notes to editor

The International Longevity Centre – UK (ILC-UK) has organised the first “future of ageing” conference to take place on November 24th. During this event, signatories to the letter and the ILC-UK pledge will debate the role of business in responding to the challenges of ageing.

Other speakers at the event include Baroness Altmann (Minister for Pensions); Professor Sir Mark Walport (Government Chief Scientific Adviser [GCSA] and Head of the Government Office for Science); Lord Willetts (Executive Chair at Resolution Foundation, and former Minister of State [Department for Business, Innovation and Skills]); Lord Filkin (Chair of the Centre for Ageing Better and Chair of the House of Lords Committee on Public Service and Demographic Change); Paul Johnson (Director, Institute for Fiscal Studies);Steve Groves (Chief Executive Officer at Partnership); Professor Jane Elliott (Chief Executive, Economic and Social Research Council); Steven Baxter (Partner, Hymans Robertson);  Professor Ian Philp (Deputy Medical Director for Older People’s Care, Heart of England NHS Foundation Trust); Elaine Draper (Director, Accessibility & Inclusion, Barclays); Mario Ambrosi (Head of Communications and Public Affairs, Anchor); and Baroness Kay Andrews (Member of the House of Lords Built Environment Committee, Former Parliamentary Under-Secretary (Department for Communities and Local Government) 2006-2009)

The pledge

We will work over the next five years to help make our ageing society and economy more sustainable.

The Open Letter

Our ageing society is of significant importance to UK plc. Without action, our ageing society poses a risk to the UK economy and our business. But action by all of us over the next five years could make the UK a world leader.

Companies have a big part to play in tackling the challenges of demographic change. We can create jobs for all ages. We can help our workforce age well. And we can ensure our products and services are relevant for all.

As business leaders we have a vested interest. We need skilled workers yet are already witnessing shortages in critical parts of our economy.

We know that a healthy workforce will be a vital part of addressing the UK productivity puzzle as our society ages yet society invests too little in healthy ageing.

We want tomorrow’s older consumers active in the economy yet savings levels are not likely to be adequate to allow many to enjoy the active retirement they want.

Next week, government, industry and voluntary sector experts will come together at the first national Future of Ageing Conference. The conference will kick start a debate on the role companies have to play in helping us adapt to demographic change.

As a group of companies, we will work with policymakers and key stakeholders the over the next five years, to make our ageing society and economy more sustainable. We urge other companies to join with us.

Jane Ashcroft, Chief Executive, Anchor

Andy Briggs, CEO, Aviva UK Life

Nick Sanderson, Chief Executive Officer, Audley Retirement

Rachael Saunders, Age at Work Director, Business in the Community

Shaun Crawford, Global Insurance Sector Leader, EY

Jilly Forster, Chair, Forster Communications

Bruce Moore, Chief Executive, Housing and Care 21

Douglas Anderson, Partner at Hymans Robertson & Founder of Club Vita

Martin Jones, Chief Operating Officer, Home Instead Senior Care

Stephen Lowe, Group Director, Just Retirement

Colin Taylor, Chief Executive Officer, Key Retirement

Fiona Dunsire, Chief Executive Officer, Mercer

Gary Day, Land and Planning Director, McCarthy and Stone

Andrew Rear, Chairman, Munich Re UK Services

Steve Groves, Chief Executive Officer, Partnership

Phil Loney, Group Chief Executive, Royal London

Romana Abdin, Chief Executive for Simplyhealth

Gary Shaughnessy, UK Chief Executive Officer Zurich Insurance plc

The International Longevity Centre – UK (ILC-UK) is organising its first major all day conference on The Future of Ageing, on Tuesday 24th November 2015 in London.

Confirmed speakers include:

  • Baroness Altmann (Minister or Pensions);
  • Professor Sir Mark Walport (Government Chief Scientific Adviser [GCSA] and Head of the Government Office for Science);
  • David Willetts (Executive Chair at Resolution Foundation, and former Minister of State [Department for Business, Innovation and Skills]);
  • Lord Filkin (Chair of the Centre for Ageing Better and Chair of the House of Lords Committee on Public Service and Demographic Change);
  • Paul Johnson (Director, Institute for Fiscal Studies);
  • Steve Groves (Chief Executive Officer at Partnership);
  • Professor Jane Elliott (Chief Executive, Economic and Social Research Council);
  • Steven Baxter (Partner, Hymans Robertson); and
  • Professor Ian Philp (Deputy Medical Director for Older People’s Care, Heart of England NHS Foundation Trust) will be speaking at the conference.

The conference will be chaired by Baroness Sally Greengross (Chief Executive, ILC-UK) and Lawrence Churchill (Trustee, ILC-UK).

ILC-UK are grateful to McCarthy & Stone and Partnership for their sponsorship of this conference.

Bookings can be made through the ILC-UK website.

Ready for Ageing Alliance challenge the “myth of the baby boomer”

A new report by the Ready for Ageing Alliance seeks to bust the widely touted myth that there is a uniform group of older people in the UK – so called baby boomers – who have benefitted at the expense of younger age groups.

The report by the Ready For Ageing Alliance - a group of major national charities interested in our ageing society - presents compelling evidence that baby boomers (in this report defined as between the ages of 55-70) are in fact a diverse group of people in virtually every aspect of their lives. The report argues that in reality, one of the few things this group shares is chronological age. The Ready for Ageing Alliance argue that the term “baby boomer” has become an overused and potentially dangerous shorthand to inaccurately describe everybody in a single age group.

Evidence revealed in the report includes:

  • Whilst many boomers have benefitted from house price inflation, just under half of those aged 55-64 in England fully own their property and 24% are still renting.
  • Whilst some boomers can expect to live a long time in good health, men in the most deprived parts of the England can expect to live to 52.2 year in good health compared with 70.5 in the least deprived areas. 6.7 million people aged 45-64 have a long standing illness or a disability.
  • Whilst some boomers benefitted from free education, under one in five of those aged 55-64 in the UK have a degree.
  • Whilst some boomers will retire with good pension provision, almost three in ten of 55-64 year olds in Great Britain do not have any pension savings (nearly 2 million people).

David Sinclair, spokesperson for the Ready for Ageing Alliance said:

“The term baby boomer seems to be increasingly used to inflame divisions and resentment between younger and older generations.

The report highlights that whilst some boomers are ageing successfully, there is huge diversity in income, wealth and experiences of those aged 55-70.

Our ageing society will impact on both young and older people. Today’s younger people are tomorrows older.

If we are to ensure our increasingly ageing society is prosperous for all future generations, we must find ways of bring older and younger together rather than pitch them against each other.”

On the 24th November 2015, ILC-UK will be holding a day conference on ‘The Future of Ageing’. We will paint a picture of the future of ageing and explore the challenges and opportunities ahead.Through our unique lifecourse focus we will explore the potential impact of ageing not just on today’s older population, but also on tomorrow’s.

Register to attend the conference here.

We invite organisations to be involved in this event through various promotional opportunities, from exhibition space on the day and advertising space in the event programme to publicity and free delegate spaces.

During the conference, we will focus on five key areas: The future challenges and opportunities of health and care in an ageing society; The future of retirement income: Wealthy pensioners or persistent poverty?; The future of our economy in an ageing society: Adapting our economy to ageing?; The future of our built environment in an ageing society; and The future of ageing research.

We are delighted to confirm that Professor Sir Mark Walport (Government Chief Scientific Adviser [GCSA] and Head of the Government Office for Science), David Willetts (Executive Chair at Resolution Foundation, and former Minister of State [Department for Business, Innovation and Skills]), Lord Filkin (Chair of the Centre for Ageing Better and Chair of the House of Lords Committee on Public Service and Demographic Change) and Paul Johnson (Director, Institute for Fiscal Studies) will be speaking at the conference.

Promotional Packages are included the below table. However, we would be very happy to speak with organisations to put together a package that suits your requirements and budget.

To receive a full Promotional Opportunities brochure, or to discuss these opportunities in more detail, please contact Lyndsey Mitchell, Office and Events Manager at ILC-UK, on events@ilcuk.org.uk or 0207 340 0440.

Welcome to the August edition of the ILC-UK Update.

At the end of November, we will be holding a one-day conference titled The Future of Ageing, We are delighted that Professor Sir Mark Walport (Government Chief Scientific Adviser [GCSA] and Head of the Government Office for Science) and Paul Johnson (Director, Institute for Fiscal Studies) will be speaking at the conference. More information about this is included below. Register soon to benefit from the early bird rates.

In July, we launched our 2015 factpack, 80 at Eighty, which was inspired by our Chief Executive Baroness Sally Greengross' 80th Birthday.

Previous ILC-UK research continues to appear in the press; this month our research was quoted in an article on divorce in later life in The Telegraph, a story about older drivers in The Daily Mail and an article on Government investment into driverless cars on Yahoo

These updates are sent every couple of months. If you would like to keep on top of our latest news, please follow us on Twitter.

 

Registration is now open for our 2015 conference.
Early Bird rates currently available

The Future of Ageing - ILC-UK 2015 Conference

Tuesday, 24th November 2015; 09:00 (for a 09:30 start) – 17:00
20 Cavendish Square, London, W1G 0RN

You are invited to attend the ILC-UK Conference, The Future of Ageing, on Tuesday 24th November 2015 in London.
During the conference, we will paint a picture of the future of ageing and explore the challenges and opportunities ahead. Through our unique lifecourse focus we will explore the potential impact of ageing not just on today’s older population, but also on tomorrows.
We will explore five key areas:

  • The future challenges and opportunities of health and care in an ageing society
  • The future of retirement income: Wealthy pensioners or persistent poverty?
  • The future of our economy in an ageing society: Adapting our economy to ageing?
  • The future of our built environment in an ageing society.
  • The future of ageing research

We are delighted to confirm that Professor Sir Mark Walport (Government Chief Scientific Adviser [GCSA] and Head of the Government Office for Science) and Paul Johnson (Director, Institute for Fiscal Studies) will be speaking at the conference.

We are currently offering early bird rates until the end of August.
£150+VAT - Charity / Not for Profit / Students / Lecturers / Individuals
£200+VAT - Corporate

To benefit from these rates now, please visit the ILC-UK website.
The Future of Ageing - Early bird rates


We are grateful to McCarthy & Stone and Partnership for their sponsorship of this conference.

We are still accepting further sponsorship for the conference and packages include:

  • Exhibition space
  • Advertisement space in the conference brochure
  • Promotional materials in delegate packs

We are also happy to work with organisations to create bespoke packages. Please contact Lyndsey Mitchell on lyndseymitchell@ilcuk.org.uk or 0207 340 0440 for more information. We look forward to hearing from you.

 

European Adult Immunisation Hub

ILC-UK plan to launch an online European Adult Immunisation Hub in the autumn.

The online hub, supported by Pfizer, will provide a platform for materials to discuss the role of adult immunisation in supporting healthy ageing. ILC-UK will be collating interviews and blogs as well as promoting evidence and news on adult immunisation.

For more information or if you would like to contribute content, please contact David Sinclair (davidsinclair@ilcuk.org.uk).

Keep up to date via Facebook, Twitter, or LinkedIn.

 

ILC-UK Publications

Opportunity Knocks: Designing Solutions for an Ageing Society
This report, which highlights the vital role of good design, technology and innovation, is a collaboration between the ILC-UK, the Institution of Engineering and Technology and the University of Cambridge’s Engineering Design Centre.

Summer Budget 2015: ILC-UK Policy Briefing
The Conservative’s first Budget as the majority party since 1996 was not without incident or surprise. This short briefing outlines the ILC-UK response to the announcements.

80 at Eighty. An ILC-UK factpack
Inspired by ILC-UK Chief Executive and founder, Baroness Sally Greengross, who turned 80 on the 29th of June this year, we have launched our new factpack, '80 at Eighty' giving 80 facts about life in your 9th decade.

At a cross-roads: understanding the future likelihood of low incomes in old age
In this new White Paper for the ILC-UK Centre for Later Life Funding we argue that “Recent successes in poverty reduction at older ages could be reduced to a footnote in history” in the absence of a long term strategy for later life funding.

Avoiding the demographic crunch: Labour supply and the ageing workforce
This new study by the CIPD, in collaboration with ILC-UK, reveals that the UK could face serious skills shortages over the next 20 years if employers don’t change their approach to workforce planning as our population ages and demand for certain services rises.

The Future of Transport in an Ageing Society
This project from ILC-UK and Age UK sets out the key transport challenges that are arising from the UK’s ageing population.

 

ILC-UK Events

Village Life: Independence, Loneliness, and Quality of Life in Retirement Villages with Extra Care

Wednesday 19th August 2015; 16:00 (for a 16:30 start) – 18:00
followed by a drinks reception; London, SW1

On the 19th August, we will be holding a launch event of a new research report “Village life” which considers the impact of retirement villages on independence, loneliness and quality of life of residents.

The report incorporates a survey of residents and compares the sample with a comparable group of non-residents living in private housing.

The report has been produced with the support of Bupa and Audley. Anchor provided additional survey respondents.

During the launch, Brian Beach, Research Fellow at ILC-UK, will present the findings of the research and Nick Sanderson, CEO of Audley, and Jeremy Porteus, Director of Housing LIN, will respond.

This event is now at capacity with a long waiting list. If you have registered to attend but are no longer available, please let us know and we will release your space to someone on the waiting list.

 

ILC-UK and University of Manchester dinner debate - ‘Can integrated health and social care save money and improve services?’ supported by Independent Age.

Sunday 4th October; 18:30 (for a 19:00 dinner) – 21:00
Manchester (outside the secure zone)

In early 2015 it was announced that Greater Manchester will become the first region in England to gain full control of health spending, with 10 local authorities taking over a combined health and social care budget of approximately £6 billion.

This innovation in health care is a good opportunity to achieve joined up health and social care, a move which could improve financial sustainability of health systems as well as improving the health and wellbeing of populations.

This policy has the potential to improve the success of health innovations which have a focus on prevention. The priorities and responsibilities of local government are markedly different from central government, as it is local councils that fund other areas which may benefit from a preventative approach to health care, for example social care, housing and leisure facilities. There is therefore a direct economic interest for local authorities to, for example, delay admission into care homes, or reduce childhood obesity.

The reforms in Manchester provide a positive opportunity to take a preventative approach to health care, and are a significant opportunity to meet the challenge of the big, cross-sectional challenges resulting from demographic change.

But will the reforms deliver their promise? During this dinner debate we will consider

  • How can we ensure the devolution of health spending results in increasing focus on preventative health?
  • How can we maximise improvements in health and social care whilst also saving money?
  • How will we know if the Manchester initiative has succeeded? How should we measure success?
  • Where next for integration between health and social care?

This is a private, invitation only, dinner debate. For more information, please contact davidsinclair@ilcuk.org.uk.

 

Other events in 2015

We continue to hold various events throughout the year. These are on a range of subjects, from transport in an ageing society to pensions to dementia.

To keep up-to-date with ILC-UK events, please continue to check the ILC-UK website on a regular basis. Public events will also be advertised to our mailing list.

If you have received this newsletter via a colleague and are not currently registered on our mailing list, you can do so by emailing us at events@ilcuk.org.uk, or by visiting www.ilcuk.org.uk.

 

ILC-UK Blogs

Since our last newsletter we have posted a number of interesting blogs on our website.

David Sinclair wrote a piece on The future of long term care spending in the UK. The post highlights the relatively small proportion of GDP which is spent on long term care in the UK, and warns of the false economy of squeezing social care budgets, in that it simply increases healthcare costs. This month has also seen David, in his post titled Lifelong Learning, write about the potential impact that cuts to spending on adult learning may have, with a focus on the UK’s productivity problem.

Following on from the launch of an ILC-UK report on innovation and technology in an ageing society, in Opportunity Knocks Helen Creighton writes that without improved productivity growth, healthcare spending as a percentage of GDO could more than double by 2064.

Riah Wilkinson wrote about Gill Pharaoh, a palliative care nurse, and her decision to opt for assisted suicide over growing old.

July has also published two guest blogs. John Lawson from Aviva wrote a piece on How to incentivise pension saving, arguing that using simple and familiar messages would make the concept easier to understand, such as rebranding tax relief as the Government contribution to pension saving. Kirsty Woodard write about The challenges of ageing without children, focusing on issues such as finance, management of money, low level support and a lack of an obvious power of attorney.

You can access the ILC-UK blog here; and the ILC Global Alliance blog here. If you would like to write a guest blog for us, please contact us at events@ilcuk.org.uk.

 

Working with ILC-UK

PARTNERS PROGRAMME
We have revamped our ILC-UK Partners programme. Membership is open to companies and not for profit organisations.

Benefits of membership include: a discount on research, guaranteed spaces at events, your logo on 3 events and 3 reports per year, and advanced copies of ILC-UK research. We also provide information and advice consultancy services to our Partners and organise exclusive events.

The current ILC-UK Partners are: Anchor, Audley, Aviva, Equiniti Paymaster, Legal & General, Retirement Advantage, Partnership and Prudential.

For more information, see the new Partners Programme brochure or contact David Sinclair, davidsinclair@ilcuk.org.uk. We are increasing the cost of our Partners Programme for new members in the Autumn so please get in touch as soon as possible if you are interested in joining.

RESEARCH AND EVENTS
Research and events produced by ILC-UK are made possible by funding from various sources. If you are interested in commissioning ILC-UK research or supporting an ILC-UK event, please contact David Sinclair, davidsinclair@ilcuk.org.uk.

PRESS
If you would like to receive ILC-UK press releases, please email events@ilcuk.org.uk and we will add you to our press release list.

 

The ILC-UK today urges mortgage providers to better understand, and respond to, the increasing numbers of retirees taking loans into retirement. 

Speaking at a conference organised by the Council of Mortgage Lenders, the ILC-UK Director, David Sinclair urged the industry to ensure they do not discriminate on basis of age alone. Sinclair also urged older people to think very carefully before looking to “buy to let” to give them a return on their pension savings.

Sinclair welcomed the work being done by the Council of Mortgage Lenders (CML) on this topic and urged the industry body to continue to work with providers to ensure they are better equipped to respond to the challenges of demographic change.

Since 2010, both the number and percentage of mortgages extending into retirement has increased(1).

The ILC-UK presentation draws on five years of research into secured and unsecured debt published by the charity. It has been made available on the ILC-UK website (4).

In late 2013, ILC-UK published a report by the Personal Finance Research Centre on the mortgage debt of older households and the effect of age.

The report found (3):

  • One in five of all households (21 per cent) headed by someone aged 50 or over had outstanding mortgage borrowing on their main home in 2008-10. One in ten older households (65+) had outstanding mortgage borrowing on their main residence. 65-69 year old households with mortgage debt still owed on average £55,200.
  • 13 per cent of all older mortgaged households were struggling to repay their mortgage.
  • More than one third of those aged over 70 with outstanding borrowing had an unlinked interest only mortgage

ILC-UK research in 2014 revealed that the average housing wealth of retirees is £122,000 or £1.4tn in total (2).

While lending criteria has been tightened across the board as a consequence of first the credit crunch and then the MMR, ILC-UK argue that this may not fully explain the rising numbers of people who appear to be excluded from the mortgage market purely on the basis of age.

In his presentation, David Sinclair will argue that broader demographic trends, financial insecurity and public policy change is resulting in increasing numbers of us needing to take a mortgage into retirement.

Speaking at the conference, Sinclair urges older people to be aware of the risks of splashing their pension pot on buy to let properties. Sinclair points out that property investments can be risky and they do not guarantee returns.  ILC-UK analysis has shown that in the 1990s it took 50 quarters for inflation adjusted house prices to regain their losses in value. Outside the South East and London, UK house prices in many areas remain below inflation adjusted 2007 levels.

International Longevity Centre – UK (ILC-UK) Director, David Sinclair said:

“The industry and the regulatory environment have been seemingly struggling to respond to ageing and demographic change. We are, however, very pleased to see that the industry have begun to respond to these challenges through the important work being led by the CML.

We are living longer, our family structures are changing, we are marrying later and we are working longer.  At the same time, financial insecurity will result in more people needing to borrow more and later in life.

We should be particularly worried about those retirees with interest only mortgages but no linked investment.

Whilst the introduction of “pension freedoms” could be a boon to the buy to let sector, older people should make sure they take advice before making the jump.

With older people holding almost 1.4tn in wealth in their homes, equity release is going to be an attractive way of supplementing a pension for many.

The industry needs to ensure that the income poor asset rich pensioners are well served by this market. That said, the recent growth in the number of people aged 55-64 taking equity release is potentially very worrying.”

In the presentation, David Sinclair urges the industry to lend responsibly but not arbitrarily refuse loans on the basis of age alone. He also calls on the industry and Government to work to address the fear of borrowing faced by many income poor, asset rich customers.

Sinclair urges Government and industry to work together to ensure that individuals have access to advice. He also urges Government to push ahead with housebuilding plans to ensure that older people have more options to move to more appropriate homes. 

References
1) http://www.cml.org.uk/news/725/
2) From ELSA. Mayhew 2014. See http://www.ilcuk.org.uk/index.php/publications/publication_details/the_uk_equity_bank_towards_income_security_in_old_age
3) The mortgage debt of older households and the effect of age http://www.ilcuk.org.uk/index.php/publications/publication_details/the_mortgage_debt_of_older_households_and_the_effect_of_age
4) Available via the blog on the ILC-UK website and at http://www.slideshare.net/ilc-uk

Contact
David Sinclair at ILC-UK on 02073400440 or davidsinclair@ilcuk.org.uk

Notes
David Sinclair spoke today at the CML conference on “Pension tension: New thinking on lending into retirement” http://www.cml.org.uk/events/pension-tension-new-thinking-on-lending-into-retirement/

 

Savers could buy £1 bonds for chance to win cash prizes in monthly draws.

A premium bond-style savings plan could help solve Britain’s elderly care funding crisis, academics say.
Individuals as young as 18 could save for care in old age by buying £1 bonds sold on the internet and in post offices and corner shops.
The bonds, offering a fixed rate of interest, would put owners in line to win monthly tax-free cash prizes in draws worth more than £600 million a year.
The savings would only be released on passing a simple assessment for social care or if the owner passed away, when they would transfer to the individual’s estate. The trigger for entitlement would be set lower than that used by local authorities.

The proposal is outlined by academics at Cass Business School, part of City University London, in a newly-published paper titled, ‘Personal Care Savings Bonds: A new way of saving towards social care in later life’.
It is estimated that the UK population aged over 75 will double from five million to 10 million by 2040, placing increasing strain on both personal and state finances required to fund care in old age.

An ageing population ushers in a completely new era, requiring society to find radical solutions to the problem of funding social care,” said co-author, Professor Les Mayhew.
Personal Care Savings Bonds (PCSB) are a long–term solution to funding elderly care in which responsibility is shared by the individual and the state.
“PCSBs make it easier for individuals to save for their future social care needs in a way that builds up over decades and offers them a personal stake.
“They can be bought by people from all economic backgrounds, including those who would not ordinarily save for their care or have the resources to pay for it.  Consumers could include spontaneous purchasers as well as regular savers.”

“Although PCSBs, like insurance, pay out on the triggering of care needs, they have the attraction of producing substantial prize money that is tax free.  Unlike insurance premiums, unused bonds pass into a person’s estate.”
 

If 12.6 million people purchased PCSBs – half the number who currently buy premium bonds – the fund would reach £70 billion within a few decades.  This assumes 20% of investors would trigger care before they died. However, even if 50% triggered care the size of the fund on maturity would be only round £1bn less.
The authors calculate that someone buying just £100 of bonds every year from the age of 18 - based on 1% in prize money and 2% in interest – would build up a fund worth £11,000 by the age of 75, and £18,000 at 95.

Professor Mayhew, said:  “Hardly anyone is interested in putting savings aside for their future care needs and there are no commercial financial products available to help pay for care costs.
“With new pension flexibilities announced this year allowing people to spend down their pension pots as they wish, there is a good chance that people will run out of money by the time care is needed.
“The call from Government to develop long term care insurance products has also been very disappointing. If they were to be developed they would be expensive and suit only a few people.
“It is clear that funds generated by PCSBs would be insufficient to pay the full cost of residential care but they would be a significant contribution in the case of domiciliary care and reduce other financial pressures on individuals and families at their time of greatest need.”


Government funding for social care will come under even greater pressure in future years. To ensure PCSBs bring new money into the care system the authors propose that the funds would not count towards the social care mean test which is based on a person’s income and assets.

Baroness Sally Greengross, Chief Executive of the International Longevity Centre UK, said:  "We are pleased to have supported this excellent idea since its inception. As well as making saving more fun, we think PCSBs are practical and worthwhile. They will help to fill the growing gap in care funding - which will struggle for decades to come unless new money is found."

‘Personal Care Savings Bonds: A new way of saving towards social care in later life’, by Professors Les Mayhew and David Smith of Cass Business School is available here.

Media enquiries:
Chris Johnson, Senior Communications Officer, Cass Business School
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European policy makers urged to support rather than compel longer working lives.

The Eurozone’s economy could lose one in six workers due to population ageing. Harnessing the power of older workers is a vital component of any long-term strategy to rejuvenate economic growth across the Europe, argues the International Longevity Centre –UK today.

A new report by ILC-UK, shows that raising labour force participation rates amongst older age groups could make a significant difference to rates of economic growth over the next 40 years. The report reveals that:
• Workers aged over 50 contributed a staggering €2.5trn to Eurozone GDP in 2013.
• Without a substantial rise in workforce productivity to offset the anticipated fall in employment, GDP per capita growth rates across the Eurozone may only reach 1% per year up to 2050.
• By 2050, higher participation rates amongst the over 50s could deliver 12.6% more economic output per person (in real terms) than if participation rates by age remain the same.
• Across OECD countries, there is a strong association between poverty rates and working longer – with higher poverty rates linked to higher workforce participation.
• Avoidance of financial ruin and poverty are not the only factors keeping people in work. Health and education are also important – those countries whose older populations are in better health or who are better educated are also more likely to work longer.

“Rising from the ashes: The role of older workers in driving Eurozone recovery”, has been published today by ILC-UK, with the support of Prudential.
The report reveals that 1 in 6 Europeans are currently over 65, yet by 2060 this figure will be 1 in 3. Moreover, currently only around a half of workers aged 55-64 in the Eurozone are  in employment.
Rising from the ashes reveals that “Unless a higher proportion of older people remain in the workforce, total employment could fall by up to 17% over the next 35 years”.

ILC-UK finds that raising workforce participation at older ages in line with their scenarios could deliver a greater economic boost for the region’s periphery countries than for its core. This is partly because these countries have more catching up to do in terms of raising labour force participation amongst older age groups. It is also because population ageing is expected to occur more quickly across this part of the Eurozone.

ILC-UK argue that in order to respond to the challenges ahead, European Governments must:
• Invest in skills and training at all ages;
• Develop and utilise new technologies and, critically in the context of this report;
• Encourage greater workforce participation amongst the over 50s

Ben Franklin, Senior Research Fellow at ILC-UK said:
Older workers aren’t a silver bullet to tackle all the economic challenges that Europe faces. But what this report reveals is the huge potential benefits of extending working lives. As part of any programme of structural reform, it is important for policymakers to focus on how to maximise the productive potential of the Eurozone’s workforce over the long-term including harnessing the productive power of older workers. To maximise the economic return of older workers, Governments should consider how they can best invest in the future health and skills base of their older populations”.

Shadow Employment Minister, Stephen Timms MP, who is speaking at the launch of the report added:
I welcome this report which underlines the serious challenge we face in retaining over 50s within the labour market.  This is an issue that the UK needs to take much more seriously. Raising the labour market participation rates of the over 50s could yield significant economic and social benefits

Timothy Fassam, Head of Public Affairs at Prudential said:
“Many older people are happy to stay in work for longer and, according to Prudential’s recent analysis of ONS Annual Survey of Hours and Earnings (ASHE), they are now seeing the welcome side-effect of significant year-on-year increases in annual earnings. However, there are of course those who would prefer to give up work in their seventh decade but have had to delay their retirement because of insufficient pension savings. The best way to secure a comfortable retirement income is to save as much as possible as early as possible, and take the advice of a retirement specialist or financial adviser.”

Rising from the ashes: The role of older workers in driving Eurozone recovery”, has been published today by the ILC-UK.
The report has been published with the support of Prudential.
 

Working with The Prince’s Initiative for Mature Enterprise (PRIME) and Business In The Community, The Internation al Longevity Centre have published a major new report about the challenges facing older workers, The missing million: illuminating the employment challenges of the over 50s. This is the first in a series of three reports being published on this topic over the next year.

The research demonstrates that of the 3.3 million economically inactive people aged 50-64, approximately 1 million people have been made ‘involuntarily workless’ - pushed out of their previous job as a result of ‘shocks’, a combination of redundancy, ill health or early retirement. This has created a silent majority’, where millions of over 50s are not working but would like to and are not receiving the help they need.

The research also shows that if people aged over 50 are helped back into employment, it does not mean that younger people are ‘crowded out ‘of the labour market. Helping older people back into the labour market could also lead to a potential £88 billion boost to the UK GDP. Most importantly securing employment for older people will transform their lives and offer them the opportunity of a brighter, more secure future.

Two further reports will be published following this paper on employment solutions and benefits of maintaining an older workforce.

The Ready for Ageing Alliance today launches its manifesto for action entitled ‘Getting Ready for Ageing’.  The report calls on policymakers in Government and beyond to start engaging seriously with the trend towards longer lives, which is fundamentally changing our country and our world.

The Ready for Ageing Alliance was formed in 2013 following publication of the ‘Filkin report’  and its conclusion that we as a country were nowhere near ready for an ageing population. The aim of members Age UK, Alzheimer’s Society, Anchor, Carers UK; Centre for Policy on Ageing, the International Longevity Centre - UK (ILC-UK), Independent Age and Joseph Rowntree Foundation is to make the case for action to ensure that our society makes the most of our ageing population.

Our demography is changing significantly and quickly: by 2030 there will be 101 per cent more people aged 85 and over in England and 51 per cent more aged 65 and over, compared to 2010. Around one in three of all babies born in 2013 is expected to celebrate their 100th birthday. By the time of the next election, there will be 850,000 people living with dementia in the UK. This will rise to over 1 million by 2051


The Ready for Ageing Alliance believes that the growing numbers of people in later life are a cause for real celebration but that we need to do a lot more to respond to both the challenges and the opportunities that longevity brings.

The manifesto sets out detailed recommendations for public policy covering housing; health & social care; the economy and communities and calls for Government to take the lead, with a single point of contact, at Cabinet level, responsible for age and ageing policy.

It also targets some big 'policy own goals' that sees us as a country currently hurtling in the wrong direction in terms of getting ready for ageing. For example, it says we must:

- Stop seeing ageing as being just about older people - if we wait until we are 60 or 70 to prepare we'll have left it too late. That's why the Alliance wants everyone to be sent a pack at 50 giving information and advice.

- End age discrimination – Legislation has gone some way to preventing discrimination on grounds of age but bizarrely financial services are exempt and hidden discrimination remains in many walks of life

- Stop operating hospitals on a model designed for the past – Staff/patient ratios on hospital wards for older patients are often lower than on general wards, yet older people often need more help - e.g. to eat and drink

- Stop undervaluing the over 65s, who currently spend a massive £2.2 billion a week and contribute £61billion to the economy through employment, icaring and volunteering.

- Stop ignoring the fact that many older workers are forced to leave the labour market early.  Start building more flexible work opportunities to make it possible for family members of all ages juggle work and care for older relatives.

 

Caroline Abrahams, spokesperson for the Ready for Ageing Alliance said:

“Last month we set out how individuals had a responsibility to prepare for ageing. But the responsibility does not lie with individuals alone. Government is failing to recognise and address the long term challenges of ageing. Unless we wake up to the major challenges ahead we run the risk of poorer, more isolated pensioners, greater intergenerational tensions and an economy which is not maximising the potential of the older consumer.

"Our politicians need to 'wake up’ and respond to our ageing population. There are so many opportunities to be had from an ageing society but without action now we will waste them."

"Longer lives are a great gift and Government must lead the way in getting us ready for ageing. There is no senior Ministerial post, dedicated unit or Cabinet Committee in place and never has been under any administration. We fear this reflects disinclination among policymakers to grip the issue and commit to action.

“We are hugely underprepared for an ageing population - the time to act is now.  In the run up to the election we want every political party setting out ambitious plans to prepare for the demographic changes facing the UK. At the very least we need to stop ageing being seen as just being about older people. We are all going to age and we all need to tackle these challenges.”


Contact: Liz Fairweather
Tel :0203 033 1718
Email: Liz.fairweather@ageuk.org.uk

Charities will flourish or wither at hands of ‘super boomers’— New paper from the Commission on Voluntary Sector & Ageing.

The independent Commission on Voluntary Sector & Ageing, established by the think tanks NPC and ILC-UK, today warns charities to improve the way they work with volunteers, or risk losing the time and goodwill of the ‘super boomer’ generation.

The new paper, A better offer, warns:

  • UK charities urgently need to step-up preparations for the future, warns independent commission. ‘Without adapting, charities may find a large part of their voluntary workforce deserting them'
  • ‘Super boomers’ could be next generation of charity volunteers, but face unprecedented pressure to work longer and care for their families, with childcare a major burden reducing the time available to help charities
  • With volunteering by older people currently valued at £10bn a year, charities face an uncertain future unless they make a more compelling offer to potential volunteers
  • New survey data shows that larger charities seem to be weathering the storm—for now

Drawing on a series of discussions with volunteers and charities, as well as a survey of 12 of the largest charities in the UK, A better offer argues that volunteering can harness the talents of the most skilled and professionally experienced generation ever. It can also help solve social problems including integration and loneliness in older people.

However, charities will need to adapt or face losing out on these potential gains. A better offer raises concerns that charities are under-prepared to attract volunteers who will be more demanding than previous generations, and will already be committed to later retirement and the burdens of covering childcare for their grandchildren.

Charities also need to prepare for a period when demographic change will mean that there may be a shortage of younger volunteers, an issue of particular importance to charities who work with children.

The Commission also surveyed 12 of the UK’s largest charities, who collectively control hundreds of millions of pounds a year and work with tens of thousands of volunteers. Most reported that their volunteer numbers were up compared to three years ago—bucking a trend which has seen volunteering falling across the sector as a whole, and raising serious concerns about the burden placed on smaller charities. The surveyed charities also voiced their worries about the care duties and grandparenting roles that would eat into the time of potential volunteers in the future.

Dan Corry, Chief Executive of NPC and a member of the Commission, said:

‘Older people have traditionally volunteered for charities in their droves. Without the massed ranks of retirees who stuff envelopes and take minutes in meetings, thousands of charities would struggle to survive. But society in changing, and charities need to change with it. If we get this right the future looks rosy. But get it wrong, and act too late, and there’s a real risk that charities will find their volunteer army heading for the hills. Charities can start by considering the small things—getting older and younger volunteers to work together to share skills, making sure volunteers are better recognised for all their time and effort. Older volunteers are among the most generous volunteers, giving thousands of hours to causes they care for, often in menial tasks and with relatively little in return. But charities are naïve if they think that the next generation will put up with the same thing’.

David Sinclair, Director of ILC-UK, said:

‘The “baby” and “super” boomers may provide a new wave of volunteers who could greatly benefit the charity sector by bringing a plethora of skills and knowledge. This is a valuable opportunity and it is up to us to design roles that make use of these skills and build an environment which is attractive to volunteer in’

 

SOS 2020 is a major new programme of work led by ILC-UK which will raise awareness of the need to adapt our economy and society to the big strategic challenges posed by an ageing population.

SOS 2020 will outline the specific policy measures needed to achieve this goal. It will illuminate the issues that face us and develop fully considered and costed solutions that will act as a “call to action” to policy-makers and politicians. Above all SOS 2020 aims to raise national and international awareness of problems and possible solutions in which we all have a vested interest.

In an increasingly interdependent world, there is a need to look beyond national shores for collective consensus and joint solutions. SOS 2020 will give us the opportunity to do this.

ILC-UK launched SOS 2020 in July 2014, with the support of Aviva and EY, where we began two projects:

  • Financial Sustainability - which will focus on how we can deliver sustainable yet adequate retirement incomes
  • Health Sustainability – which will focus on fostering innovation in health and social care systems


Financial Sustainability
The aim of this project is to draw out some credible scenarios about resilience in retirement over the next twenty years in response to the new freedoms at the point of retirement. We envisage creating three credible scenarios, each with clear driving forces which combine to shape the future in different ways. These scenarios will be qualitative and quantitative – utilising compelling stories and narratives alongside robust modelling work in order to demonstrate the impact of the different scenarios on financial resilience. This will enable us to make important recommendations to policy makers and to show the various impacts of making different policy choices.  


Health Sustainability
The aim of this project is to create a bank of robust innovative case studies of sustainable health systems, fully costed, and then apply these to different countries from which we can assess their suitability to drive innovation at the global level. We will identify innovations across four agreed thematic areas, these will include: the prevention agenda, dementia, technology, information analysis, health literacy, integrated care, research and drug development and incorporate the wider financing of health and social care (for example which systems incentivise a sustainable approach, insurance systems and self-care systems). 
By identifying sustainable innovations in health and care from across the world and then trying to apply these in different country settings, we ultimately hope to offer robust and verifiable models that will improve performance (better health outcomes and reduced costs) at a time of growing pressure.

While undertaking these projects ILC-UK will continue to seek support for other strands of work as part of SOS 2020. This programme of work has the potential to be a leading catalyst with an evidence led, solution orientated approach, not only in the fields of health and retirement featured today, but also in Communities, the built environment and transport systems which, collectively, will shape the quality of life for us and our children.

If you would like more information on any aspect of the project please do get in touch:

 

  • Ben Franklin (benfranklin@ilcuk.org.uk) will be leading on Sustainable Retirement Income.
  • Sally-Marie Bamford (sallymariebamford@ilcuk.org.uk) will be leading on Sustainable Healthcare.
  • Jonathan Scrutton (jonathanscrutton@ilcuk.org.uk) will be the overall coordinator for the project.

Responding to today’s Fiscal Sustainability Report, Baroness Sally Greengross, Chief Executive of the International Longevity Centre - UK (ILC-UK) said:

“The future costs of our ageing society should rightly be worrying for policymakers. But they are not all inevitable.

If we don’t do much more to support longer working lives and aid innovation in health, care and financial services, our economy will certainly suffer. Future generations will not thank us for inaction today.

These figures highlight that the UK isn’t ready for ageing. Policymakers have some tough decisions to make but procrastinating is not helping anyone.

There is a role for all of us. That’s why, on the back of these figures, ILC-UK are delighted to announce the launch of a major two year project to explore how we can ensure the future sustainability of our ageing society. Learning lessons from across the world, SOS 2020 (Sustainable Older Society 2020) will set out a plan of costed solutions aimed at Governments, the private and the public sector.”

Local and national policy-makers are failing to ensure that our communities meet the needs of all ages according to a new report, Community Matters. Making our Communities Ready for Ageing.

Community Matters, published by the International Longevity Centre - UK (ILC-UK), with the support of Age UK, incorporates a 10 point call to action for local authorities to become ready for ageing.

The report argues that policy makers must work to ensure that communities do more than cater for our basic needs. It argues that communities should be places of fun for all. The report highlights the importance of supporting walking and cycling in old age as well as need to ensure housing is adaptable to an ageing society.

New analysis published as part of the report reveals that simply to keep up with anticipated population growth between now and 2037, we will need to build houses at the fastest rate since the 1970s.

The report explores the Government's plan for a new Garden City in Ebbsfleet and highlights ideas to make the new community "age friendly". Ideas include the creation of shared facilities for fun and play, and the introduction of Electric 'pods' to transport people around.

Baroness Sally Greengross, Chief Executive of ILC-UK said "Our homes are not just places to live and our towns and cities should not just provide for our basic needs. We must have a bold and aspirational vision for communities in an ageing society.  Cities and towns must of course, meet our basic needs. Yet they are failing to do so. We are even failing to provide public toilets. But our aspiration for age friendly cities must be much greater than providing toilets.

Communities can reduce loneliness and isolation but we must make sure that services exist and well intentioned "safeguarding" does not prevent all ages from living, working and playing together. And we need community centres rather than "places to hire".

Good communities start with good housing. As well as building more, we need to build better.

Our society is ageing. Our communities could help us age well but they are simply not ready for ageing. We must build a new ambition vision of the community of the future. An older community, but also hopefully a more fun one.”

Caroline Abrahams, Charity Director at Age UK says "Our population is ageing and it is essential that communities start to think now about how best to enable older people to get out and about and access essential services.  The alternative is that as we age we are increasingly stuck at home and cut off from the rest of society limiting our ability to enjoy life, to socialise and stay independent for longer. More toilets and seats will be essential for all of us but we should be more ambitious for later life and start building communities that do more than just work for older people but provide greater opportunities for participation”.

Malcolm Dean, who chaired the expert discussions added: "The last century saw major breakthroughs in dealing with the injuries of biological ageing. This new century needs to apply the same energy and commitment to resolving the injuries of social ageing - isolation, loneliness, and exclusion from too many community activities. The report is packed with simple and inexpensive new approaches to making neighbourhoods more 'age friendly'".

The report incorporates an ideas bank of recommendations in order to ensure that our Communities are "Ready for Ageing including:

  • Making our communities fun (swings at bus stops): Local authorities should support provision of desegregated apparatus for fun in outdoor spaces that includes people of all ages
  • Build more homes and ensure they are accessible and adaptable: The Lifetime Homes Standard should be made mandatory and Government should introduce a tax incentivised voucher scheme for housing adaptations.
  • Let us know about our housing options (a "last time movers" guide): Estate agents should be trained to better understand the potential needs of the older consumer and could better promote the Lifetime Homes Standard.
  • Get us walking: Replace the older people crossing road sign with a sign with more positive imagery promoting walking as part of later life. Develop budding services to encourage people to walk to town and services. Maintain pavements.
  • Get us on our bikes: Increasing numbers of cyclists across the life-course should be prioritised as a public health, environmental and social goal by Health and Wellbeing Boards and Local Authorities.
  • Ensure access to green space: Recognise the health benefits of access to green space, and placing some spending on green space under the umbrella of health.
  • Tackle loneliness and isolation: Community centres should protect time for local group activities to maintain the space as community resource (as opposed to a hall for hire). Safeguarding systems should not unnecessarily 'kill kindness' by stopping young and old working, living and playing together.

One million pension savers face significant risks as a consequence of the new pension freedoms to be introduced in 2015 argues a new report. “Freedom and Choice in Pensions: Risks and Opportunities”, has been published today by the International Longevity Centre-UK (ILC-UK).

The report warns that unless a number of critical measures are put in place, pensioners could be worse off throughout retirement due to the new freedoms which will see the effective requirement to take an annuity abolished and pensioners able to take all their pension as cash.

The low interest rate environment, the lack of financial advice for the mass market and behavioural biases such as the underestimation of life expectancy, could result in individuals reacting to the new freedoms by blowing their pension pots on big ticket or high risk items. The report points out that individuals could unwittingly undertake high risk investment strategies including buy to let, or become the victim of scams that have appeared outside the regulatory perimeter.

To avoid this worst case scenario, and to ensure better financial resilience in retirement, the report makes a number of recommendations including:

  • The development of simplified advice models to cater for the mass market.
  • Effective innovation in products and services to meet changing income needs during retirement.
  • Increased consumer engagement well in advance of retirement.
  • One-off guidance to address behavioural biases.
  • A regulatory approach that welcomes innovation but remains wary of economic and behavioural drivers of consumer risk.

Launching the paper, ILC-UK Research Fellow Ben Franklin said:

“The new pension freedoms will completely shake-up the retirement income landscape. We need to make the most of the opportunities that the new flexibilities will offer, and minimise their risks.

On the one hand, new flexibilities offer the opportunity for individuals to maximise their investment strategies to meet their changing income needs during retirement. On the other hand, without appropriate guidance and advice, the economic climate and persistent behavioural biases threaten to induce poor decisions resulting in reduced financial resilience during retirement.

With so much to be done before the new framework is in place, the real threat to success lies in the extraordinarily tight timeframe for implementation – with less than a year to go before people can take advantage of the new freedoms.”

Freedom and choice in pensions: risks and opportunities is available to download.

For more information please contact: Ben Franklin or David Sinclair at ILC-UK ben.franklin@ilcuk.org.uk (02073400440 or 07543646992)

With the independence vote on the horizon, Scotland’s policymakers must face up to the challenges of a falling working age population while also tackling significant public health challenges argues a new report by the International Longevity Centre-UK (ILC-UK).

The report highlights the demographic changes facing Scotland over the next 20 years - revealing that:

  • By 2037, Scotland’s working age population is expected to be 3.5% smaller than it was in 2013 – the largest percentage fall of any UK nation (England +5%);
  • Assuming employment rates by age remain the same, this would imply a fall of 45,000 (-2%) in total employment compared with a 1.7 million (+6%) rise across the UK as a whole; 
  • In the year 2014, it is anticipated that there will be 19 more babies for every 1,000 women aged 30-34 in England than in Scotland;
  • Since 1981, at birth male life expectancy in Scotland has been around 2 years shorter than across the UK as a whole.  However, to help ensure continued economic growth, Scotland will need to support longer working lives;
  • At birth disability-free life expectancy for males in Scotland is below State Pension Age and four years shorter than for the UK as a whole. It will therefore be particularly critical that Scotland addresses problems associated with health and disability in order to support longer working lives;
  • Over the next two decades the dependency ratio (the ratio of non-working age people to working age) will rise by 40% in Scotland by comparison to a 30% rise in the UK;

The report is being launched today at an ILC-UK ‘Population Patterns’ event in Edinburgh – which is part of a broader series of events - supported by the specialist insurance company, Partnership Assurance. Today’s event will explore the demographic implications of Scottish Independence.

“Scottish Independence - Charting the implications of demographic change” argues that Scotland must work to extend working lives and improve health if it is to respond adequately to the challenges of an ageing society.

It continues highlighting that Scotland should not seek to rely on the revenue from oil and gas to fund the costs of ageing as this is anticipated to fall from an historic average of £5.5bn per annum during the years 1980-2013, to around £2bn during the period 2014-2041. 

ILC-UK points out that the combination of an ageing population and declining revenues from oil and gas extraction is likely to place downward pressures on government spending as well as upward pressures on taxation.

Speaking at the launch event in Edinburgh today, Richard Willets, Director of Longevity at Partnership said:  “With a rapidly aging population, longevity is steadily moving up the news agenda and the potential impact of any changes are becoming an increasing concern for government.  Therefore, it is vital that this becomes part of the general discussion when independence is considered and positive steps are taken to deal with demographic challenges such as the falling working age population.”

David Sinclair, Assistant Director, Policy and Research at ILC-UK added: “The demographic challenges facing Scotland are similar to many other nations. But some of the challenges are starker than for other parts of the UK. Against this backdrop, economic policy will need to incentivize longer working lives and policymakers will need to deliver increased investment in capital to improve the productivity of the workforce and drive economic growth. Policymakers must ensure that significant attention is paid to improving health in Scotland.”

"While people on the verge of buying annuities or trying to build up their personal savings have been buffeted for a number of years, a rise in the Bank of England's Base Rate is unlikely any time soon. This is because, despite rising economic growth and employment, persistent economic weaknesses remain including high levels of household indebtedness, falling real incomes and underemployment. And crucially, the economic recovery is still not secured – indeed, we are only now approaching our pre-crisis level of output. The Bank will want to see significant progress on all of these fronts before committing to a gradual rise in rates.

The UK is not alone in having to confront the unwinding of extraordinary monetary support. The US faces a bigger task as they are still committed to monetary stimulus in the form of asset purchases (to the tune of $65bn per month). How markets and economies around the world respond as it starts to slow these purchases could impact asset prices around the world for some time to come."    


ILC-UK have today published a blog: "Base rate: to raise or not to raise" http://blog.ilcuk.org.uk/2014/03/04/base-rate-to-raise-or-not-to-raise/

Responding to new ONS data on Health Inequalities published today, Ben Franklin, Senior Research Fellow at the International Longevity Centre - UK (ILC-UK) said:

“This data reveals that inequalities in health are most stark amongst the pre-retirement age bracket (ages 35-59).

Across the most deprived areas, 40.7% of people aged 50-54 rated their health as “not good” compared with just 11.6% of those living in the least deprived areas (see chart 1 below). Levels of deprivation then start to converge after retirement with increasingly similar proportions rating their health as “not good” after age 65 (see chart 2 below).

The data illustrates the importance of tackling health problems in the most deprived communities, way in advance of retirement. It also helps to explain why healthy life expectancy at 65 is so much lower across some local authorities than it is for others. While there are increasing pressures to work beyond “traditional” retirement age, inequalities in health are likely to mean that for many people living in deprived areas this will be highly challenging.”     

CHART 1 

 

CHART 2

On 10th February 2014, a new report from ILC-UK argued that increasing the state pension age without taking into account the 18 year difference in healthy life expectancy across the UK, risked disadvantaging groups of older people.

The report “Linking state pension age to longevity: Tackling the fairness challenge”, published as part of the Age UK Research Fellowship demonstrated that measures such as healthy life expectancy and disability-free life expectancy vary significantly by region and social class, and in consequence particular groups are more likely to be disadvantaged by a rise in the state pension age than others.


Notes

The ONS have today (14 February) published: Health deprivation divide widest for middle aged.

A new report from ILC-UK argues that increasing the state pension age without taking into account the 18 year difference in healthy life expectancy across the UK, risks disadvantaging groups of older people. 

The report “Linking state pension age to longevity: Tackling the fairness challenge”, published as part of the Age UK Research Fellowship demonstrates that measures such as healthy life expectancy and disability-free life expectancy vary significantly by region and social class, and in consequence particular groups are more likely to be disadvantaged by a rise in the state pension age than others.

  • While most people will live to state pension age and beyond, a large proportion are unlikely to reach state pension age in good health, particularly in some parts of the UK, with Glasgow City having a healthy life expectancy of just 46.7 years – a near 20 year deficit from the current SPA of 65.
  • Males in more disadvantaged areas and lower social classes are unlikely to reach state pension age free of disability, while those in the lowest social class have a disability-free life expectancy 13.4 years lower than males in the highest social class.
  • The additional benefits tied to the state pension age, such as the free bus pass, will on average, not be available to those from lower social classes until well beyond their healthy life expectancy.
  • Although life expectancy and disability-free life expectancy have increased over time for most groups evidence suggests that health gaps are continuing to widen. The difference in disability-free life expectancy between women born in the most and least deprived areas was 11.6 years in 2001-04. By 2007-10 it had increased to 13.4.  

The report also highlights how the disparity between life and healthy life expectancies may offset the perceived financial benefits of raising the state pension age:

  • Increasing state pension areas into ages where disability rates are higher, raises concerns about transferring spending from the state pension to disability and unemployment benefits.
  • Raising state pension age in line with life expectancy could result in increasing numbers of people leaving the workforce before reaching state pension age in order to care for friends and family. Currently it is a key reason why women aged over 50 leave the workforce.

The report makes a series of recommendations to policymakers, including to Government:

  • Five yearly reviews of state pension age, as detailed in the 2013 Pensions White Paper, should incorporate an examination of changes in healthy life expectancy and disability-free life expectancy as well as inequalities in these measures across different social classes and UK regions.
  • As state pension age increases, there must be continued investigation into the reasons for leaving work and retiring. This will help identify whether disability and poor health become a greater barrier to workforce participation as state pension age increases.
  • The recent increase in the proportion of employed men and women reporting a long term health problem or disability should be examined to explore what is driving these changes.
  • Health promotion strategies should target poorer social classes to ensure reduction rather than increases in health inequalities between classes.

Baroness Greengross, Chief Executive, ILC-UK, said:

“As we live longer lives it appears to be a natural move to raise the state pension age. Yet as this research shows, we need to be very careful to ensure that increasing the state pension age doesn’t just result in an increase in the numbers of people out of work and ineligible for state pension. This report highlights that the highest social class are likely to live 13.4 years longer disability-free life than the lowest. Central and local Government must concentrate greater effort on tacking the causes of inequalities which result in such huge divergences in life expectancy”.

Caroline Abrahams, Charity Director at Age UK, added:

"This research backs up what we've known for some time - that increasing the state pension age based purely on longevity will leave many people facing serious problems in later life. While it may seem reasonable to consider extending working lives as overall life expectancy increases, it will be especially tough on people with lower life expectancies – who are likely to be on lower incomes – who may end up with little or no time left in retirement to enjoy. Those who are unable to work longer due to ill health or caring responsibilities must be given the support they need, when they need it.

"The current Pensions Bill going through parliament should oblige government to take into account a range of factors before they consider raising the state pension age, such as the difference in healthy life expectancy and varying employment opportunities for continued working in later life.”

Ben Franklin, Research Fellow at ILC-UK and one of the report’s authors, said:

“This report demonstrates that raising the state pension age in line with life expectancy could have a number of unintended consequences. If increasing numbers of people leave the workforce before reaching state pension age – to care for loved ones or due to poor health – the economic and fiscal benefits of raising state pension age will be lost. And with such significant health inequalities across the UK, there is the very real possibility that the vast majority of people from some local authorities will fail to reach state pension age in good health. Improving the quality of life and not just the quantity of life is critical to ensuring that reforms to state pension age are successful in supporting longer working lives in a fair and equitable way.”

Paul Kitson, pensions partner at PwC, who will be hosting the launch event, said:

“As this research shows, not all pensioners are equal, the better off tend to live longer than those who are not so well off. While it is clear that state pension age needs to increase, the difference in healthy life expectancy between the different socio-economic groups raises questions over whether a one size fits all state pension age is the right answer.”

Notes

The report is available in the publications section of the ILC-UK website.

The report will be launched on the 10th February at the ‘Linking state pension age to longevity: Tackling the fairness challenge’ event being held at PwC, 1 Embankment Place, London. Minister for Pensions, Steve Webb MP will also be speaking on his plans for state pensions.

Age UK Research Fellowship

Age UK is funding a three year research fellowship at the ILC-UK. This fellowship allows us to undertake important research on ageing and longevity. Through the research fellowship, ILC-UK will undertake a number of pieces of policy and research work in agreement with Age UK. The ILC-UK is most appreciative of this opportunity given by Age UK.
 

Demographic forces are set to shape the future of our economy. For many advanced as well as middle income countries, population ageing will pose a significant economic problem if it results in an increasing proportion of people out of work relative to those in work. But measures can be taken to help reduce the economic impact of ageing. This includes encouraging and supporting those over the age of 65 to continue working, and more controversially perhaps, increasing net migration. To help understand the extent to which both measures can mitigate against the economic effect of ageing we have prepared the following slide pack which outlines a number of plausible scenarios. We aim to expand and develop this analysis going forward as well as potentially applying it to countries other than the UK.

 


 

Using data from the UK’s largest social survey, Understanding Society, new research reveals that people who are struggling to manage their finances in old age have eight times the odds of having reduced levels of mental wellbeing.

The new evidence is published today in a working paper published by the Personal Finance Research Centre (PFRC) at the University of Bristol and the International Longevity Centre UK (ILC-UK). The research has been produced as part of the ILC-UK and PFRC project on “financial wellbeing in older age” funded by the ESRC’s Secondary Data Analysis Initiative.

The new research reveals:

•  Compared to those who are living comfortably, those who say they are just getting by have double the odds of reporting lower levels of mental wellbeing, after controlling for all other factors.

•  However, this pales compared to those who are finding it very difficult to get by financially, who have almost eight times the odds of reporting reduced mental wellbeing compared to those who are living comfortably.

The research highlights a strong association between age and mental wellbeing:

•  While more than one-in-five of those aged 50-54 show worryingly low levels of mental wellbeing, this drops to 15 per cent of those aged 80 and above. However, the age group displaying the highest levels of positive mental wellbeing are those aged 70-74.

•  While just a quarter (26 per cent) of those aged between 50 and 54 feel that they are living comfortably, 40 per cent of those aged 80 and above report the same.

•  Only one per cent of those aged 80 and above feel that they are finding things very difficult financially, compared to five per cent of those aged 50-54, and three per cent of all respondents.

After controlling for the other factors, the research finds:

• Older women are more likely to show signs of reduced mental wellbeing than men (odds of 1.5).

• Older people who are divorced or separated have 1.2 times the odds of displaying poor levels of mental wellbeing, compared to those who are married or in a civil partnership.

• Those who live in a property with a mortgage have 1.2 times the odds of reporting lower levels of mental wellbeing.

• Older people who are unemployed have double the odds of reduced mental wellbeing, compared to those in full or part-time employment.

•  Retired people have 1.4 times the odds of having reduced levels of mental wellbeing, while the long-term sick or disabled have almost five times the odds of poor mental wellbeing (odds of 4.7).

•  People in rural areas have slightly lower odds of having reduced mental wellbeing than those in urban areas (odds of 0.9).

The author of the research, David Hayes, Research Associate, PFRC, said:

"This research supports the findings of other researchers that debt may be both a cause and consequence of mental health. However, the magnitude of the relationship that we uncover here is quite staggering. The research proves beyond all doubt how poor mental wellbeing and poor financial management are inextricably related, and has implications for policy in the fields of health and debt. Future work is now needed to unravel the nature of this complex relationship, to provide further material for policy makers in these areas."

David Sinclair, Assistant Director, Policy and Communications at ILC-UK added:

“This research confirms our suspicions that having low levels of mental wellbeing is very much associated with financial difficulties. We must ensure that people of all ages have access to the mental health support they need. Similarly we must ensure that everyone who needs it has access to support to help them manage their finances.”

Andy Bell, Deputy Chief Executive at the Centre for Mental Health commented:

"There is now clear evidence of the links between mental ill health and financial difficulties. People with mental health problems face a high risk of poverty and problem debt while people with financial problems are at risk of poor mental health. Both health and financial services need to be mindful of these links and ensure people get the expert support they need to manage their finances and their mental health together."

With 12.2 million grandparents in the UK, Noreen Siba (International Longevity Centre-UK, Managing Director) announced a new programme of work which will highlight the true extent of financial transfers from grandparents to grandchildren.

Speaking at a private debate on intergenerational fairness at the Conservative Party Conference, Noreen Siba said:

“There is evidence to suggest that grandparents play a pivotal role in the financial support of grandchildren but little is done to fully understand this phenomenon.  We must do more to recognise and maximise this vital contribution from the UK’s grandparents.  And our forthcoming research will aim to provide concrete facts to encourage a debate around how this should be done.”

The research, produced with the support of Key Retirement Solutions and Partnership will explore data from the 2010 wave of the English Longitudinal Study of Ageing (ELSA) to understand the levels and patterns of grandparents giving money to grandchildren.  It will be published at an event at the House of Lords on 15th October.

Ahead of the publication of the full research, ILC-UK will also publish research (9th October) which highlights how grandparents are beginning to support younger people through University and how they believe they can afford this.

Ged Hosty, Managing Director of Equity Release at Partnership commented:  “While many people focus on the fact that today’s over-55s have benefitted from unprecedented house price growth, high levels of employment and relative economic stability, they don’t generally acknowledge the continued financial role that they play in many families.  We are delighted to work with the ILC-UK and Key Retirement Solutions to better understand this issue and encourage debate on this topic.”

Dean Mirfin, Group Director, Key Retirement Solutions added: “Our own research continues to show that grandparents are playing an ever important part in the lives of their grandchildren, not just in terms of family support but increasingly direct financial support, in particular through the use of housing wealth as well as through other means. We see the work undertaken by ILC-UK to investigate the role that grandparents financial support can and does have as being fundamental in understanding the financial impact of intergenerational gifting.”
 

One in three over 70’s with mortgages have interest only mortgage with no linked investment.

13% of older people with mortgages are struggling to make repayments on their home reveals new research by The Personal Finance Research Centre at the University of Bristol and leading think-tank on demographic change, the International Longevity Centre – UK (ILC–UK).

‘The mortgage debt of older households and the effect of age’ highlights that while people over the age of 50 are generally less likely to have a mortgage, nearly one in ten (9%) of households headed by someone in their late 60s still have mortgages to repay as did one in fifty of the over 80s (two per cent).

The research also reveals that:

  • One in five of all households (21 per cent) headed by someone aged 50 or over had outstanding mortgage borrowing on their main home in 2008-10.
  • Among the over 50s with outstanding mortgages, the mean average owed was £62,200. This is equivalent to £12,900 across all households headed by someone aged over 50, including those without a mortgage on the main home.

The research highlights worries over the extent to which older people may have problems paying off their mortgage.

  • Nearly a quarter of mortgaged households headed by someone over 75 (24 per cent) owed the equivalent of 25 per cent or more of the value of their home and five per cent owed more than 50 per cent
  • At least 14 per cent of older mortgaged households had taken a new mortgage on or extended their loan within the last two years.

This research also highlights an at risk group- the oldest mortgagors. This group are more vulnerable to financial instability as they owe more relative to the value of their homes, resulting from both lower value properties and a high use of interest-only mortgages.

  • Four in ten of the oldest mortgaged households (40 per cent) have at least one interest-only mortgage without a linked investment to repay the loan, compared with six per cent among the under 55s.

The FCA (Financial Conduct Authority) published its review of interest only mortgages in May 2013, highlighting that those whose mortgage is due to be repaid before 2020, will need to take control of their mortgage repayment planning now. The FCA confirmed that they would work with the Council of Mortgage Lenders (CML) and the Building Societies Association (BSA) to ensure lenders contact their borrowers in order to prompt them into checking their plan for repayment is on track and considering the options available to them.

Andrea Finney of the PFRC at University of Bristol said: “Home ownership is common among the over 50s, but these new findings highlight a core of households whose mortgages have persisted into older age. It is surprising to see such high loan-to-value ratios among mortgaged households headed by someone in their late 60s for example. Other assets only go part way to explaining this, raising important questions about the financial security of these households’ as they approach later life.”

David Sinclair, Assistant Director of Policy and Communications at ILC-UK, added: “Whilst mortgage debt declines with age, this research reveals that owing money on your home is not the preserve of the young. We are seeing a worrying picture emerge of older people with unlinked interest only mortgages. As the FCA and industry communicates with people with unlinked interest only mortgages, it should evaluate whether any specific targeting of information and advice is necessary for older people with unlinked mortgages.”

The research has been funded by the Economic and Social Research Council as part of the Secondary Data Analysis Initiative.

Representatives of PFRC and ILC-UK are available for interviews on the findings. Please contact David Sinclair or Jessica Watson at ILC-UK on 02073400440 or 07543 646992.
 

Three in 10 (28%), or 1.1 million, of older people in debt are considered to be in “problem debt” and are struggling to repay,[1] according to new research published today by the International Longevity Centre – UK (ILC-UK) and Age UK.[2]

The findings, using data covering 2002-2010, reveal that around six per cent of over 50s in England faced debt problems[3]  in 2010 whilst around a quarter of the older population were using unsecured credit. And while the overall numbers of people with “problem debt” remained virtually unchanged between 2002 and 2010, among those with unsecured debt, 28 per cent were considered to be in problem debt in 2010 – a rise from 23 per cent in 2002.[4] Among the over 50s population the older people are, the less likely they are to have debts; even so, of those aged 70 and over with unsecured debts, one in six are struggling with problem debt.[5]

The latest figures also show that ten per cent of older people with unsecured debt – around 400,000 – are paying over £85 a week to service their debt.[6]

It is widely acknowledged that debt problems seriously impact on people’s quality of life and relationships, but for the first time, this research shows that older people who enter problem debt are over twice as likely to experience marital breakdown as those who do not.[7]

Significant levels of debt for people in or approaching retirement can cause particular hardship as the options to repay debt at this stage in life are often more limited or non-existent. The ILC-UK and Age UK are warning that the increased financial pressures older people have faced over the last decade, such as rising prices for energy, are likely to have contributed to the increasing amounts of debt owed among the over 50s. Generational effects also have had an impact, such as the fact those reaching retirement now are more used to credit cards and other forms of borrowing than older pensioners.

Published today, the new report, ‘Tales of the Tallyman: Debt and problem debt among older people’, highlights those most at risk from debt. The figures show that in 2010, self-employed older people were twice as likely as retired people to be in problem debt, with unemployed older people three times as likely[8] – this is particularly worrying considering that growing numbers of older people are becoming self-employed, with those 50 plus making up 84 per cent of the increase in self-employed workers since 2008.[9] Having a mortgage was also a key risk factor, with owner-occupiers with a mortgage five times more likely to be in problem debt as owner-occupiers without a mortgage.[10]

The research shows that while the numbers of those aged 50 and over using credit dropped by 10 per cent between 2002 and 2010[1]1, the amount those with unsecured debt owe increased substantially, rising from £1,500 in 2002 to £2,500 in 2010 on average – an increase of two-thirds in cash terms.[12] Among these debtors, 10 per cent had debts of £15,000 or more.[13]

This research supports anecdotal evidence from Age UK advisors who report that they are seeing more cases of older people experiencing debt problems.

Commenting on the findings, Michelle Mitchell, Charity Director General of Age UK said: “There is a small group of older people who are facing the nightmare of increasingly serious debt problems which doubles their chance of their marriage breaking down and can ruin their quality of life.

“While it is good news that overall debt among the older population is falling, this research, supported by evidence from other charities, sends a clear warning that funding for debt and money advice for older people must be protected and expanded.  Debt advisors need to understand the specific needs of older people often living on low fixed incomes and particular attention must be paid to those moving into self-employment or who have recently become unemployed.”

These findings follow a recent report by StepChange Debt Charity, which showed that although older people make up a small proportion of their client base, people aged 60 and over seeking their help had, on average, higher debts than any other age group.[14]

However, it’s important to remember that older people still have more negative attitudes towards using credit and less likely to have debts than younger age groups.

Baroness Sally Greengross, Chief Executive of ILC-UK, emphasised that: “Without further intervention, problem debt will continue to blight the lives of older people – impacting on their relationships, quality of life and mental health. This is why it is so important that government makes a commitment to protect funding for debt advice services, and that these services are targeted towards those that need help the most.”

If you are an older person who is worried about debt or managing your money, Age UK can help. The free factsheets ‘Debt Advice No.75’ and ‘Managing Your Money’ provide basic information and are available at www.ageuk.org.uk or by calling our free Advice Line on 0845 65 65 65.  The Advice Line also provides advice over-the-phone or can signpost you to a local organisation.  Alternatively call your local Age UK to speak to an advisor.

-Ends-

Case study
A retired man who contacted Age UK had been widowed 4 years before. His wife had always dealt with all the paperwork and finances and he was now in debt. He was having difficulty understanding the statements, bills and insurance policies. The Age UK adviser visited and helped him go through the papers, check through all his finances and set up direct debits. Afterwards he said he felt much more confident about dealing with money. Source: Local Age UK Information and Advice Service

Secured and unsecured debt
Secured debt is outstanding debt that has an asset as collateral, with the most common arrangement being a mortgage based on property. With unsecured debt, the arrangement is based on an agreement to pay back the money and is not linked to an asset. For example, this would include money owed on credit cards.

Problem debt
There have been many attempts to define when using credit or having debts becomes problem
debt but no consensus. Page 10 of Age UK’s summary of research by the International Longevity Centre, ‘Problem Debt Among Older People’, details the indicators used for this research. 

  • For a full copy of the report ‘Tales of the Tallyman: Debt and problem debt among older people’, please contact David Sinclair, Assistant Director, Policy and Communications at the ILC-UK on davidsinclair@ilcuk.org.uk.
  • ‘Problem Debt Among Older People’ – Age UK’s summary of research by the International Longevity Centre – is available from the Age UK press office. 
  • The report is being launched at an ILC-UK/ Age UK event ‘Debt and problem debt among older people’ in London on Tuesday 4 June. For more information about the event, please contact David Sinclair, as above. 


Notes to Editor

  1. Among those with unsecured debt, the percentage of people in problem debt rose from 23% to 28% between 2002 and 2010 (p. 10, Problem Debt Among Older People, Age UK).
  2. ‘Tales of the Tallyman: Debt and problem debt among older people’ is a new report from the International Longevity Centre-UK, with a summary by Age UK. It reviews existing literature and provides new analysis of the British Social Attitudes Survey (Great Britain), the Family Resources Survey (covering the UK) and the English Longitudinal Survey on Ageing (ELSA) of which there are currently five ‘waves’ available covering the years from 2002 to 2010. The figures in this release are based on ILC-UK analyses of the English Longitudinal Study of Ageing (ELSA), a study of those aged 50 and over.
  3. According to the ILC-UK’s definition (p. 10, Problem Debt Among Older People, Age UK), around six per cent of people aged 50 plus are in ‘problem debt’ – around 1.1 million. There are 18.3 million people in England aged 50 and over (2011 Census data).
  4. Page 10, Problem Debt Among Older People, Age UK.
  5. Page 13, Problem Debt Among Older People, Age UK.
  6. People with unsecured debts typically paid around £14 a week servicing these in 2010, but one in ten – an estimated 400,000 over 50s - were paying £85 a week (p. 9, Problem Debt Among Older People, Age UK). All figures relate to England only.
  7. A small number of older people in the research experienced marital breakdown between 2002 and 2010 – that is moving from being married to a different status (other than being widowed). Those who entered problem debt were over twice as likely to experience partnership breakdown as those who did not. However, this pattern was not found among those who entered unsecured credit arrangements but were not in problem debt. This suggests that problem debts could have contributed to the breakdown (p.16, Problem Debt Among Older People, Age UK).
  8. Self-employed people were twice as likely as retired people to be in problem debt, while unemployed people were three times as likely (p.13, Problem Debt Among Older People, Age UK).
  9. The number of workers who are self-employed in their main job rose from 367,000 between 2008, the start of the economic downturn, and 2012.  84 per cent of the increase in self-employed workers since 2008 was for those aged 50 and above (Office of National Statistics).
  10. Page 13, Problem Debt Among Older People, Age UK.
  11. The proportion of older people with any kind of credit or debt fell from more than four out of ten (42%) in 2002 to less than a third (32%) in 2010. The main falls were in 2004 and 2006 before the 2007-08 financial crisis started. There was an increase in the proportion in debt in 2008, and then a fall in 2010 (p. 9, Problem Debt Among Older People, Age UK).
  12. Overall, among those who had unsecured debts, the amount of money owed increased substantially – the typical (median) amount owed was £1,500 in 2002, rising to £2,500 in 2010 (p 9, Problem Debt Among Older People, Age UK).
  13. Page 37, ‘Tales of the Tallyman: Debt and problem debt among older people’, ILC-UK.
  14. Last year, 13,148 people aged 60 and over contacted StepChange for help, a 36 per cent increase since 2009 when 9,628 people in that age group sought its help. The over 60s owe more than any other age group seeking the charity’s help, averaging £22,999 last year, almost five thousand pounds higher than the average debt for all of the charity’s clients which is £17,635.

ILC-UK
The International Longevity Centre-UK is the leading think tank on longevity and demographic change. It is an independent, non-partisan think-tank dedicated to addressing issues of longevity, ageing and population change. We develop ideas, undertake research and create a forum for debate.

Age UK
For media enquiries relating to Wales, Scotland and Northern Ireland please contact the appropriate national office: Age Scotland on 0131 668 8055, Age Cymru on 029 2043 1562 and Age NI on 028 9024 5729.

Age UK is the new force combining Age Concern and Help the Aged, dedicated to improving later life.

We provide free information, advice and support to over six million people; commercial products and services to over one million customers; and research and campaign on the issues that matter to people in later life. Our work focuses on five key areas: money matters, health and well-being, home and care, work and training and leisure and lifestyle. We work with our national partners, Age Scotland, Age Cymru and Age NI (together the Age UK Family), our local Age UK partners in England and local Age Concerns. We also support older people in more than 40 of the world’s poorest countries through our subsidiary charity Age International and as a member of the Disasters Emergency Committee (DEC).

Age UK is a charitable company limited by guarantee and registered in England (registered charity number 1128267 and company number 6825798). Age Concern England and Help the Aged (both registered charities), and their trading and other associated companies merged on the 1st April 2009. Together they have formed the Age UK Group (“we”).  Charitable services are offered through Age UK and commercial products are offered by the Charity’s trading companies, which donate their net profits to Age UK (the Charity).

Today the International Longevity Centre-UK (ILC-UK) launches a pioneering snapshot of the life of older women in the UK and highlights how older women are still suffering from the legacy of a pension system designed historically around men and largely by men.
An intimate and revealing collection of essays penned by high profile authors entitled ‘Has the sisterhood forgotten older women?’ reveals the secret struggles and financial challenges for older women as they age.

Included within the 38 essays are contributions from Ros Altmann (Independent pensions expert and former Government policy adviser) and Anthony Thompson (Head of Public Affairs for Scottish Widows), both of whom highlight a ‘forgotten generation’ of older women who have found themselves in a pensions ‘black hole’.

Baroness Greengross, Chief Executive of the ILC-UK said:
“We are witnessing a generation of women who will be living out their later years in poverty through no fault of their own as a result of historic discrimination in the state and private pension arena. We need to make sure the next generation of women do not fall into the same trap.

While we welcome the proposed flat- rate state pension which should herald significant improvements for future generations of women, we need to make sure we repay the contribution older women made both in the public and private sphere and ensure they have financial security and dignity in later life.”

Ros Altmann, in her essay entitled ‘How older women lose out in the pensions arena’, urges women now to take responsibility for their own financial future and sets out her top tips for women to help provide for themselves in later life:

  • “Don't rely on a partner's pension - save for yourself.
  • If your partner is buying an annuity, make sure he knows the importance of selecting a joint life product that will keep paying to you after he dies.
  • Take your own financial planning advice, to help you assess your later life income prospects.
  • More women than men will need expensive social care so you may want to plan how you might pay for that if needed.”

In response to the essays and evidence submitted, ILC-UK will also be launching an Older Women’s Policy and Research Action Alliance to create a roadmap for future research and policy priorities.

The compendium is available to download from http://www.ilcuk.org.uk/index.php/publications/publication_details/has_the_sisterhood_forgotten_older_women The hashtag is #olderwomen

Governments must do more to reduce the long term cost of ageing to the public purse argues a new policy report from the International Longevity Centre – UK (ILC-UK).

“The cost of our ageing society”, sponsored by Milliman, highlights the projected financial impact of the cost of the world’s ageing population.

In the report, ILC-UK calls on governments across the world to consider linking eligibility ages of state pension to life expectancy and do more to ensure that the labour market is accessible to older people.

ILC-UK also argues that governments need to ensure pension systems are sustainable, allow for greater risk-sharing, and are less vulnerable to longevity risk. It also urges Governments across the world to consider how to create better conditions for health care innovation and development.

ILC-UK believes that governments need to prepare for uncertainty noting that “Policy makers today are being asked to prepare for a future about which there is a serious degree of uncertainty and therefore sustainable policies will be the ones which can adapt to unexpected changes.” It argues therefore that addressing the needs of ageing populations will require ongoing investment in research and data collection.

ILC-UK argues, however, that policy interventions must recognise the contribution that older people make to society and the economy. ILC-UK also points out that individual countries will need to ensure there are safety nets for those who cannot work longer.

“The cost of our ageing society” draws heavily on the European Commission’s 2012 Ageing Report (1) and the Office for Budget Responsibility’s Fiscal Sustainability Report, July 2012 (2)”. ILC-UK summarises the latest projections on longevity and the cost of ageing across the world.

  • In the UK:  age-related spending is projected to rise from an annual cost of 21.3% to 26.3% of GDP between 2016/17 and 2061/62, a rise of 5% of GDP (3) (equivalent to a rise of around £79bn in today’s money).(4)
  • In the EU: age-related spending is projected to rise from an annual cost of 25% to 29.1% of GDP between 2010 and 2060, a rise of 4.1% of GDP.(5)   However, a scenario which assumes greater resources devoted to development within health care projects that age-related spending in the EU could rise to as much as 29.8% of GDP, annually, by 2060. (1)

In the UK:

  • spending on public pensions (state pension, benefits and public service pensions) is projected to rise from an annual cost of 8.9% to 10.8% of GDP between 2016/17 and 2061/62, a rise of 1.9% of GDP (6) (equivalent to a rise of around £33bn in today’s money). 
  • spending on health care is projected to see the largest rise of all elements of age-related spending, rising from an annual cost of 6.8% to 9.1% of GDP between 2016/17 and 2061/62, a rise of 2.3% of GDP (2) (equivalent to a rise of around £36bn in today’s money).  The rise in projected spending on health care in the UK mirrors the increase in the ageing population. 

However, scenarios in which there were higher than expected levels of mortality, morbidity and health care development could see much greater increases in expenditure on health care. (2)

  • spending on long term care is projected to rise between 2016/17 and 2061/62 by 0.9%, from an annual cost of 1.1% to 2% of GDP, a rise of 0.9% of GDP (2)  (equivalent to a rise of around £14bn in today’s money). 

Baroness Sally Greengross, Chief Executive of ILC-UK, said “Our ageing society will have significant impact on state spending on pensions, health care, long-term care and unemployment benefits. Across the world, people will need to continue to work longer as a result. In the UK and across the world we will also have to innovate in health and deliver a sustainable funding settlement for social care."

Emma McWilliam, Editor Longevity Risk and Consulting Actuary Milliman, said “Intergenerational collaboration is key, especially given high rates of youth unemployment.  If those at working age are not employed, simple old age dependency ratios do not show the complete picture to Governments on how best to deal with the challenge ahead. Additional measures such as Labour Market Adjusted Ratios, as set out by the European Policy Centre, that effectively encourage policies around employment are definitely a step in the right direction to build public policy that reflects the current demographics and needs of all generations in our future society.

David Sinclair, Assistant Director, Policy and Communications at ILC-UK, added “Governments across the world must not ignore the future costs of our ageing society. These costs won’t just go away. Drifting along is not an option and does not benefit future older or younger people. Policymakers must urgently look to solutions to the long term challenge of mitigating the increased cost of an ageing society."

Contact

David Sinclair or Jessica Watson at ILC-UK on 02073400440 or 07531164886


Notes

Baroness Sally Greengross and David Sinclair are available for interviews on this report.

On 16th October 2012, ILC-UK organised an event on “The cost of our ageing society”. This joint debate between ILC-UK and the Actuarial Profession was sponsored by Milliman.

ILC-UK and the Actuarial Profession, sponsored by Milliman, are organising a further event on “The cost of our ageing society”. The event will take place on 20th February in Edinburgh (16:00-19:00). If you are interested in attending please email events@ilcuk.org.uk

The International Longevity Centre-UK is the leading think tank on longevity and demographic change. It is an independent, non-partisan think-tank dedicated to addressing issues of longevity, ageing and population change. We develop ideas, undertake research and create a forum for debate. http://www.ilcuk.org.uk

Milliman LLP is among the world's largest providers of actuarial and related products and services. The firm has consulting practices in life insurance and financial services, property & casualty insurance, healthcare, and employee benefits. Founded in 1947, Milliman is an independent firm with offices in major cities around the globe. For further information, visit http://www.milliman.com and uk.milliman.com.

References

  1. European Commission (2012) The 2012 Ageing Report. Economic and budgetary projections for the 27 EU Member States (2010-2060) European Union http://ec.europa.eu/economy_finance/publications/european_economy/2012/2012-ageing-report_en.htm
  2. Office for Budget Responsibility (2012) Fiscal sustainability report, July 2012  (OBR) http://budgetresponsibility.independent.gov.uk
  3. OBR (2012) Table 3.6, includes education
  4. GDP Projections by ONS, 2012/13 UK GDP- £1.57trillion, HM Treasury http://hm-treasury.gov.uk/data_gdp_index.htm
  5. EC (2012) These figures include education which is also affected by demographics
  6. OBR (2012) includes Basic State Pension, State Second Pension, Pension Credit, Winter Fuel Allowance and other benefits

“Nudge or Compel?: Can behavioural economics tackle the digital exclusion of older people?”, supported by social investor Nominet Trust, explores how we can use behavioural economics to tackle the digital exclusion of older people.

The report highlights that over 7.5 million adults have never used the internet. The majority of non-users are older, have disabilities or are in the lowest social classes.

The report highlights new analysis of data from the English Longitudinal Study of Ageing (ELSA) on the behavioural traits which accompany internet usage among older people. It finds that:

  • People who reported using the internet tended to report feeling more in control of various aspects of their lives.
  • People who didn’t own a computer were more likely to feel that they were unable to learn a new skill, while conversely people who did own a computer were more likely to agree that they could.
  • People who reported not using the internet were more likely to say that they ‘often’ felt isolated from others. Conversely, people who said they did use the internet were more likely to respond that they ‘hardly ever or never’ felt isolated. The same pattern was found for loneliness.

Launching the report, Baroness Sally Greengross said:
“Technology plays an increasingly important part in our society yet millions of older people are still not online. This report highlights a strong association between being offline and isolation, loneliness and a perception of not being in control.  As more and more private and public services are made available exclusively online, there is a risk of greater exclusion. Technology is not just for younger people, it is for all of us. Yet as we move services online, “Digital by Default” must play a role in nudging those people who are offline towards the internet.”

Annika Small, chief executive at Nominet Trust comments: “Digital technology can play a key role in creating strong networks for people in later life that will help reduce isolation and loneliness. It is critical that we find ways to motivate older people to get online by demonstrating how the internet can strengthen vital social ties that will help them to remain active and engaged. This, in turn, can delay and prevent some of the negative effects of ageing that many people currently experience.”

David Sinclair, Assistant Director, Policy and Communications at ILC-UK added:
“Public policy aimed at getting older people online has tended to focus how we can develop skills and ensure access to new technology. But far too often, we have overlooked the role played by behaviour and choice.

We have recently seen the use of behavioural economics to encourage a new generation to save for the first time. We must better explore how we can use these techniques to tackle the other challenges faced by an ageing society. ‘Nudge or Compel’ highlights that Behavoral economics can help us tackle digital exclusion. We know, for example, that the fear of something going wrong can act as a barrier to people getting online in the first place. We urge service providers to take away some of that fear, such as by guaranteeing that individuals should be able to return to a paper service if the online experience does not work for them.”

Amongst other recommendations, the report also calls on

  • Service providers to attract older customers by finding ways of discounted installation and connection deals, and initial periods of free internet access.
  • Companies advertising technology and opportunities to learn technology to use imagery of both older and younger people.
  • Government and the private sector to support local digital champions to make the case at a community level for the use of new technology.
  • Government and the private to invest more in adult learning, particularly if certain services are going to be made available exclusively online.
  • The technology sector to place more emphasis on co-design.


NOTES

- ‘Nudge or Compel? Can behavioural economics tackle the digital exclusion of older people?’ will be available on the ILC-UK website www.ilcuk.org.uk on 29th November at 6am

- The concept of Nudge was developed by Thaler and Sunstein (2008)  and is based on the field of behavioural theory which suggests that individuals’ actions and decisions don’t result simply from a rational overview of external circumstances. Instead they are equally likely to be based on systems of habitual behaviour based on learned traits and biases.


Contact:
Jessica Watson or David Sinclair at ILC-UK 020 7340 0440 or 07531 164 886


About ILC-UK
www.ilcuk.org.uk

The International Longevity Centre-UK is the leading think tank on longevity and demographic change. It is an independent, non-partisan think-tank dedicated to addressing issues of longevity, ageing and population change. We develop ideas, undertake research and create a forum for debate.

About Nominet Trust
www.nominettrust.org.uk

Nominet Trust is a UK registered charity, which believes in the power of digital technology to improve lives and communities.

The  Trust brings together, invests in and supports people committed to  using digital technology to create social and economic value.

Nominet  Trust has invested in hundreds of projects since its inception,  providing business support as well as financial investment, seeking to  connect projects to prospective partners who can help increase their  reach and impact.

Nominet  Trust was founded in 2008 by Nominet, the not-for-profit organisation  responsible for the smooth and secure running of the .uk internet  infrastructure. Nominet has a strong public purpose and the Trust is one  example of its commitment to creating a safer, accessible and diverse  internet.

Cross party politicians and industry urge government action on retirement income

The impending regulatory environment for financial advice (RDR) may result in an ‘advice gap’ where the poorest and least well-off pensioners will fail to receive critical financial advice, argues the International Longevity Centre – UK (ILC-UK)

Alongside the publication of “The Retail Distribution Review and small pension pots”, by ILC-UK, with the support of pensions specialists, Partnership, a cross party group of MPs and senior representatives of the financial services industry, have urged the Government and FSA to act to ensure that the Retail Distribution Review does not widen the advice gap for people with small pension pots.

ILC-UK has today published an open letter to Mark Hoban MP (Financial Secretary to the Treasury), Steve Webb MP (Minister for Pensions, DWP) and Lord Adair Turner (Chair, FSA) calling on the Government and FSA to host a ‘retirement income summit’ to protect the poorest and least well-off pensioners. The letter has been signed by senior Conservative, Labour, and Liberal Democrat politicians.

The letter states - “We believe there is a significant risk that the impending regulatory environment for financial advice (RDR) may result in an ‘advice gap’ where the poorest and least well pensioners will fail to receive much needed financial advice. In turn they run the risk of having less income in retirement.  With one in six pensioners already living in poverty, these people need more income in retirement – not less!”

In “The Retail Distribution Review and small pension pots”, ILC-UK recommends that:

  • the government and the FSA should investigate in more detail the opportunities to mitigate the implications of RDR for financial advice for people with small pension pots, and in particular people who could benefit from an enhanced annuity by shopping around;
  • the government and the FSA should clarify the distinction between the provision of information and advice, and the extent to which providers are able to guide potential or existing customers without being deemed to give regulated advice;
  • the FSA restores a concern over the quantity of financial advice – as well as quality – to the heart of the RDR process;
  • the government establishes mechanisms to ‘join up’ the public policy agendas on financial advice and enabling saving;
  • the government continues to promote the open market option in the annuities market, and as such considers how to mitigate the potential impact of RDR changes on people’s ability to shop around for the best annuity deal; and
  • the FSA publishes open market option take-up by wealth cohort – providing greater transparency about which people actually exercise their choice to shop around for the best annuity at retirement. 


Baroness Sally Greengross, Chief Executive of ILC-UK said “The status quo in financial advice is not sustainable. Trust in financial advice in paramount – and this will only improve with a more transparent charging structure and stronger rules to ensure the independence of advice. But the unintended consequences of the RDR could reduce access to advice for people with small pension pots. We need to a greater emphasis on the quantity of advice as well as the quality of advice.”

Steve Groves, Chief Executive, Partnership added “The key changes brought by the RDR are to be welcomed. A transparent, professional advice market is in everyone’s interest. However they risk creating an“advice apartheid” unless there is greater clarity on what is information rather than advice and the processes to access financial products are simplified.”


KEY FACTS/EVIDENCE


NOTES

  • The open letter has been published at www.ilcuk.org.uk. It has been signed by Dame Anne Begg MP (Chair, Work and Pensions Select Committee), Clive Bolton (At Retirement Director, Aviva), Jonathan Evans MP (Chair, All Party Parliamentary Group on Insurance and Financial Services), Frank Field MP, Baroness Sally Greengross (ILC-UK Chief Executive), Steve Groves (Chief Executive, Partnership), Chris Hannant (Policy Director AIFA), Michael Lake CBE (ILC-UK Chairman & Former Chief Executive of Help the Aged), Lord Lipsey (President, Society of Later Life Advisers), Ivan Martin (Chair, Sesame), Lord John McFall (former Chair, Workplace Retirement Income Commission), Paul McMillan (Editor Money Marketing), Tom McPhail (Hargreaves Lansdown and Pensions Income Choice Association), Lord Newby, (Co-Chair, Liberal Democrat Treasury Parliamentary Party Committee), Joanne Segars (Chief Executive National Association of Pension Funds), Elliot Varnell (Milliman), Keith Boughton (Director, Insurance and Payments, Xafinity Paymaster).
  • “The Retail Distribution Review and small pension pots”, by ILC-UK has been published at www.ilcuk.org.uk today.
  • The Retail Distribution Review (RDR), will mean that financial advisers will have to charge clients directly for the provision of advice, rather than receive commission from product providers. The RDR also introduces new professional standards for financial advisers. The new regulatory regime will increase the cost of providing advice, which may mean that providing advice at affordable rates becomes prohibitive for many advisers.

OPEN LETTER
Mark Hoban MP – Financial Secretary to the Treasury
Steve Webb MP – Minister for Pensions, DWP
Lord Adair Turner – FSA

29th February 2012

Urgent call for a ‘retirement income summit’ to protect poorest and least well pensioners

We believe there is a significant risk that the impending regulatory environment for financial advice (RDR) may result in an ‘advice gap’ where the poorest and least well pensioners will fail to receive much needed financial advice. In turn they run the risk of having less income in retirement. With one in six pensioners already living in poverty, these people need more income in retirement – not less!
We request that you urgently convene a “retirement incomes summit” to address this issue, alongside other issues with the annuity market that are leading to poor outcomes in retirement for those with defined contribution pensions.

As you are aware 80% of pension pots are valued at £40,000 or less. Yet currently only one in three people shop around for the best retirement income – even though the difference between the best and worst income rates can be up to 40% or more for people with a health or lifestyle condition. Research shows that financial advisers can be critical in this process. Yet many may leave the market or will stop advising on unprofitable small pension fund business as the result of these new regulations.

We also believe that the move from final salary pensions, which guaranteed an income in retirement for life, to new pension structures, mean that far more people will be reaching retirement with a small pension fund who will have to make choices about their retirement income options without advice.

We must address core issues before the introduction of the RDR in the New Year – or risk an ‘advice apartheid’ between the wealthiest and poorest pensioners.

We accept there is major role for industry and the consumer and financial advice sector. But we urge Government to take a leadership role.

The “retirement incomes summit”, must address how we can:

  • ensure that an advice gap does not impact negatively on the ability of the poorest, and people in poor health, to maximise their retirement income?
  • simplify the process for those who choose to shop around
  • clarify the distinction between the provision of information and advice, and the extent to which providers are able to advise potential or existing customers without falling under the RDR regulatory regime and charging structure?
  • ensure that the quantity of financial advice – as well as quality – moves to the heart of the RDR process?
  • join up public policy agendas on financial advice, consumer engagement, and enabling saving?

The summit should also address how we can drive better outcomes at retirement by addressing wider issues around the functioning of the annuities market and the appropriate support for members of defined contribution schemes when turning their pension pot into an income.

We support the principles underpinning RDR. We also believe that the required outputs, which we have set out above, can be achieved without any changes to that regime.

However, if we cannot achieve those much needed changes to processes and communications ahead of RDR, there may be serious consumer detriment to our poorest and least well pensioners.

The International Longevity Centre – UK has today published a policy brief which explores these issues in more detail.

Yours sincerely

Dame Anne Begg MP (Chair, Work and Pensions Select Committee), Clive Bolton (At Retirement Director, Aviva), Jonathan Evans MP (Chair, All Party Parliamentary Group on Insurance and Financial Services), Frank Field MP, Baroness Sally Greengross (ILC-UK Chief Executive), Steve Groves (Chief Executive, Partnership), Chris Hannant (Policy Director AIFA), Michael Lake CBE (ILC-UK Chairman & Former Chief Executive of Help the Aged), Lord Lipsey (President, Society of Later Life Advisers), Ivan Martin (Chair, Sesame), Lord John McFall (former Chair, Workplace Retirement Income Commission), Paul McMillan (Editor Money Marketing), Tom McPhail (Hargreaves Lansdown and Pensions Income Choice Association), Lord Newby, (Co-Chair, Liberal Democrat Treasury Parliamentary Party Committee), Joanne Segars (Chief Executive National Association of Pension Funds), Elliot Varnell (Milliman), Keith Boughton (Director, Insurance and Payments, Xafinity Paymaster).

 

A response to the Open Letter above was received on 5th March 2012. To view the response, click here.


Young people and pensions: a savings culture is urgently needed, argues International Longevity Centre – UK

‘Putting off’ retirement planning is placing young people at risk of a financially unsustainable future and society is failing to instil a savings culture in the young, says a new report, by the International Longevity Centre-UK (ILC-UK). The think tank argues that because the transition between adolescence and adulthood is generally increasing, we need a greater commitment to encouraging young people to think about and plan for retirement.

The report Resuscitating Retirement Saving: How to Help Today’s Young People Plan for Later Life, produced with the support of Prudential, examines the financial and economic circumstances of young people today, and considers the role of behavioural economics in nudging young people towards saving for retirement.

The report notes the trends which are likely to impact on long term saving, including increased longevity, fiscal problems caused by population ageing, an increase in flexible working, and growing care needs. In the future, most people will be enrolled in money purchase (defined contribution) rather than final salary pension schemes, requiring individuals to bear more responsibility for their retirement income. The report also points out that buying a house will become more difficult – arguing that an obsession with investment in housing may be inhibiting saving for a pension.

The report recommends:

  • The development and promotion of a savings rule of thumb similar to the ‘5-a-day’ healthy eating message.
  • Better promotion of existing incentives to save.
  • Taking the opportunity provided by online financial services to make pension saving more accessible and as easy as online banking.
  • The development of a ‘Plan B’ in case young people ‘opt out’ of occupational pensions saving after the introduction of auto-enrolment in 2012.
  • The introduction of a compulsory choice between savings options – making young people exercise the power they seem to demand.
  • Government should consider the introduction of a graduated state pension to reflect changing expectations around retirement.

Dr Craig Berry, Senior Researcher at ILC-UK and author of the report said:

“Planning for retirement may be an alien concept for many young people, but delayed transitions to adulthood in terms of owning a home, establishing a career and starting a family mean that young people need to start saving for a pension now. Crucially, however, government policy to encourage saving must be informed by generational perspective. If we are to get young people to save we must consider their financial and economic circumstances, alongside their behavioural traits.”

Minister of State for Pensions Steve Webb said:

“We have to get young people engaged in pensions as they will live longer than us and will have to take more responsibility for saving for their retirement.”

“Automatic enrolment will make a dramatic difference, giving millions the opportunity to save in a work based scheme for the first time ever, with nearly a quarter of those eligible aged 22 to 30. And NEST’s investment approach will help them see their money growing and encourage them to keep saving.”

Rob Devey, Chief Executive of Prudential UK and Europe, said:

“It is never too early to start preparing for retirement and with auto enrolment we have a once in a generation opportunity to create a culture where pension saving is the norm for young people. If supported by engaging communication and efforts to boost financial capability we can begin to help this generation of savers secure the retirement they desire.”

Contact:
Email: rebeccataylor@ilcuk.org.uk


Notes to Editor:

1. Resuscitating Retirement Saving: How to Help Today’s Young People Plan for Later Life will be available on the ILC-UK website on 8th June 2011. Advance copies are available for the media.

2. The production of Resuscitating Retirement Saving has been supported by Prudential

3. The International Longevity Centre-UK is the leading think tank on longevity and demographic change. It is an independent, non-partisan think-tank dedicated to addressing issues of longevity, ageing and population change. We develop ideas, undertake research and create a forum for debate. The ILC-UK is a registered charity (no. 1080496) incorporated with limited liability in England and Wales (company no. 3798902).

 

A report by leading think-tank, International Longevity Centre – UK (ILC-UK) and commissioned by poverty charity, Elizabeth Finn Care, finds that seven in ten aged over 65 felt they would be most affected by spending cuts, as did the same proportion of 25-34 year olds. Moreover, four in five over-65s think that spending on their age group should be protected – as did over seven in ten 16-24 year olds.

Today’s report, 'The Spending Review 2010: intergenerational perceptions of fairness, cuts and economic recovery' builds upon an earlier report by ILC-UK, Intergenerational fairness and the Spending Review 2010, which analysed the impact of potential cuts on health, well-being and poverty across the generations, and urged the Government to consider intergenerational fairness as it makes its decisions about spending cuts.

Survey evidence, presented in full in today’s report, shows that nearly two-thirds of people (65%) think that job creation should take precedence over reducing government debt. Concern for the economic prospects of today’s younger people trumps concern for future generations of taxpayers. Those from the lowest social class (partly skilled and unskilled workers) who are ‘very pessimistic’ about the UK’s economic prospects in the next decade was over double that of any other social class.

The survey also reveals that the public thinks that transport (63%), out-of-work benefits (54%) and defence (44%) are the top three areas the Chancellor should target for spending cuts. Interestingly, however, less than half of respondents from London chose Transport as a focus for cuts (48%), compared to almost three quarters of those from Wales (72%). This may be a direct reflection of the higher dependency on public transport in London.

Most people reported that they would reduce spending on clothes (73%), entertainment (62%) and transport (58%) if spending cuts affected their household income. Alarmingly, 31% of older people said they would consider cutting back on food in these circumstances.

Baroness Sally Greengross, Chief Executive of ILC-UK, said: “If the Government is to convince the public of the fairness of spending cuts, it is essential that no generation today thinks they will be worse off than others. Yet most people believe that their age group will be hardest hit, especially older people and younger people.”

Dr Dylan Kneale, lead author of the report and Senior Researcher at ILC-UK, said: “The Government’s argument on protecting future generations has failed to convince the public. People are clearly worried about the impact of cuts on jobs, with the poorest more worried than most about the country’s economic prospects. The finding that almost a third of older people intend to reduce spending on food if their household budget is hit by the cuts is particularly alarming.”

The report is available to download here

 

Responding to news stories that the Government intends to reduce Pension Tax Relief, David Sinclair, Head of Policy and Research at the International Longevity Centre – UK, said:

“On the surface, proposals to curb tax relief on pensions for the richest in society seem fair. Over half of pension tax relief goes to higher rate taxpayers and a quarter goes to just 1% of the population with the highest income.

It would however be extremely dangerous if this money was taken completely out of the pension system. If we are to reduce pensioner poverty, we must better incentivise people to save and reduce the reliance on means tested support. The Government should invest savings into a developing decent universal basic state pension. If Government doesn’t invest in encouraging young people to save today, they will inevitably be paying more to pick up the tab for pensioner poverty in the future”

ILC-UK yesterday published a report, commissioned by poverty charity, Elizabeth Finn Care, which found that nearly two-thirds of people (65%) think that job creation should take precedence over reducing government debt. The report urged the Government to consider intergenerational fairness as it makes its decisions about spending cuts over the next week. The full results of the survey are available here.

The nationally representative telephone survey of 1000 UK adults aged 16+ was conducted between 1st and 3rd October 2010 by GfK.

Intergenerational Fairness and the Spending Review 2010 was published on Wednesday 13th October 2010 by the International Longevity Centre-UK, with the support of Elizabeth Finn Care. It analyses the potential impact of the spending review in the context of intergenerational fairness and sets there challenges for the Government ahead of the announcements on 20th October.

The three principles for maintaining intergenerational fairness set out in the report are:

  1. The Spending Review should impact fairly across different generations.
  2. The Spending Review should not exacerbate the causes of poverty in later life.
  3. The Spending Review should not undermine the drivers of increased longevity.

 

In light of proposals to increase the State Pension Age faster than currently planned, and the likely abolition the Default Retirement Age, a new discussion paper by the International Longevity Centre-UK sets out why people retire when they do and examines how this may change in the future.

The paper finds that

  • The meaning of retirement was originally bound up with the receipt of a pension, but most people do not retire at State Pension Age;
  • Good pensions coverage generally increases the likelihood of early retirement, and vice versa. Other things being equal, low-paid/low-skilled workers retire later due to financial compulsion;
  • Over the long-term, defined contribution pension schemes are likely to encourage later retirements, in part due to their inherent incentive structure, but also because they tend to be less generous that defined benefit schemes; and
  • Many older workers seem to favour a gradual transition from work to retirement. Such arrangements could help people to cope with care responsibilities.


ILC-UK recommends that, if working lives are to be extended, and the government needs to give more attention to:

  • Preventative healthcare throughout the life-course;
  • Job quality for older workers;
  • The potential of ‘gradual retirement’, including encouraging employers to offer downshifting options to staff approaching retirement at all levels;
  • Simplifying the pensions system and improving the provision of advice; and
  • The support offered to older people with caring responsibilities.


Dr Craig Berry, author of the report and Senior Researcher at ILC-UK said “Proposals to increase the State Pension Age and abolish the Default Retirement Age will have an impact on individual retirement decisions. They will not automatically lead to longer working lives, and Government must not develop its policies in this area without looking at the reasons people retire when they do. The Government needs to consider how it can best incentivise and support us to work longer in sustainable ways. The introduction of policies to encourage ‘gradual retirement’ have to be part of this picture”

To download the report, click here: The Future of Retirement

The publication of Asset Accumulation across the Life Course on September 17th has attracted significant media coverage for the ILC-UK:

In addition to a number of radio interviews, the research was reported on in the national press:

The Times (18/09)
p19
While the old grow richer, the young get poorer
This is a column by David Willetts MP responding to the research, available here:
http://www.timesonline.co.uk/tol/comment/columnists/guest_contributors/article2477765.ece

Financial Times (17/09)
p4
Warning on effect of house prices

Daily Mail (17/09)
p2
Young gambling on property to finance their retirement.

Metro (17/09)
p25
'Wealthy' 30-year-olds are drowning in debt

Daily Express (17/09)
p7
'Don't rely on your home to fund old age'

The Scotsman (17/09)
p28
Pensions saving fall as property seen as way to fund retirement

Yorkshire Post (17/09)
p5
Decline in pension plan contributors

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