NEWS:

We are delighted to announce that our Chief Executive, Baroness Sally Greengross OBE has been awarded a special Lifetime Achievement award by the British Geriatric Society (BGS), on the occasion of their 70th anniversary celebrations.

At a ceremony attended by patients, members of the BGS, doctors, nurses and healthcare workers, HRH The Prince of Wales presented Baroness Greengross with the award for her contribution to improving services for older people, and her ongoing support for the BGS.

Baroness Greengross sits as a Crossbench Peer in the House of Lords, and serves as Vice-Chair of the All Party Parliamentary Group on Dementia, and Co-Chair of the All Party Parliamentary Group for Ageing and Older People.

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.

Employers ‘letting down’ over 50s on risks of alcohol in later life – new report

  • Recent retirees are more likely to drink every day
  • Almost one third of older drinkers in the professional occupational class drink 5-7 days a week
  • A quarter of the professional occupational class aged 60-69 drink heavily – more than under 30s
  • Those retiring before 60 and after 75 are more likely to be high-risk drinkers

Older adults in employment and facing retirement are being let down by employers when it comes to problem drinking, a report released today states.

The report written by ILC-UK and commissioned by Drink Wise, Age Well, urges employers and government to take more action to help over 50s in employment or facing retirement to avoid serious alcohol problems in later life.

It highlights retirement as a ‘danger point’ for problem drinking, with recent retirees over 50 being more likely to drink every day. Additionally, those retiring before 60 are more likely to become a high-risk drinker, as are those working beyond the age of 75.

It concludes that there is currently a ‘blind spot’ in support from employers and the state in preparing for retirement which falls short of emotional, health and social changes. For millions of people facing later retirement in the future, the report represents a clarion call.

For those over 50s still employed stress, boredom, lack of control over work and retirement worries all contribute to drinking more. Earlier this year the Drink Wise, Age Well survey revealed that as many as 1 in 4 older adults would not ask for help with an alcohol problem if they needed it.  For those who drank more than they used to, 40% cited retirement as a reason for doing so.

Other findings include:

  • Nearly 30% of over 50s in the ‘professional’ occupational classes drink 5-7 days a week, the highest of any occupational class
  • Almost a quarter of older groups in the highest professions drink more than their younger counterparts
  • Alcohol problems can cost UK employers money in terms of workplace absence and lost productivity – around 7.3 billion a year

Over 50s who have been out of work and recovered from an alcohol problem still face further barriers in getting back into work. Only 16% of employers said they would consider employing someone with a previous alcohol problem, leaving some of the UK’s most experienced workers who want to work unable to realise their potential.

The authors of the report call for employers to introduce measures to assist employees over 50 who might be struggling with an alcohol problem, such as counselling and effective workplace policies that treat alcohol issues like any other health issue.

For those into retirement, the report calls for GPs to factor in the effects of retirement when giving advice on reducing risk from alcohol. The report also calls for greater engagement from employers to staff pre and post-retirement. This includes social clubs and guidance on how to avoid alcohol becoming a problem once working life is over.

Julie Breslin, head of programme for Drink Wise, Age Well said:

“People aged over 50 who are out of work, may struggle more than any other age group to get employment. Add this to someone over 50 who is in recovery from problem drinking, and there is a compounded stigma. However, people in recovery will often have so much more to offer a workplace; experience, loyalty and commitment, and by making employment opportunities more accessible everyone benefits.

Additionally, people who are approaching retirement age will have given much of their life to the workplace and supporting their employer’s success. It is only right that there is an investment from the workplace into their well-being particularly as they approach retirement. There should be a holistic approach to retirement which includes health and well-being. Providing people with knowledge and awareness, and coping strategies to manage the transition hopefully means people won’t turn to increased alcohol use if they are struggling”

David McCullough, chief executive of Royal Voluntary Service said:

“Retirement is like a cliff edge and often older people go from having a busy schedule and colleagues to interact with, to days where they might not see anyone or even have a conversation on the phone. It doesn’t take long for loneliness to set in and drinking a little more than they should each day can quickly become the norm. It’s vital that people facing retirement or those recently retired, remain mentally and physically active and engaged in their community and we would urge employers to ensure they have the necessary support and guidance in place to help employees with what can be a very steep transition.”

Baroness Sally Greengross, chief executive of the International Longevity Centre – UK said:

“As our population ages, the importance of older employees continues to grow.

A healthy and happy older workforce is vital, and having a better relationship with alcohol can help towards this. This report shows that many older adults are reaching retirement drinking potentially harmful amounts, and there is a need for increased support from employers in treating alcohol problems as they would other health problems.

Employers, health professionals and family members should be having these potentially difficult conversations sooner rather than later, to prevent serious alcohol related harm developing later in life”.

The report is available to download here.

Notes to Editors:

  • The report was compiled from existing health and social-related data and took evidence from working and retired over 50s, and employers at a series of enquiries at the House of Lords.
  • The AUDIT Alcohol Use Disorders Identification Test identifies three categories of drinker:

o LOWER RISK: This group is defined as: AUDIT score of 0-7 Or: Men who regularly drink 3-4 units per day. Women who regularly drink 2-3 units per day. This group is defined as ‘lower risk’ rather than ‘no risk, as evidence is accumulating that no level of alcohol use is without risk entirely. This is particularly true for older adults.

o INCREASING RISK DRINKERS This group is defined as: AUDIT score of 8-15 or Men who regularly drink more than 3 to 4 units a day, but less than the higher risk levels. Women who regularly drink more than 2 to 3 units a day, but less than the higher risk levels.

o HIGHER RISK DRINKERS This group is defined as: AUDIT score of 16+ or Men who regularly drink more than 8 units a day or more than 50 units of alcohol per week. (5 bottles of wine or 20 pints). Women who regularly drink more than 6 units a day or more than 35 units of alcohol per week. (14 pints lager or 3 ½ bottles of wine)

  • High Risk drinkers are defined in this research as respondents in Understanding Society who drink more than five times a week and who drink more than eight units in a typical day.
  • Recent retirees are defined as respondents in Understand Society who retired between waves four and five.
  • Drink Wise, Age Well will be delivered over a seven year period by a consortium led overall by Addaction and in Northern Ireland by Addiction Northern Ireland, and including Royal Voluntary Service, International Longevity Centre UK and Drug and Alcohol Charities Wales. The programme will be evaluated by an academic team led by the University of Bedfordshire’s Substance Misuse and Ageing Research Team (SMART

Each partner will take the lead in a demonstration area:

  • Western Health and Social Care Trust, Northern Ireland: Addiction Northern Ireland (contact Director Thelma Abernethy or Locality Manager Joanne Smith )
  • Cwm Taf Wales: Drug Aid (Director, Caroline Phipps or Locality Manager Richard Broadway)
  • Devon County, England:  Addaction (Contact Clare Pawley)
  • Sheffield City, England : Royal Voluntary Service- (Contact Emma Wells)
  • Glasgow City, Scotland: Addaction (Contact Graeme Callander)
  • Research and Evaluation: Sarah Wadd, SMART who will lead a UK wide academic team
  • Policy- Sally-Marie Bamford, ILC-UK
  • The Big Lottery Fund supports the aspirations of people who want to make life better for their communities across the UK. It is responsible for giving out 40% of the money raised by the National Lottery and invests over £650 million a year in projects big and small in health, education, environment and charitable purposes.
     
  • Since June 2004 it has awarded over £8 billion to projects that change the lives of millions of people. Every year it funds 13,000 small local projects tackling big social problems like poor mental health and homelessness. Since the National Lottery began in 1994, £34 billion has been raised and more than 450,000 grants awarded.

Press Release

Embargoed Wednesday 9th November 00.01

Current pensioners have managed to secure unprecedented leisure time but fail to enjoy the fruits of their labour  


Current pensioners have come close to achieving Keynes’ 80 year old vision of economic bliss – where people are able to capitalise on extended periods of leisure time[1]. But many have fallen short of his ideal because they are unable to remain active and spend their accumulated wealth. Meanwhile, future generations may be forced to work longer hours and experience a sustained reduction in leisure time.

Based on analysis of OECD and Bank of England datasets [2], the findings will be presented by ILC-UK Head of Economics, Ben Franklin, at the ILC-UK’s Second Annual Future of Ageing Conference today.

Those reaching retirement today have benefitted from falling working hours, earlier exits from the labour force and longer life expectancy. New analysis from the ILC-UK shows how this has translated into far fewer working hours over the expected lifetimes of adults retiring today:

  • An average of 23 hours per week for those retiring in the UK today versus 30 hours in 1970.
  • An average of 19 hours per week in France for those retiring today versus 34 hours in 1970.
  • An average of 21 hours per week in Norway for those retiring today versus 30 hours in 1970[3].

Mr Franklin will argue that despite the success in substantially reducing lifetime working hours and increasing leisure time, those in retirement are not necessarily “enjoying the abundance when it comes”.[4] He highlights ILC-UK research which finds that, on average, older people are “underspending”[5], that poor health prevents older people from doing what they want in retirement, and that most leisure time is taken up watching TV and later on, living at home alone.

Yet just as we get accustomed to shorter working weeks, the trend has started to reverse. New analysis of 300 years’ worth of data suggests that the post-World War II period was an economic anomaly characterised by high wage growth, substantial increases in the productivity of labour and in the successful diffusion of productive invention (see chart). Since the year 2000, growth in each of these areas has stalled meaning people have had to work for longer to keep the economy ticking over.

Speaking at the conference, Ben Franklin will say:

“Over eighty years ago, Keynes had a vision that people would work substantially fewer hours and have much more leisure time to use in meaningful ways – to “enjoy the abundance when it comes”. Yet while we reduced the number of working hours across the lifetimes of those retiring today and created extensive periods of adult life outside of the workforce, most leisure time in retirement is spent watching television and, later on, living at home alone. Poor health and disability remain significant barriers to economic bliss in retirement.

Meanwhile, weak economic fundamentals may mean that Keynes’ vision of bliss will slip further from the fingers of those in the workforce today, with slower productivity growth leading to longer hours in work. If, as the data suggests, it turns out that the period 1950-2000 was an economic anomaly rather than the new normal, this will have profound implications for the future leisure opportunities of today’s workers.”


David Sinclair, ILC-UK Director, also speaking at the conference, will set out a positive vision for the Future of Ageing. He will argue that we are at a tipping point where staff shortages, the increasing economic cost of ageing and poor economic fundamentals will force action by policymakers.

Speaking at the conference David Sinclair will say:

“Over the past decade public policy has started to respond to the challenge of ageing. Auto enrolment into pensions has got millions more people saving. We have seen falls in serious illness among older people over the past decade as well as, for example, falls in excess winter deaths. We have seen a growth in age friendly communities as our society slowly adapts to ageing.

We have begun responding to ageing but we are miles from where we need to be. Health and social care funding is inadequate to meet demand, too few people are saving an adequate amount for their retirement and most of us aren’t living as healthily as we should.

But while ageing may seem an impossible challenge for politicians, with political will and action we can ensure the future of ageing is a success rather than a threat to our economy.”


Speaking at the conference, Sinclair highlights 6 “silver bullets” for policy makers to focus effort on, pointing out that achieving change in all these areas is possible with leadership and political will.

The 6 ILC-UK silver bullets

  • Maximising the economic contribution of older people
  • Getting us healthy
  • Maximising the potential of technology and big data
  • Stop patronising old age. Treat adults as adults
  • Start talking about end of life
  • Let’s make ageing fun

Ends

Contact

David Eaton, davideaton@ilcuk.org.uk (07851042609), David Sinclair, davidsinclair@ilcuk.org.uk (07543646992) or Ben Franklin, benfranklin@ilcuk.org.uk (07393325293)

Journalists who would like to attend the Future of Ageing conference should contact ILC-UK asap. Filming and interviews may be arranged with speakers.

Notes:

Copies of the presentation of new analysis by Ben Franklin are available for journalists from Dave Eaton at ILC-UK. They will be published on the ILC-UK Website after the event.

Copies of other presentations on the day will also be made available on the ILC-UK website after the Future of Ageing Conference.

The ILC-UK Future of Ageing conference (http://www.futureofageing.org.uk/) brings together representatives from Government, business, academia and civil society. Speakers at this year’s conference, being held in Westminster, include:

  • John Cridland CBE, Head of the Independent State Pension Age Review
  • The Rt Rev. and the Rt Hon. the Lord Carey of Clifton, Archbishop of Canterbury 1991-2002
  • Professor Sarah Harper, Director, Oxford Institute of Population Ageing
  • Dr Margaret McCartney, GP and regular contributor on Radio 4’s Inside Health
  • Dwayne Johnson, Director of Social Care and Health at Sefton Metropolitan Borough Council
  • John Pullinger CB, National Statistician, UK Statistics Authority
  • Dr Islene Araujo de Carvalho, Senior Policy and Strategy Adviser, Department of Ageing and Life Course, WHO
  • Jonathan Stevens, Senior Vice President, Thought Leadership, AARP
  • Linda Woodall, Director of Life Insurance and Financial Advice, and sponsor of the Ageing Population project, Financial Conduct Authority

On Friday 12th February 2016, the ILC-UK published a report based on the information presented at the 2015 Future of Ageing conference, guest blogs written for our Future of Ageing series, and research and analysis from ILC-UK.  The report is available on the ILC-UK website at www.ilcuk.org.uk

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.

[1] John Maynard Keynes, The economic possibilities for our grandchildren (1930)

[2] The Bank of England's Three Centuries Macroeconomic Dataset Version 2.3 - 30 June 2016

[3] We used OECD data to estimate likely hours in work as a proportion of total expected adult life. This is total estimated working hours over a lifetime divided by the number of adult years. Adult years is calculated as current life expectancy at the point of retirement minus age of entry in the labour force (we use age 18 for year of entry since time series data on entry is not available for all countries).

[4] John Maynard Keynes, The economic possibilities for our grandchildren (1930)

[5] http://www.ilcuk.org.uk/index.php/publications/publication_details/understanding_retirement_journeys_expectations_vs_reality

Since our August update, we have launched four new reports, including an analysis of future care sector workforce shortages in the context of Brexit, and a review of financial capability interventions and older people in retirement.

We have also opened bookings for a December event on new approaches to means-testing and funding adult social care, and limited spaces are still available for the 2016 Future of Ageing Conference.

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, Facebook or our LinkedIn Group.

 

ILC-UK's Future of Ageing Conference less than one month away

George Sinclair, age 9, explains the urgent need to address the challenges posed by our rapidly ageing society

The Second Annual Future of Ageing Conference
Wednesday, 9th November 2016; Central Hall Westminster, Storey's Gate, London, SW1H 9NH

Current confirmed speakers include:

  • Dr Islene Araujo de Carvalho, Senior Policy and Strategy Adviser, Department of Ageing and Life Course, WHO
  • John Cridland CBE, Head of the Independent State Pension Age Review
  • Jonathan Stevens, Senior Vice President, Thought Leadership, AARP
  • John Pullinger CB, National Statistician, UK Statistics Authority
  • The Rt Rev. and the Rt Hon. the Lord Carey of Clifton, Archbishop of Canterbury 1991-2002
  • Professor Sarah Harper, Director, Oxford Institute of Population Ageing
  • David Sinclair, Director, ILC-UK
  • Dwayne Johnson, Director of Social Care and Health at Sefton Metropolitan Borough Council
  • Dr Maragaret McCartney, GP and regular contributor on Radio 4’s Inside Health, and
  • Linda Woodall, Director of Life Insurance and Financial Advice, and sponsor of the Ageing Population project, Financial Conduct Authority

For more information and to register to attend, click on the below link
ILC-UK 2016 Future of Ageing Conference

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

Further support has kindly been received from Action on Hearing Loss, lip reading practice and Drink Wise, Age Well.

We have a number of promotional opportunities for organisations wishing to be involved in the 2016 Future of Ageing Conference. For full details, please click here.

We are also happy to work with organisations on bespoke packages. If you would like to discuss sponsorship and the various packages in more detail, please contact Lyndsey Mitchell on lyndseymitchell@ilcuk.org.uk.

 

Support the work of the International Longevity Centre - UK

As an independent charity with no core funding, the ILC-UK relies upon the support of our Partners Programme and individual research commissions to operate.

If you would like to support our work producing research and policy analysis and hosting around 50 free-to-attend events a year, you can now donate to the ILC-UK via the secure BT My Donate portal below.

Any support you can provide would be greatly appreciated, and will allow us to continue to address the greatest challenges facing Government and society in the context of our rapidly ageing society and demographic change.

Please click here to donate to the ILC-UK

 

ILC-UK Publications

Brexit and the future of the migrant social care workforce
In this follow up to ILC-UK's 2015 report ‘Moved to Care’, ILC-UK and Independent Age update the analysis of the future workforce shortages in adult social care in England to take account of the EU referendum result of the 23rd June.

Still not ready for ageing
The Ready for Ageing Alliance assess the Government's response to our rapidly ageing society and finds the UK is still not ready.Far from seeing sustained progress over the past few years, society is seemingly going into “reverse gear” in some respects.

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

Pension coverage and pension freedoms: Lessons from Hong Kong
This think-piece looks to Hong Kong,  whose pension infrastructure is similar to the one emerging in the UK to examine the potential impact of the UK's recent pension reforms.

 

ILC-UK Events

Costing care: New approaches to means-testing and funding adult social care

Wednesday 14th December; 16:00 (for a 16:30 start) - 18:30 (followed by a short drinks reception)
Staple Inn Hall, Institute and Faculty of Actuaries, High Holborn, London WC1V 7QJ

This ILC-UK, IFoA and Cass Business School joint event will launch a new paper which reviews the present and proposed formula for means-testing adult social care in England.

Chaired by Baroness Sally Greengross OBE, Chief Executive of the ILC-UK, the launch will include a keynote presentation from report author, Professor Les Mayhew, Professor of Statistics, Faculty of Actuarial Science and Insurance, Cass Business School, and a response from an expert panel of actuaries and related professionals.

Limited spaces are still available for this event.
Please click here to register for this event

 

ILC-UK Blogs

Since our August update, we have published analysis on how best to support tomorrow's workforce; addressing the persistence of poverty across Europe; the dilemma faced by central banks, and guest blogs from a variety of expert contributors.

Blogs written by ILC-UK researchers include 'Are immigrants driving down wages in the adult social care sector?', 'Coming soon to a welfare state near you? A universal basic income', and 'Creeping protectionism and population ageing: a lethal combination'. ILC-UK economists Ben Franklin and Dean Hochlaf have also published an ILC-UK Economic Insight report into the challenges facing central banks in the context of the economic 'new normal'.

Our guest blogs have included articles from Audley Chief Executive Nick Sanderson on 'Downsizing and the housing black hole', and from Claire Turner, Interim Director of Evidence at the Centre for Ageing Better on 'Ageing: the things we don't talk about'.

We have also published three guest blogs as part of our 'Future of Ageing' series: researchers from the Centre for Health Economics and Medicines Evaluation have published on 'Developing and evaluating sustainable services in an ageing society'; Clare Bambra, Professor of Public Health Geography at Durham University has written on how 'Where you live can kill you', and Dr Marianne Coleman, Emeritus Reader in Educational Leadership as written on 'The future challenges and opportunities of health and care in an ageing society'.

We also regularly publish our Friday Five: five key facts about issues related to ageing.

To read these and all our blogs, please click here.

 

Partners Programme

Membership of our Partners Programme 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.

Partners are exposed to the latest available research and data in the UK, EU and the rest of the world. Partners are helped to understand and plan for changing societal trends and given opportunities to participate in cutting-edge debates to help them remain ahead of policy curves.

The current ILC-UK Partners are: Anchor, Audley, Aviva, Centre for Ageing Better, Equiniti, EY, FirstPort, Hymans Robertson LLP, Legal & General, Newcastle University Institute for Ageing, Partnership and Prudential.

For more information, see the Partners Programme brochure or contact David Sinclair, davidsinclair@ilcuk.org.uk.

 

Working with ILC-UK

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 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.

The Drink Wise Age Well partnership of leading national alcohol and ageing charities have launched an Inquiry, led by the International Longevity Centre – UK (ILC-UK) into alcohol-related harm amongst the over 50s.

Each year we will hold an Inquiry on a key theme pertaining to alcohol and the over 50s and for 2016, we aim to explore and consider employment. We have selected this theme for 2016 based on some of the early findings from the Drink Wise Age Well survey; of those surveyed whose alcohol use has increased, 40% cite retirement and 20% loss of purpose for their increased consumption.

The 2016 Inquiry will focus on three key areas: alcohol and over 50s seeking employment; the second will examine alcohol and over 50s currently in employment; and the third will focus on alcohol and over 50s transitioning to, or currently in, retirement. We are inviting submissions of written evidence for one, two or all of the three key areas.

Guidelines on making a submission

  • If you would like to make a submission of written evidence to the Inquiry, please state clearly who the submission is from, i.e. whether from yourself in a personal capacity or sent on behalf of an organisation.
  • Please be concise – we recommend no more than 1500 words in length.
  • Include a brief introduction about yourself/your organisation and your reason for submitting evidence.
  • Include any factual information you have to offer from which the Inquiry might be able to draw conclusions, or which could be put to other witnesses for their reactions.
  • Include any recommendations for action by the Government or others which you would like the Inquiry to consider.

Submissions of written evidence might consider:

1. To what extent does alcohol use either indirectly or directly impact employment prospects, job seeking activities and work performance in the over 50s? With around 1 million people aged 50-64 across the UK not currently in work but wanting to work, to what extent might alcohol-related harm be a cause, and/or symptom of prolonged unemployment? For those in work, what are the workplace consequences of alcohol-related harm?

2. What sort of interventions are required to encourage and support over 50s either seeking work, in work or in retirement with issues around alcohol? Evidence relating to successful interventions may focus on the role of service providers, the perspective of a service user, or a combination of these perspectives.

The final report is intended for a policy and public audience, so written submissions should be accessible but at the same time, informative, thought provoking and ideally challenging while offering solutions/recommendations. The written submissions will form a key part of the evidence base for the next annual State of the Nation report; our last State of the Nation report received wide media exposure and was covered by the BBC1 Breakfast Show, The Sunday Times and The Telegraph amongst other publications, and all submission will be acknowledged where referenced. To submit written evidence please email events@ilcuk.org.uk. Please note there is a final deadline of any submissions of Friday, 1st July 2016.

We are also holding three high level oral evidence sessions in the House of Lords:
• Monday 18th April – alcohol and over 50s seeking employment;
• Friday 6th May – alcohol and over 50s currently in employment;
• Monday 23rd May – alcohol and over 50s transitioning to, or currently in, retirement.

If you would like to attend any or all of these evidence sessions as an audience member please visit the ILC-UK website for further details:
http://www.ilcuk.org.uk/index.php/events/drink_wise_age_well_alcohol_inquiry

This is an independent Inquiry, with the ILC-UK providing the governance and secretariat while the Chair will drive the agenda and findings. Baroness Sally Greengross will chair the Inquiries evidence sessions, which are kindly supported by the Big Lottery Fund.


Please note:
Authors are requested to provide a very short biography of themselves/organisations of no more than four lines to sit alongside their submission. Due to time constraints, we will only be making minor amendments/proofing so all submissions need to be of a publishable standard, ILC-UK reserves the right not to publish if material is deemed inappropriate. All authors and their organisation will be credited in the final report and any associated publicity and promotional material linked to the response.

Responding to the latest Aviva Working Lives report, David Sinclair, Director, International Longevity Centre – UK (ILC-UK), said:

Ten years on from final Pension Commission report, we see more people saving due to the success of auto-enrolment. Now is the time to build on this success.

Almost half of those working later than they hoped, are doing so because they haven’t saved enough. Whilst we have more people saving, the levels are woefully inadequate, particularly given we are living longer. Investment returns remain relatively low so even those who are saving aren’t getting the return they hoped for.

With the Cridland review exploring further increases to state pension age, future pensioners should be prepared to need to work longer. But this isn’t necessarily a bad thing. As the research points out, for many older people, working longer provides a “feelgood factor”.

Government and employers must find ways of ensuring that older people aren’t forced out of the workforce prematurely. The benefit of extending working lives goes beyond the benefit to individuals. UK plc faces a significant economic hit if we don’t better adapt workplaces to cope with demographic change.

On 10th June, ILC-UK are organising their second Retirement Income Summit.


NEW STUDY: STIGMA AND SHAME STOPPING ‘HIDDEN’ OVER 50s DRINKERS SEEKING HELP

Biggest ever study of its kind reveals attitudes towards alcohol and ageing could be leaving over 50s at increased risk of harm from alcohol. 

A hidden population of over 50s at increasing risk from their drinking may well be hidden in plain sight according to the Drink Wise, Age Well report released today. Attitudes held and experienced by older drinkers may stop them for asking for help in reducing their alcohol use.

Respondents who drank more than they used to gave age-related reasons for doing so. Furthermore, over three-quarters (83%) of those surveyed who were at increasing risk from alcohol use had never been asked about their drinking by someone who might be able to help. Risks associated with alcohol include depression, poor sleep, memory problems, and trouble with relationships as well as more serious illnesses such as cancer or liver disease.

The biggest-ever study of its kind into drinking behaviours among the over 50s surveyed over 16,700 people from 10 areas across the UK. Categories of risk were defined using the international recognised AUDIT screening tool.

Preliminary findings are:

  • Over half of respondents aged over 65 believe that people with an alcohol problem have themselves to blame. Nearly a quarter think they should feel ashamed.  
  • The five most frequently reported reasons for those who drink more now than in the past are age-related. These include retirement, bereavement, loss of sense of purpose, fewer opportunities to socialise and finances.
  • Around 4 in 5 of those who are at increasing risk of harm from alcohol said that on no occasion had relatives, friends, doctors or other health workers been concerned about their drinking or suggested they cut down.
  • 1 in 4 said they would not tell anyone if they needed help.


Julie Breslin, Drink Wise, Age Well Programme Lead said:

“One positive from the Drink Wise, Age Well study is that 80% of those surveyed who drink, are drinking at lower risk levels. However, of those who are drinking at more risky levels the majority have never had anyone, including health professionals, talk to them about their alcohol use. Also a quarter of people would not know where to go for help nor would they ask if they needed it. Thanks to support from the Big Lottery Fund, Drink Wise, Age Well is working to tackle the stigma around alcohol use in the over 50s population and do this through raising awareness, training frontline staff to ‘ask the question’ and ensuring appropriate help is available to those when they do look for it.”

Baroness Sally Greengross from the International Longevity Centre - UK said:

“This report gives us an opportunity to start putting some wrongs to rights in relation to older adults and alcohol. We are all living longer lives; however, it is vital to ensure this is a life of quality and good health. If the number of people that are drinking at increasing risk levels continue this into later life there may be some serious impacts both on their own health and at a societal level. At a policy level we need to create a climate where sensible drinking is considered within the wider scope of healthy ageing and longevity.”

David McCullough, Royal Voluntary Service Chief Executive said:

“What this report gives rise to are some concerning characteristics in relation to higher risk drinkers. More often than not, they are not in a relationship and live alone, and have a longstanding illness or disability. 1 in 3 higher risk drinkers cite being down or depressed as a reason for drinking and 41% say they drink because they are lonely or bored. Tackling social isolation among older people is a key commitment of Royal Voluntary service and this report highlights that we need to be much more vigilant and aware of the potential for high risk drinking in a population that are more isolated. We are delighted to be partners of the Drink Wise, Age Well programme so we can tackle this together.”

Drink Wise, Age Well is supported by the Big Lottery Fund as part of Rethink Good Health, a £25 million UK-wide programme to inform policy and practice UK-wide in preventing alcohol misuse amongst older people, specifically those aged 50 and over. It works in five areas to help prevent harm caused by alcohol in the over 50s, promote alternatives to alcohol in communities, build skills in communities to help at risk over 50s and seeks to get the issue on the health agenda.

-ENDS-

Drink Wise Age Well media contact:
Steve Williams, Communications and Public Affairs:
Tel: 0141 221 8390 steven.williams@addaction.org.uk

Addaction press office: 020 7017 2747
Out of hours: 07818 587696


Notes to Editors:

  • The AUDIT Alcohol Use Disorders Identification Test identifies three categories of drinker:

o LOWER RISK: This group is defined as: AUDIT score of 0-7 Or: Men who regularly drink 3-4 units per day. Women who regularly drink 2-3 units per day. This group is defined as ‘lower risk’ rather than ‘no risk, as evidence is accumulating that no level of alcohol use is without risk entirely. This is particularly true for older adults.
o INCREASING RISK DRINKERS This group is defined as: AUDIT score of 8-15 or Men who regularly drink more than 3 to 4 units a day, but less than the higher risk levels. Women who regularly drink more than 2 to 3 units a day, but less than the higher risk levels.
o HIGHER RISK DRINKERS This group is defined as: AUDIT score of 16+ or Men who regularly drink more than 8 units a day or more than 50 units of alcohol per week. (5 bottles of wine or 20 pints)
Women who regularly drink more than 6 units a day or more than 35 units of alcohol per week. (14 pints lager or 3 ½ bottles of wine)

  • Drink Wise, Age Well will be delivered over a seven year period by a consortium led overall by Addaction and in Northern Ireland by Addiction Northern Ireland, and including Royal Voluntary Service, International Longevity Centre UK and Drug and Alcohol Charities Wales. The programme will be evaluated by an academic team led by the University of Bedfordshire’s Substance Misuse and Ageing Research Team (SMART).
     
  • Each partner will take the lead in a demonstration area:
    Western Health and Social Care Trust, Northern Ireland: Addiction Northern Ireland (contact Director Thelma Abernethy or Locality Manager Joanne Smith )
    Cwm Taf Wales: Drug Aid (Director, Caroline Phipps or Locality Manager Richard Broadway )
    Devon County, England:  Addaction (Contact Clare Pawley)
    Sheffield City, England : Royal Voluntary Service- (Contact Emma Wells )
    Glasgow City, Scotland: Addaction (Contact Graeme Callander )
    Research and Evaluation: Sarah Wadd, SMART who will lead a UK wide academic team
    Policy- Sally Bamford. ILC-UK

    • The Big Lottery Fund supports the aspirations of people who want to make life better for their communities across the UK. It is responsible for giving out 40% of the money raised by the National Lottery and invests over £650 million a year in projects big and small in health, education, environment and charitable purposes.
    Since June 2004 it has awarded over £8 billion to projects that change the lives of millions of people. Every year it funds 13,000 small local projects tackling big social problems like poor mental health and homelessness.

    Since the National Lottery began in 1994, £34 billion has been raised and more than 450,000 grants awarded.

Ends//


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.

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.

  • Think tank urges continued focus on preventing ill health as research highlights that ill health and inactivity is not inevitable.
  • Age UK announce plans for annual “Greengross Lecture”

A new factpack published today by the International Longevity Centre – UK (ILC-UK) (1) illustrates the realities of living to 80 for the 367,000 people reaching the milestone age this year.

Inspired by ILC-UK Chief Executive and founder, Baroness Sally Greengross, who turned 80 on the 29th of June this year, 80 at Eighty (2) gives 80 facts about life in your 9th decade.

Across the world, the number of people aged 80 plus has increased from 15 million (1950) to 110 million (2011). By 2050 the number aged over 80 is estimated to reach 400 million.

This factpack incorporates new analysis by ILC-UK of the English Longitudinal Study of Ageing by ILC-UK. 80 at Eighty reveals:

Many English 80 year olds remain very active…

  • In England over 16,000 people aged 80+ are still in paid employment.
  • People aged 80+ may be more satisfied with their sex lives, as 67.9% report the frequency to be about right, in contrast to 54.5% of those aged 50-64.
  • More than half (55%) of men aged 80+ are married (or in a civil partnership) vs. 21% of women.

But health problems are common…

  • Around 16% of those aged 80-84 have already survived a heart attack.
  • 49% of women and 38% of men aged 80+ are often troubled with physical pain.
  • 50.8% of men and 56.7% of women aged 80 and over report having a limiting long standing illness.
  • Over one in ten of those aged 80-84 have some kind of dementia

Alongside Baroness Greengross, Julie Andrews, the Dalai Lama, Woody Allen and Norman Foster turn 80 this year. Elvis would have been 80 this year.

80 at Eighty was launched at a reception hosted by Age UK this week. During the reception, Age UK announced plans for the introduction of an annual “Greengross” lecture.

Baroness Altmann CBE, Minister of State for Pensions said
“I welcome this year’s edition of the Factpack, building as it does on the high quality research that has been the hallmark of ILC UK’s work over a number of years. In common with much of ILC UK’s research, this usefully highlights the importance of addressing the challenges and opportunities of our ageing society. Improving quality of later life is an important goal which can benefit increasing numbers of people.”

Baroness Greengross, ILC-UK Chief Executive said
“It is brilliant to see how many 80 year olds remain active. There were 17 runners in this year’s London Marathon aged over 80.  But 80 at Eighty also highlights the day to day challenges faced by too many people into their 80s and beyond.
The priority for me, as I pass my own 80th birthday, is to focus policy effort on ensuring more and more 80 year olds are healthier longer. Growing numbers of people aged into their 80s and 90s is great news, particularly if we can better prevent the multiple illnesses that can destroy wellbeing in later life.

Caroline Abrahams, Charity Director for Age UK said:
“It is fantastic that there are more over-80s in our society than ever before and that this age group is increasing more quickly than any other.

"Growing numbers of these people are making significant contributions to their families and communities - indeed to our country - and in the process they are dismantling ageist stereotypes about what it is to be 'old'.

"No one epitomises this better than Baroness Sally Greengross, who has had a long and distinguished career supporting older people that she shows no sign of giving up, and who herself is joining the over-80s club this year.

"Age UK is therefore delighted to announce that from 2016 we will host an annual Greengross Lecture in Sally's honour. Our intention is that the Lecture will champion later life and the person or people who have made a really big difference to it that year - a fitting tribute we hope to all that Sally has done and continues to do."

“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, argues ILC-UK in a new White Paper for the Centre for Later Life Funding.

“At a cross-roads: understanding the future likelihood of low incomes in old age” sets out the priorities for Government over the next Parliament.

In the White Paper, the think tank argues that a strategy for later life funding must:

  • Secure effective funding for adult social care
  • Implement the Dilnot reforms
  • Find ways of ensuring the provision of mass market financial advice
  • Develop default options for those who “sit on their pension pots and do nothing”.
  • Be clear around what constitutes the deliberate deprivation of assets within the context of the new pension freedoms
  • Incentivising downsizing
  • Support innovation in the equity release market
  • Support policy which extends working lives

The White Paper sets the agenda for the ILC-UK Centre for Later Life Funding, which  will explore these issues and trends over the coming year.

Baroness Sally Greengross, ILC-UK Chief Executive said: “We are at a cross roads. There has been undoubted progress in reducing pensioner poverty, particularly at older ages, but we must guard against complacency. Continuing reductions to social care budgets could lead to ever rising levels of unmet need and thereby greater deprivation amongst the oldest old. Not all babyboomers are wealthy and the pension freedoms alongside an over reliance on housing wealth poses risks to future retirement incomes. For tomorrow’s pensioners, there is a huge question about whether they will be able to depend on the state to provide adequate levels of support given the rising fiscal pressures of supporting an ageing population.”

About the Centre for Later Life funding: This report is the first publication from The Centre for Later Life Funding, which in turn, sits under the guise of the ILC-UK. The Centre is, in part, a continuation of its predecessor body the Care Funding Advice Network (CFAN) – a coalition of organisations and individuals seeking to improve on the Care Act’s recognition of the need for financial advice.

The Centre represents a significant expansion in terms of scope and output to include policy briefings and research papers which consider not just questions about care funding but questions about funding retirement more broadly. And it will be focused on developing ideas and solutions to these questions. We think that the artificial separation of retirement funding from care funding is unhelpful given that long-term care can be one of the biggest costs that people face during their retirement years, and the new “cap” will not change that fact. We are grateful to all ILC-UK Partners who have made this possible.

Demographic time bomb means employers must act to avoid a cliff-edge loss of skills and talents by 2035

A new study launched by the CIPD today 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.

New research  from the CIPD, the professional body for HR and people development and the International Longevity Centre-UK (ILC-UK), the independent think tank on longevity, ageing, and population change, brings to light the challenges the UK faces over the coming two decades. As a result, the CIPD is urging organisations across all sectors to take steps now to reap the benefits of a more age diverse workforce, rather than fall victim to a mass exodus of skills as their workforce ages.

There are currently 9.4 million workers in the UK today who are over the age of 50  and while the employment rate of older workers has increased significantly in recent years, there is still a 64 percentage point drop in the employment rate between the ages of 53 and 67.

The health and social work, education and public administration are most at risk of skills shortages. This is because they are not only highly reliant on older workers (around a third or more of their workforces are over 50), but also struggle more than other sectors to remain attractive places to work for older workers. The report also found that the manufacturing, construction and transport and storage sectors all have at least a third of workers aged over 50 and typically see at least a 50% fall in the number of people employed between the ages of 45-49 and 60-64.

Ben Willmott, Head of Public Policy at the CIPD, said: “2035 may sound far off but the reality is that organisations need to get to grips with the ageing workforce challenge today or face skills shortages that will affect their ability to grow or deliver key services in the very near future. The findings in this report suggest too many employers are sleep-walking towards a significant skills problem that risks derailing their business strategy if not addressed. Not enough organisations are thinking strategically about workforce planning or even know enough about the make-up of their workforce. Employers need to recognise the value that older workers can bring to their organisation when recruiting new staff, continue to invest in people’s training and development at different stage of their careers and think about how they can transfer older workers knowledge to other parts of the business when they do retire. In addition it is increasingly in employers’ interests to think about how they can support the health and wellbeing of their staff and provide more flexible working opportunities to allow older workers to downshift and benefit from more gradual transitions into retirement if that is what they want.”

The report outlines five essential components that should form an organisation’s strategy to address the aging workforce challenges:

  1. Ensuring they have inclusive recruitment practices
  2. Improving the capability of line managers
  3. Investing in training and development
  4. Supporting employee health and wellbeing
  5. Moving towards more flexible working

Minister for Pensions, Ros Altmann, said: “The analysis in this report can help us understand the challenges that the next 20 years present much more clearly.

“Employers need to realise what they stand to lose if they fail to give opportunities to older staff. Not only could they miss out on the wealth of experience that having a diverse workforce can offer, but they also risk losing a large chunk of their workers – and valuable skills – over a short period of time, as this study shows.

“Ensuring all employees and new applicants are considered on their merits is vital, especially given the demographic challenges that our economy faces. I hope employers will remain open-minded to recruiting and training older staff, as well as considering the benefits of flexible working. This is important for older workers but it is also important for the future of our economy.”

Ben Franklin, Head of Economics of Ageing at the ILC-UK, said: “Population ageing is not some distant event enabling us to bury our head in the sand. It’s already with us, affecting every corner of our lives, and the UK’s workforce is no exception. This report clearly shows that some sectors will face an exodus of staff in the short to medium term and that they, along with all other sectors, must develop robust strategies to support longer working lives, and to drive up productivity growth into the middle of this century. This means investment in people and capital. Population ageing does not have to be a by-word for economic stagnation, and with the right mix of resolve and innovative thinking, employers can help shift the UK’s path towards a prosperous yet sustainable future.”

 

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/

 

The Charity Act’s reference to ‘need because of age’ is patronising and should be removed—new report

Removing the reference would help charities lead banishing age stereotypes and prepare for our ageing population, argues the final report from the Commission on Voluntary Sector & Sector.

Decision time, published today by the Commission, suggests this change as one way to make sure voluntary organisations are geared-up to combat ageism and avoid alienating older staff, volunteers and donors.

New analysis in the report estimates that volunteering and donations from people over 65 could grow by over £6bn in the next two decades, but warns that charities will miss out on this money without reforming the way it works with older supporters.

Decision time makes a range of suggestions aimed at the voluntary sector, funders and government, to help civil society negotiate the opportunities and pitfalls posed by the UK’s ageing population. These include:

  • Charities must adapt how they work with older volunteers and donors. Today’s retirees are more discerning and discriminating than ever before about giving time and money, and charities should maintain more interactive, reciprocal relationship with the people who support them
  • The voluntary sector should market itself as the ‘sector of choice’ for people shifting jobs in the last year before they retire. Charities could lead retraining for teachers, care-workers and other under-staffed professions
  • Government can support the efforts of charities by considering incentives to volunteer. This may include piloting tax breaks for volunteers or carer credits
  • Funders should pilot more early intervention projects, to identify the most effective work and prevent future problems before they emerge 

Exclusive analysis for the Commission estimates that, compared to 2013:

  • the value of charity volunteering by over 65s will be £15.72bn by 2033, an increase of £5.32bn
  • the value of charity donations by over 65s will be £3.49bn by 2033, an increase of £1.18bn

Professor Lynne Berry, Chair of the Commission, said:

‘By 2033, 1 in 4 of us will be over 65 years old. The voluntary sector achieves amazing things every day, but in the course of the last 18 months the Commission has found that there is lots to do if the sector is to cope with, and make the most of, our ageing population. It needs to act quickly.

‘Charities can start by looking at their own day-to-day practices: are older people just there to be helped, or do they play their part working with charities as well? Does the charity resemble the community it serves? And they can think about the current batch of older supporters and ask whether they are doing enough to maintain them as volunteers and donors for the future.

‘Most public discussion of the ageing population sees it as a problem, but it could be a brilliant opportunity for the voluntary sector to focus on the future and the impact it wants to have. Hopefully the ideas in our report will help kick-start those conversations’

1.4 million older people face inadequate retirement incomes after pension freedoms day

  • 1.1 million people face inadequate incomes even if they choose to annuitise.
  • But this could rise to 1.4 million if all those with DC pensions blow their pots.
  • 850,000 people on the verge of retirement are particularly at risk of income shortfalls due to high concentration of wealth in DC savings and limited financial capability. 
  • Annuities should form part of a default retirement strategy. 

A major new report published by the International Longevity Centre-UK (ILC-UK) and sponsored by Aviva, provides the first detailed exploration of what certain choices made at the point of retirement today could mean for overall levels of retirement income over the next 30 years.

The report, “Here today, gone tomorrow” models the outcomes of four different approaches to using DC pension wealth: 1) annuitising, 2) blowing the pot on big ticket items, 3) putting everything into a savings account and 4) leaving the fund invested. It utilises data from the largest survey of the over 50s in England* and applies these approaches to different consumer segments aged 55-74. It finds that:

Even if all those approaching retirement were to annuitise, over half (1.1 million people) will not be able to secure an adequate income unless they use non-pension assets or receive additional benefits on top of the State Pension.

But in a scenario where the DC pot is used to buy big ticket items, an additional 350,000 people (1.4 million people in total) will not be able to secure an adequate income in retirement.

Putting everything in a savings account also risks people running out of money before they die. We project that for those years when people have savings to draw on, they achieve a replacement rate equivalent to two thirds of their pre-retirement income, but once their savings run out, they achieve an income of only half their pre-retirement income.

Given that people typically underestimate their life expectancy by upwards of four years, spending savings too early is a real possibility.

Leaving the fund invested also risks people running out of money before death as well as exposing individuals to substantial income volatility. Within a balanced fund of 60% bonds and 40% equities, we estimate that average annual income in retirement could range between £18,000 and £12,000 until the fund runs out.   

Not everyone will be equally affected by the choices they make. There are 850,000 individuals who are at high risk of seeing big income shortfalls from making particular decisions. Many of the individuals from this group have low levels of financial capability allied to a high concentration of financial wealth locked up in DC schemes.

For this group the report finds:

  • Blowing the pot would lead to a substantial fall in average projected replacement rates - from a replacement rate of almost 70% if they annuitise, to less than 40% if they blow the pot.
  • Putting everything into a savings account could result in substantial income falls at the end of life – from a replacement rate of over 60% when they have some savings to less than 40% when savings run out.
  • Keeping the fund invested could also result in substantial falls in income at the end of life for this group – from a replacement rate of over 70% when they can draw on the fund to less than 40% when the fund runs dry.

The report argues that “such income falls coming at the end of life could have disastrous implications resulting in individuals cutting back on expenditure just at a time when they may need it most – i.e. to maintain basic living standards as well as paying for long-term care”.

In response, the report argues that annuities must play a “key role in any future default strategy” given their clear benefits for those who will be highly reliant on their DC pots for retirement income. But the author’s argue that consumers must be appropriately forewarned that they will be auto-enrolled into the product and enrolment must not occur until the individual reaches State Pension age. 

On launching the report, ILC-UK Senior Research Fellow Ben Franklin said:

“While we do not advocate that everyone should take a particular course of action, our analysis clearly highlights the benefits of annuitising for those individuals who have a high concentration of wealth in DC savings. All other stylised choices risk significant falls in income during retirement. Annuities are generally misunderstood and the group who stand to lose the most from spending everything too early, also score relatively poorly on financial capability, making them particularly susceptible to poor decision making. Without the appropriate support including a new default strategy, these individuals could end up significantly worse-off in retirement”.

John Lawson, Head of Policy at Aviva added:

“6 April is just the start of the new regime and it’s important not to rush into any decisions.  We’d urge those starting to look into their retirement finances to take their time to shop around, take advice and consider all the options. We know people frequently underestimate their life expectancy and this research underlines how crucial it is to consider all your potential financial needs across the whole of your retirement, not just in the short term.”

  • Current policy not enough to secure adequate retirement incomes for many. 
  • Retirement planning difficult due to constant policy changes.
  • Uncertainty is compounded by twin threat of falling real incomes and low investment returns.

A new report published today by the International Longevity Centre-UK (ILC-UK) and sponsored by Prudential, calls upon the next Government to introduce a new independent Pensions Commission to rebuild consensus-based policy making in pensions and tackle the substantial challenge of insufficient incomes in retirement.

The report, “Consensus revisited” reveals that, despite a number of positive policy initiatives, many future savers are still unlikely to secure adequate retirement incomes as a consequence of economic and demographic headwinds:

The economic storm:

  • The UK’s economic recovery is founded on rising household spending, but in the absence of rising incomes, savings will fall and indebtedness will rise.
  • Household debt to income is predicted to rise above its pre-financial crisis peak in 2018, while the savings ratio is predicted to fall to its lowest level since 1997.
  • The country may also be entering a “new normal” period of low investment returns, with average annual returns on bonds and equities expected to be at least 50% smaller than they were in the 30 years prior to the financial crisis.

The demographic storm:

  • On average, in 2012, women left the workforce at 63, which means they will need to fund 26 years in retirement. Men will need to fund 21 years.
  • The average length of time spent in retirement has significantly increased over the last 30 years, by more than one third for men and just under one fifth for women.
  • Even with the Government’s planned changes to State Pension age, people will still require sufficient savings to fund up to a third of their adult lives in retirement (over 20 years).

In future, hopes for an adequate retirement income will hinge on people saving enough into defined contribution (DC) schemes, but evidence suggests this is not yet the case:

  • On average, employees contribute just 2.9% of their salary to a DC pot by comparison to 5.9% for members of defined benefit (DB) schemes[v].
  • The difference in the employer contribution is even starker – just over 6% for DC schemes but over 15% for DB schemes[vi].
  • Projections suggest that unless contributions into DC schemes rise, less than half of median earners will be able secure an adequate retirement income through Auto-Enrolment.

Given the context of policy change coupled with severe economic and demographic headwinds, the report argues for a new Pensions Commission to take a “holistic, non-partisan view of pensions policy” and make “well-informed decisions on the basis of strong evidence and widespread consensus”.

ILC-UK argue that the central aim of such a Commission should be to help savers secure income adequacy in retirement. The think tank argues that the commission should be given a remit to:

  1. define target outcomes for retirement savings and extending working lives.
  2. monitor progress against these targets.
  3. consult and ultimately decide on whether new policy reforms are needed.

The report argues that a commission be set up as soon as possible after the general election to help navigate the tricky road ahead, but that “in order to allow the current set of reforms to bed-in and to ensure at least short to medium term stability in pensions policy, the Commission should not set out any final proposals until 2017 at the earliest”.

The report also argues that the Commission must “carry sufficient weight politically to ensure that its findings and proposals are taken seriously” and recommends that the commission should report to the Secretary of State for Work and Pensions the Chancellor of the Exchequer and the Prime Minister.

Launching the report, Ben Franklin, Senior Research Fellow at ILC-UK said:
“A new Pensions Commission is urgently needed in order to look at the problem of retirement income adequacy in a holistic way – taking into account the political and economic realities of our time. The core goal of ensuring adequate retirement incomes based on the principle of consensus based policy making, is consistent with the original thrust of the Turner Commission a decade ago, and can be at the heart of a new coherent settlement on pensions policy in the UK."

Tim Fassam, Head of Public Affairs at Prudential added:
“Recent changes have expanded the number of people saving and provided a wider range of choices in retirement. While these are important improvements, most people are still not saving enough to provide the retirement they desire. Pension decisions are long-term, so stability and predictability are important in encouraging people to save more. At Prudential we believe the best way to achieve this is through consensus with savers, policymakers and industry working together.”

  • 7 in 10 people with DC pots aged over 55 would prefer pension to deliver guaranteed income for life.
  • Half want a guaranteed income that is protected against inflation
  • Yet 3 in 5 people with DC pots of this age have yet to make a plan.
  • And only half of those with DC pots say they understand what an annuity is.
  • Just 1 in 5 say they understand what the term marginal tax rate is.
  • 1 in 10 aged over 55 wrongly believes that to limit their tax burden they should withdraw everything from their pot as one big lump sum.

New research published today by the International Longevity Centre-UK (ILC-UK), finds that the majority of people approaching retirement want to use their pension pots to deliver a secure guaranteed income for life, with inflation protection being very important, but many may be too confused to know how to go about achieving this goal.

The new research, “Making the system fit for purpose” finds that consumers approaching retirement are ill-equipped for new pension freedoms. The research has been supported by a consortium of industry partners (EY, Just Retirement, Key Retirement, LV= and Partnership) and guided by pensions and retirement expert, Ros Altmann.

The research incorporates a representative survey of 5000 people aged 55-70 who are yet to retire or draw on their private pension wealth [1]. The survey found:

Guaranteed income seen as “most important”

  • Nearly 70% of all those with DC pension savings favoured using their pot to deliver a guaranteed income, particularly an income protected against inflation, while just 7% said that paying for big ticket items such as holidays or a car was most important, and 5% said paying off debt was the priority.

Older consumers are risk averse

  • Three quarters of people (75%) across the entire survey agreed with the statement “I would prefer a secure guaranteed income over an income that might rise or fall depending on financial markets”.
  • When asked what proportion of their pension fund they could afford to lose, the most common answer amongst those with DC pots was none (35%). Just 7% thought they could afford to lose 20% of their fund or more.

While consumers want income security many are confused about options

  • Only half those with a DC pension said they understood what an annuity is quite or very well.
  • Only 20% of those with DC pots understood what an enhanced annuity was.
  • And just 35% said they understood what income drawdown was.
  • This compares to 9 out of 10 people who said they understood what a mortgage is.
  • Women were consistently less financially aware than men on all measures and are therefore most at risk of confusion from the new pension freedoms

Compounding the problem of confusion, many are yet to make a plan

  • Across the entire survey just 4 in 10 had made a plan. Those closer to retirement were more likely to have made a plan but even amongst those who were less than 1 year from retirement, more than 4 in 10 had still not made one.
  • It is a similar story for those with DC pots, with 4 in 10 of those who are less than 1 year from retirement having not yet made a plan.

Lack of understanding could lead to artificially high tax burden

  • Only 1 in 5 people with a DC pot said they understood what marginal tax rate was.
  • When pressed on how to reduce their tax burden when withdrawing money from the pension pot, only half gave the correct answer that you should withdraw it in small amounts over a number of years. 1 in 10 wrongly thought that the best thing would be to withdraw as one big lump sum. 

On launching the report the Government’s Business Champion for older workers, Dr Ros Altmann said:
“It is clear from the research that there is an urgent need to help people understand more about how pensions work and what their options are when deciding how to make best use of their pension funds.  Even after decades of pension saving, many people have no understanding of the most important aspects of the pension system, which leaves them at risk of making poor decisions.  The opportunity of more freedom and choice in future has the potential to deliver better value from retirement savings, but much work still needs to be done to help savers understand their options.  Promoting take-up of the new Guidance service will be vital to help millions of men and even more women make the most of their hard-earned pension savings” 

Commenting on the results, ILC-UK Chief Executive, Baroness Sally Greengross said:
“These results underscore the significant challenges that lie ahead. By April 2015, we will need a fully functioning Guidance Guarantee which supports the high proportion of pension savers who have low levels of financial capability and who are confused about what to do in the face of these new freedoms. But Guidance alone will not be enough. An advice market that works for the many and not just the few is also needed – including mass market advice that meets the needs of those with limited to moderate net wealth. And critically, there is an urgent need to determine how we support those who fail to take Guidance or for those who take Guidance but are still liable to making poor decisions”.

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
Tel: +44 (0)20 7040 5210
E-mail: chris.johnson.1@city.ac.uk

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.
 

 

Pensions Minister says the situation is improving for older workers but we must "keep our foot on the accelerator".


Ros Altmann, the UK Government’s Business Champion for Older Workers will today urge employers and policymakers across the world to embrace the 3 ‘R’s when considering employment of older workers. Dr Altmann will deliver the message to an international audience in London today when she presents the Robert Butler Memorial Lecture. The lecture has been organised by the International Longevity Centre – UK (ILC-UK) as part of a visit by the ILC Global Alliance to the UK.


Despite us living longer lives, average retirement ages are still below what they were in the 1950s. Dr Altmann will propose a reassessment of later life working and retirement.  She is calling for new attitudes to over 50s in the labour force, with employers and governments urged to:
1)    Retain: Employers should objectively assess older workers’ skills and ensure they do not lose them too soon, including facilitating more flexible working in later life wherever possible.
2)    Retrain: Employers and governments should support ongoing lifelong learning and training in new skills for workers of all ages. In particular, training for those who have had heavy physical jobs so they can keep working in a different role.
3)    Recruit: HR departments, recruitment agencies and employers should take over-50s job applicants seriously and not dismiss them as ‘too old’.


Speaking ahead of the lecture, Dr Altmann said:

“We need a new mindset: one that accepts that chronological age does not determine ability to work.  Most people are still fit and well at much older ages than before.
It is quite astonishing that the improvements in health and demographic realities have not fed through to the labour market and retirement thinking.
We need to stop wasting resources and embrace longer working lives, helping those below state pension age to stay engaged in the world of work, while also ensuring those who want to work beyond state pension age can continue to do so, perhaps part-time if they want. The best way for people to retire is gradually, rather than suddenly.
This means establishing new social norms and revolutionising retirement – both vital elements for economic progress in the 21st century.”

 

Minister for Pensions Steve Webb MP said:

“In the past we were too quick to write people off in this country once they turned 50.  The actions of this Government are helping turn the situation around but we must keep our foot on the accelerator.
Having extended the right to request flexible working and outlawed forced retirement, we are now pushing ahead with implementing our Fuller Working Lives initiative - challenging outdated stereotypes head on and showing businesses the benefits of having an age diverse workforce."


Baroness Sally Greengross, Chief Executive of ILC-UK and co-President of the ILC-Global Alliance added:

“With the growth in the number of people aged 15-64 likely to slow over coming decades, businesses will be forced to put emphasis on recruiting older talent and ensuring lower levels of “brain drain” from their organisations. Businesses that anticipate and plan for these changes will be best prepared to flourish, while those that fail to prepare could struggle to survive and grow."

 

Dr Ros Altmann will deliver the Robert Butler Memorial lecture at 2.30pm on Wednesday 29th October.
Ros Altmann is on Twitter @rosaltmann and has a blog at pensionsandsavings.com http://www.rosaltmann.com/

 

 

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 AGE AUDIT: DELIVERING A BUSINESS RESPONSE TO AGEING

A new business “Age Audit”, published today, includes an 8-point action plan to support companies who want to respond to the challenges and opportunities of ageing.

The Age Audit has been published by the International Longevity Centre-UK (ILC-UK), the leading think tank on longevity and demographic change as part of the ICAEW BusinessFutures project.

The Age Audit points out that unless businesses respond to ageing, UK plc faces significant fiscal and economic challenges. If the over 65s are unable to find employment, those who are in work will account for a diminishing proportion of the population. Tax revenue from those in work may fail to keep up with demand for social security from an increasingly large proportion of people aged over 65 and out of work.  Demographic change may mean that future economic growth may be dependent on either substantially increasing the productivity of those in work or the numbers of people over 65 in work rises.

The Age Audit reveals that:

  • The over 65s in the UK currently spend around £2.2 billion per week (£114 billion per annum) on goods and services. Assuming their weekly spending rises in line with annual inflation of 2%, they are likely to be spending over £6 billion per week (£312 billion per annum) by 2037 
  • From now until 2037, the 15-64 age group in the UK will, on average, grow by just 29,000 per annum. By contrast, the number of people aged 65 and over will rise by 278,000 on average each year.
  • Across more economically developed countries, the proportion aged 65 and over will rise from 16% to 26% and the proportion over 80 will rise from 4.3% to 10%.

ILC-UK argue that if businesses make the right decisions to support increasing flexibility in the workplace, to raise the health and wellbeing of the workforce, to counteract ageism and to embrace continuous learning, the concept of retirement as we think of it today will no longer have any use.

Launching the Age Audit, ILC-UK Chief Executive, Baroness Sally Greengross said: "Ageing poses both an opportunity and a threat to businesses around the world. With growth in the number of people aged 15-64 likely to slow over the coming decades, businesses will be forced to put emphasis on recruiting older talent and ensuring lower levels of “brain drain” from their organisations.

At the same time, consumption of goods and services by the over 65s is likely to grow at a faster rate than any other demographic group necessitating innovations in design and marketing to tap into the “grey pound”.

Businesses that anticipate and plan for these winds of change will be best prepared to flourish, while those that fail to prepare could struggle to survive and grow."

Charles Carter, ICAEW Director of Regions, added: “If businesses focus exclusively on the under 65s, they will be missing out on a vast and growing talent pool. Indeed, just to fill the likely number of vacancies over the next decade will make the employment of older people a necessity rather than a luxury.”

How businesses can respond to ageing: introducing the eight-point action plan

1.               Think strategically about ageing

2.               Deliver flexible working

3.               Become age neutral

4.              Support those with disabilities as well as the wider health and wellbeing of the  workforce 

5.               Embrace continuous learning 

6.               Support intergenerational fairness

7.               Help people afford a good retirement

8.               Tap into the “grey pound”

Ends

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.

97% of the fall in annuity rates down to increased longevity and low investment returns

Many lifetime annuities offer fair value for money according to new research by Jonquil Lowe of the True Potential Centre for the Public Understanding of Finance at The Open University Business School.

The report, which has been published today by the International Longevity Centre UK (ILC-UK) also argues that the protection against longevity risk may be poorly understood by consumers.

Falls in annuity rates over the past 25 years mean that an individual who wanted to start retirement with a nominal income of £10,000 would have needed a pension pot of £65,000 in 1990 but over £175,000 by 2013. This has led to a commonly held view that annuities are a bad investment, which overlooks the insurance value of annuities, particularly in the face of increasing longevity.

The research confirms that the major determinants of annuity rates are life expectancy and long-term interest rates. A simple linear regression of UK level annuity rates for a 65-year-old man against a benchmark 15-year gilt rate and cohort life expectancy using monthly data over the period 1991 to 2013 explains 97 per cent of the variation in the annuity rate.

The research considers whether annuity rates can be considered actuarially fair (i.e. if the expected discounted present value (EDPV) of the income equals the price paid).

Lowe finds that some annuity consumers are getting more than value for money (Money Worth Ratio (MWR) of more than 1). For most people buying the best value annuities (average of the top three rates), the MWR at all ages for women and at ages 55 to 70 for men is greater than 0.85. This is within the usual range for MWR therefore does not suggest an excessive mark-up by providers.

Even the worst annuity rates generally deliver value for money to women, with the exception of those with standard life expectancy aged 75. The worst annuity rates offer poor value for money to men however; the exceptions being men with higher-than-average life expectancy aged 55 or 60.

The results suggest consumer detriment to those male annuity purchasers who end up on the worst rates, but otherwise a product that is generally delivering value for money.

Lowe argues that annuities should be viewed through a consumption frame, focusing on what can be spent throughout the remaining life course, suggesting that if advisers and individuals are using an investment frame, the focus will be on rate of return and investment risk, but not longevity risk.

The report sets out the implications of this research for pre-retirement guidance and advice

  • Guidance or advice must help consumers understand the nature of longevity risk and how to protect against it
  • Guidance may be needed more than once given increasingly flexible retirements, and the fact that individuals will be free to draw their pension savings in as many tranches as they choose
  • Should government go further and mandate advice for DC members who are contemplating giving up aspects of their retirement security? Is there an inconsistency given those on DB schemes who wish to transfer to DC schemes from April 2015 will need to take advice?
  • Will guidance be sufficient? Guidance is non-specific; does not advocate a particular course of action; and does not recommend the purchase, sale or alteration of particular regulated products from particular providers. It seems likely that many, if not most, individuals approaching retirement would need to be directed to an authorised financial adviser for regulated advice, which begs the question whether guidance has a role at all beyond signposting to sources of authorised advice?

Author of the report and lecturer in Personal Finance at The Open University, Jonquil Lowe said: “This much maligned financial product should ideally still play a key role in most people’s retirement planning and in the free, impartial guidance for every retiree promised as part of the government’s pension liberalisation package. A fall in annuity rates associated with increasing life expectancy does not equate to a fall in value for money ; rather it represents a spreading of value over a longer period.”

David Sinclair, Director, International Longevity Centre – UK (ILC-UK) added: “The research dispels the argument that consumers should automatically shun annuities on the basis of value for money. But given the gap between the best and worst annuities in terms of value for money, it is vital that we continue to encourage and support retirees to shop around in order to get the best value annuities.”

The report points out that annuities may not be the right option for everyone. Other strategies and products may be more suitable for those with higher risk tolerance, greater resources and/or a desire to leave bequests. Those with low resources who can expect a high proportion of their income to come from their state pension and those with debts may still prefer to forego a pension income for a lump sum.

Ends

Notes:
In its 2014 Budget, the UK government announced that from April 2015 its citizens entering retirement will no longer be steered towards using their tax-advantaged pension savings to buy a lifetime annuity (a financial product where a lump sum is exchanged for an income for life), or indeed to securing an income at all. Instead retirees will have complete freedom to draw out their savings whenever and however they like, provided they have reached at least age 55.

*If the EDPV equals the price paid then its ratio to price will be 1. This ratio is commonly called the Money Worth Ratio (MWR) and is a standard way of evaluating annuities. In practice, the ratio will normally be less than 1 since the insurer incurs costs including normal profit. If there is a lack of effective competition, the insurer might also be making supernormal profit, in which case the MWR could be substantially less than 1.

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 Open University Business School (OUBS) is a leader in modern flexible learning and the pioneer of teaching methods that enable people to change their life goals, studying at times and in places convenient to them.  The OUBS is one of a select group of schools worldwide accredited by the three leading international accrediting bodies – AACSB, AMBA, EQUIS – hallmarks of quality of teaching, learning materials and qualification impact. It is the only triple-accredited business school that specialises in flexible learning and is home to more than 24,000 MBA graduates in over 100 countries. Its MBA programme offers both residential schools and face-to-face and collaborative learning options.

For more information, please see its website at www.open.ac.uk/business-school

The True Potential Centre for the Public Understanding of Finance (PUFin) is a pioneering centre of excellence for research and teaching related to personal finance capability. Based at The Open University Business School, PUFin is generously supported by True Potential LLP.

The Government should create a state-run “Equity Bank” to help low income older people generate extra income from their property argues a new report. “The UK Equity Bank” has been published today by the International Longevity Centre – UK (ILC-UK) and was produced by Professor Les Mayhew and David Smith of Cass Business School, part of City University London.

The authors propose that, after receiving the appropriate financial advice, an individual sells a portion of their home to the state in return for a guaranteed lifetime income. Upon death the property would be sold, the debt to the state paid and any remaining value passed to the person’s estate. The Bank would be carefully targeted at older retirees who own their own homes and live alone but are income poor.

The report points out that housing equity owned by the population aged 65+ is estimated to be worth around £1.4 trillion or, £122,000 per person on average (ELSA). In households with a deceased partner, home equity could be twice this average. Around 40,000 new people each year could benefit from the scheme.

The proposal responds to an influential 2013 House of Lords Committee report which argued that

“The Government should work with the financial services industry to ensure such mechanisms [for releasing housing equity] are available and to improve confidence in them”.

The paper will be launched at an event to be held in the House of Lords on 12th June chaired by Baroness Sally Greengross, Chief Executive of ILC-UK, the leading international think tank on longevity and demographic change.

The authors argue that the Equity Bank should be owned and maintained by central government. It is important that the financial benefits are not eroded by higher taxes or the withdrawal of benefits and the Government is in the best position to make sure this does not happen. A trusted state-run scheme as described in the paper could also benefit from economies of scale and relatively low borrowing and administration costs. Because it would be carefully targeted, it would sit along-side and not replace existing commercial products.

Launching the paper, Professor Les Mayhew said “The proposed recent pension reforms, whilst welcome, do not address the needs of existing pensioners whose incomes are fixed and therefore unaffected. Its main purpose would be to improve living standards in retirement, as well as making more money available for every day tasks and services such as help around the home, home maintenance, holidays, etc.  The proposal is aimed at a sizeable group of older home owners, perhaps as many as 400,000, who have relatively small incomes of, say, £15,000 per annum or less, consisting mainly of the state pension and limited additional sources."

Baroness Sally Greengross, Chief Executive of ILC-UK added: “The value stored in people’s homes could be used to provide greater income in old age and improve living standards. Whilst some people will chose to downsize, there is a large group of older people on low incomes for whom moving house would be impractical but for whom a higher income could significantly help improve their day to day life. Traditional equity release schemes may not work for this group of the population and new ideas, like the Equity Bank, deserve serious consideration from Government and the financial services industry.”

Professor Mayhew points out: “Even if only relatively small amounts were to be released each year, the Equity Bank proposal would generate macroeconomic as well as personal benefits to users. It would benefit local economies especially in places with disproportionate numbers of older people and income deprivation. Over time the Equity Bank would be self-financing but it is plausible that start up costs could be met from within existing welfare budgets.”


ILC-UK are currently planning our activities at the 2014 Political Party Conferences. We hope to run a series of events on topics as diverse as pensions, health, employment, care and communities as part of the main party conference fringe programme. If you are interested in talking to us about sponsoring a fringe event, please do get in touch with David Sinclair or Jessica Watson (jessicawatson@ilcuk.org.uk / davidsinclair@ilcuk.org.uk / 0207 340 0440).

We are also planning our 2014-2015 events programme. We organise 30+ events a year, from small discussion events, through to larger conferences. Our events always “sell out”, and often, very quickly. If you are interested in talking to us about sponsoring an event, please get in touch with David Sinclair or Lyndsey Mitchell at ILC-UK (events@ilcuk.org.uk / 0207 340 0440).

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.

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.

Up to 1.7 million grandparents expect to have to contribute towards university fees. Around 364,000 grandparents have already contributed.

Grandparents are expecting to have to dig deep to help grandchildren afford university fees, reveals new research* produced by over-55s specialist adviser Key Retirement Solutions exclusively for ILC-UK.

The research has been published ahead of a major piece of academic research by ILC-UK, supported by Partnership and Key Retirement Solutions which will be published on 15th October and which explores the full extent of grandparental giving.

Growing Need:
The nationwide study found just under three per cent of grandparents have already helped fund fees – but that number is set to rocket to nearly 13% over the next 10 years.  Which means that one in eight grandparents – equivalent to 1.7 million over-55s - expect to have to help pay grandchildren’s university fees while at the same time funding their own retirement aspirations.

While UCAS figures** showed a nearly 8% drop (2011 to 2012) in university applications following the increase in maximum tuition fees to £9,000 a year, this trend is starting to reverse. Around 637,456 students applied in 2013 compared with 618,247 in 2012 which suggests that people are using other sources of funding – such as family - to meet these increased costs.

The older generation is aware of their grandchildren’s educational aspirations – and potentially expectations – with around 10% of those aged between 55 and 64 believe they will have to make contribution rising to 15% for over-65s.

Funding Sources:
Almost three-quarters (73%) of over-55s expect to dip into their savings to help grandchildren while around nine per cent will rely on investments.  However, despite benefiting from significant house price inflation only four per cent will use property wealth such as increasing their mortgage or equity release to raise the money.

Dean Mirfin, Group Director at Key Retirement Solutions (www.keyrs.co.uk), said: “Helping out family is a powerful motivation for grandparents and contributing towards university tuition fees is a reasonable investment of savings.

“The numbers of grandparents providing financial assistance for university tuition is set to rocket from current levels as the implications of the maximum £9,000 a year tuition fees become clear.

“With finances for the over-55s under strain from falling annuity rates and historically low savings rates taking on extra commitments requires careful thought and planning.”


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

“Boomer bashing, or blaming the baby boomers for the current economic challenges facing young people is becoming very fashionable. Yet what this research, and ILC-UK’s forthcoming work will reveal, is that older people are playing a significant role in supporting younger people through education.”

 

Notes
*  Consumer Intelligence interviewed 2,072 parents and grandparents for Key Retirement Solutions between August 16th and 20th 2013
**  http://www.ucas.com/news-events/news/2013/2013-cycle-applicant-figures-%E2%80%93-june-deadline

Skilling up the older workforce, supporting more older women in work and improving health have been highlighted as key priorities for European Governments who want higher levels of participation of older workers.

A new International Longevity Centre –UK (ILC-UK) report, Working Longer: An EU perspective, supported by Prudential, explores how the EU and its 28 members have responded to the working longer agenda.

The report argues that older people have not been exempt from the impact of the recession and that Governments should put extra resource into tackling ageism and creating the right sort of jobs for an older workforce.

The report was launched at a debate in London where Pensions Minister, Steve Webb MP presented the UK Government’s plans for maximising the potential of older workers.

The report highlights that:

  • Europe faces significant skills gaps due to demographic change. In the UK alone there are 13.5 million job vacancies, which need to be filled over the next ten years, but only seven million young people are projected to leave school and college over that time.
  • EU Membership has gone alongside growth in participation of older workers. New Member States have seen the biggest growth in participation of older workers over the past decade.
  • Across Europe, incentives to retire early have gradually been removed, whilst state pension ages have begun to increase. But some incentives for early retirement remain across EU Member States.
  • Government initiatives to support older workers are often poorly evaluated for effectiveness. As a result it is difficult to “learn from the best”.
  • Governments have not met an EU target set in 2001 to achieve 50% employment rate of older workers by 2010. Fewer than half (48.8%) of EU28 citizens aged 55-64 were in employment in 2012. Over the period 2002-2008, the average age of labour market withdrawal among the EU-28 had only increased by an estimated 1.3 years, from 60.1 to 61.4. Whilst the employment levels of older workers has increased over the past decade by 10% there is significant variation across Europe. Just 13% of Hungarians aged 60-64 were in work in 2010 compared to over 60% of Swedes.

Working Longer, An EU perspective analyses the situation across the EU and identifies examples of interventions from across Member States including:

  • Changes since 2006 in Sweden offer more favourable treatment for work related income than pension income.
  • Reforms in Croatia have meant that those who retire early are now subject to between a 0.15% and 0.34% loss every month in the value of their pension. In contrast, people who delay retirement are entitled to a 0.15% monthly increase in the value of their pension.
  • France has introduced a gradual retirement scheme, which allows workers to reduce their working hours on reaching 60 (62 in 2017) and receive a proportion of their pension in return.
  • A Portuguese New Opportunities Initiative gives preferential access for older people to lifelong learning.
  • The Finnish government has invested in the KESTO-program, which built up a database for research on extending working life.

After analysing the situation across the EU-28, the report explores seven challenges for the EU and Member States:

Achieving gender equality. In every EU Member State, the life expectancy of women is higher than that of men, by 5.9 years on average. Yet despite living longer across the EU, women participate less in the labour market and retire earlier.

Skilling up the older workforce. The current cohort of older workers in Europe have low levels of education and qualifications compared to younger groups.

Supporting older people in the recession. Across Europe, a relatively high proportion of unemployed 55-64 year olds have not worked for 12 months or more.

Matching demand and supply in the labour market. There has been inadequate focus on the extent to which Europe’s economy has been creating the right sort of jobs to meet the needs and wishes of the supply of older workers.

Tackling ageism. Negative attitudes towards older workers remain a significant cultural barrier across Europe.

Improving health. One of the biggest challenges facing the working longer agenda is poor health of older workers. However, our analysis has found relatively few initiatives by governments or employers to explicitly improve the health of older workers.

Recognising the diversity of the working experience. Policymakers need to take into account the fact that older workers across Europe are more likely than other ages to be self-employed, on open-ended contracts, or working part-time.

The report argues that European decision-makers and Member States should:

  • Take a life course approach
  • Make better use fiscal incentives
  • Create more, better and more appropriate jobs
  • Addressing inequalities
  • Deliver a targeted research agenda

David Sinclair, Assistant Director of Policy and Communications at ILC-UK said: “Europe’s economy is driven by the skills and talents of its people. As our society ages, it will therefore be increasingly important to make the most of the potential of older workers. Yet few European Governments have got to grips with the challenges of an older workforce. We must not however, pitch one generation against another. European policymakers must focus on tackling the barriers employability across the life course. Flexible working and opportunities for people of all ages to develop their skills are vital. We must tackle ageism whilst also offering older people the opportunity to retire gradually. Governments across Europe must better evaluate initiatives and share their successes with their colleagues”.

Speaking at the launch of the research, Pensions Minister, Steve Webb MP said:
There are more older people in work than ever before, despite difficult economic conditions.  Back in 2011 we took action so that older people were no longer discriminated against by abolishing the default retirement age.

I am determined that more employers will make the most of the talents and experience of older workers."

ENDS

Researchers suggest development of new financial product to help save for old age and disability.

The development of a whole new financial savings product called Personal Care Savings Bonds (PCSBs) could help ease the social care funding crisis facing the UK.

Similar to the Premium Bond, PCSBs could be bought by any adult at a nominal value of £1. Unlike premiums bonds they would accumulate interest as well as pay monthly prizes. However, PCSBs could only be cashable when the owner passes a social care assessment or upon death.

The concept of PCSBs will be presented in a launch event at the House of Lords on Thursday 13 June. The proposal for the new bond is contained in a discussion paper co-authored by Professor Les Mayhew and Dr David Smith of Cass Business School, part of City University London, in partnership with the International Longevity Centre UK (ILC UK).

Professor Mayhew has been researching the problems posed by ageing population on health and social care for 15 years. He says:

“Paying for social care is a long term issue and pressures on services will increase throughout the century as people live longer and the population ages. The funding crisis will continue for the foreseeable future unless long term solutions are developed.

“Whilst the Dilnot capped cost model has gone some way to address the potentially the catastrophic costs of social care to some individuals, the fact remains that insufficient funds are being injected into the system.

“PCSBs could provide the basis for a new way of approaching funding care, in which responsibility is shared by the individual and the state. PCSBs provide an opportunity for individuals from all economic backgrounds to have a stake in their future social care funding needs.”

Chief Executive of the International Longevity Centre UK, Baroness Sally Greengross welcomes the report saying:

“If people are to save for their future, especially people who are on lower incomes or are less wealthy, it is essential that they have opportunities to do so in a way that is simple, engaging, and safe. Equally, they must not be penalised for having done so through means tested support systems.

“For these reasons, I welcome this paper. It is an important and timely contribution to stimulating the debate on how we can bring more money into the social care system. It proposes a way to help people, especially less wealthy people, to save for their future and have more choices about when they receive care, the type of care and support they would like, and how it is provided.”

How PCSBs work

  • Each bond has a nominal value assumed to be £1 and is entered into a monthly prize draw; prize winners are individual bond holders who can elect to receive the money or re-invest it in more bonds thus increasing their personal fund.
  • Bond values, both the prize element and accumulated value, will be tax free. PCSBs will normally be purchased out of taxed income, unlike personal pensions, though similar to Premium Bonds and lottery tickets. They would be purchasable over the internet, by standing order, and from local post offices and/or shops.
  • Cash can only be withdrawn from deposits on being assessed as needing social care or on death. This means that the chance of winning a prize would increase with age as long as their fund accumulated in line with the total fund, and would reach a maximum value at the point of needing care or at the point of death.
  • It follows that the longer a person lives without triggering social care, the larger the fund will be when it is required. For example a person aged 90 would be up to 162 times more likely to win a prize than an 18 year old (assuming they saved regularly).
  • For those who die before triggering a social care assessment, the value of the accumulated fund would transfer to a person’s estate to be inherited by persons or others of the deceased person’s choice. This addresses one of the perceived problems of insurance for long-term care in which prospective policyholders may be concerned that they will not receive a benefit due to small print in the policy. With PCSBs, even if they do not receive a payment for care, their estate will get the benefit.
  • In some cases bond values on death could be used to pay funeral costs replacing some public expenditure that would have been incurred under the Social Fund. This would represent a small but useful saving on welfare expenditure and would provide cheap form of funeral insurance for people who would not usually buy these products.
  • The research shows that once fully mature the fund could be worth as much as £80bn and make and annual contribution to the UK care economy of over £2.5bn annually. Annual prize money would be worth around £700m.

Ends

For more information please contact:

Helen Merrills, Press Officer, Cass Business School
Helen.merrills.1@city.ac.uk
020 7040 4191

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).

Baroness Greengross said:

“Our society is in denial of the inevitability of ageing. We have put off the difficult decisions for far too long.

The Public Service and Demographic Change Committee argues that there has been a lack of vision and coherence in the ageing strategies of successive governments. This cannot continue.

It is fiscally vital that we get ageing right. Age-related spending in the UK is projected to rise from an annual cost of 21.3% to 26.3% of GDP between 2016/17 and 2061/62, equivalent to a rise of around £79bn in today’s money.

But addressing the cost of ageing is just the start of the challenge.

The report paints a picture of a health and care system which doesn’t work for today’s older population. Similarly our communities, housing and transport systems are ill equipped for the challenges ahead.

We must not be afraid to tell people that they are likely to need to work longer and that state pension ages may need to increase further as healthy life expectancy changes.

As individuals we will all need to take more responsibility for preventing ill health. Older people will, as the Committee highlights, need to use the value of their homes to partly fund their retirement.

But for individuals to plan for the long term, they need certainty about future policy direction. The lack of a strategic approach by Government undermines confidence in long term planning.

There is a role not just for Government and individuals, but also for the private sector. The financial services industry must respond better to the challenges of ageing. The market failure highlighted by the committee cannot continue. It is clear that parts of the industry want to serve this growing market. Government must create the right conditions for the financial services industry to thrive and deliver products and services to help us manage as we age.

This important and wide ranging report must kick start a new debate about age, and Government must not shy away from difficult decisions.

Now is the time for action. Tomorrow’s pensioners will not thank us for continuing to ignore this issue.”

Notes: The House of Lords Public Service and Demographic Change Committee, Ready for Ageing? will be published on 14th March 2013.

Responding to Aviva’s second Working Lives report, David Sinclair, Assistant Director of Policy and Communications at ILC-UK said:

“'Putting off’ retirement planning places young people at risk of living in poverty later in life. We must better plan for tomorrow, today.

Whilst many younger people are struggling to save, it is positive news that large numbers do not plan to opt out of automatic enrolment for pensions. Auto enrolment will result in millions more people saving for later life.

Society must do more to instill a savings culture in the young. Saving needs to become a social norm.

Government and the industry should work together to develop and promote a savings rule of thumb similar to the ‘5-a-day’ healthy eating message.”

Notes: Aviva’s latest working lives report is being published on 27th February. The report finds:

  • Britain’s workers remain undecided on pension saving - 37% of employees say they will opt out of automatic enrolment, and 28% are undecided.
  • Affordability is a key obstacle - almost half (45%) of employees who do not currently take up the pension they are offered say they don’t have the cash.
  • Only a third (37%) of employees are confident about their financial situation.
  • Two-thirds of employees (65%) say their key workplace concern is how their pay compares to the cost of living.
  • Nearly two-thirds (60%) of employees lack confidence in the UK economy.

Younger people and saving: ILC-UK’s 2011 report, Resuscitating Retirement Saving: How to Help Today’s Young People Plan for Later Life, produced with the support of Prudential, examined the financial and economic circumstances of young people today. It considered the role of behavioural economics in nudging young people towards saving for retirement.

With around 50 days to the introduction of the retail distribution review (RDR), the International Longevity Centre-UK (ILC-UK) has today published “Advice for all”, a new report which sets out practical solutions to address the advice gap post RDR.

Following the RDR there are concerns that fewer advisers will provide full advice to those with average pension pots, with some choosing instead to shift up the wealth spectrum.

“Advice for all” highlights the views industry and voluntary sector experts outlined at the Retirement Income Summit, hosted in June 2012 by ILC-UK and sponsored by Aviva and Partnership.

“Advice for all” calls for immediate action to reduce the risk of an advice gap which could result in poorer and less well advised pensioners. Of delegates surveyed at the start of the Summit, 78% believed the RDR will result in an advice gap for people with small pension pots.

The policy recommendations from the experts at the Summit include:

Greater transparency:

  • The industry should create a comprehensive league table of annuity rates and a directory of advisers.
  • Annuity providers must publish all annuity rates, regardless of whether they offer them just to current policyholders or open to all retirees.

Better information for the consumer:

  • Consumers should receive from their pension provider, the key details about their policy on just half a side of A4 paper.
  • All consumers should have the right to a short conversation about their retirement options.
  • Providers and regulators should work together to ensure consumers no longer receive volumes of compliant but ultimately overwhelming information.

A greater role for technology:

  • Annuity advisers and providers should explore greater uses for technology in delivering advised and non-advised services to help people understand their options at retirement and help them make an appropriate decision.

The report highlights that the difference between the best and worst annuity rates can be significant and too few people understand that they can shop around to get the best annuity rate through the ‘Open Market Option’.
“Advice for all” highlights four urgent challenges which must be addressed immediately in order to prevent consumer detriment:

  1. The advice gap: those with modest incomes may no longer have access to advice and could lose out on much needed retirement income.
  2. Too few savers are exercising the Open Market Option: retirees are losing out on retirement income through annuity providers’ failure to promote OMO properly.
  3. Information overload: more needs to be done to ensure customer information is developed from a consumer, rather than compliance, perspective.
  4. Lack of focus on the right type of annuity: there is a risk that consumers focus on the annuity rate they receive, to the exclusion of whether the type of annuity they are purchasing is right for them, which is critically important.

The report also highlights four longer term issues to be solved:

  1. Erosion of savings culture and industry trust: Confidence in savings is low due to the poor reputation of the financial services industry.
  2. Tackling opaque products and rates: Lack of transparency damages customers’ confidence in the industry and prevents consumer engagement with pensions. 
  3. Slow pension transfers: The mechanics of the pensions industry has made it difficult for retirees to get good annuity rates and accordingly erodes trust.
  4. Too many small pension pots: Fragmented pension pots do not engender engagement in the way a large pension pot does.

Delegates at the Retirement Income Summit were asked to vote on different policy proposals during the event:

  • 84% of delegates at the summit agreed that better consumer outcomes would be achieved if simplified advice was made workable.
  • 85% agreed that non-advised solutions combined with more financial education, transparent communication and appropriate ‘nudge’ techniques could help people get more from their pension pot.
  • 63% agreed that all pension customers approaching retirement should receive a one-page letter explaining that shopping around could provide them with more income.
  • 65% said the Government should consider some simple defaults for annuity purchase.
  • 79% of delegates said benchmark annuity rates for non-open market annuity providers should be published.
  • 83% said advised and non-advised services should be subject to the same rate transparency requirements.
  • 82% agreed that the Government and industry should develop detailed proposals to simplify the pensions transfer process further, whilst 95% said the industry should improve the flow of information from the current pension scheme to the member and their adviser and to release the monies to the new provider more easily and quickly.

Launching the report, Baroness Sally Greengross said “Our work on the Retail Distribution Review over the past year has highlighted a very real concern that many people will cease to access the advice they need. It is right that we raise professional standards in the advice sector. But we must all work harder to ensure that the poorest among us can maximise their income in retirement. Our report proposes solutions to the problems identified at the Retirement Income Summit. It is vital that industry alongside the Treasury and DWP, act on these ideas.”

Gregg McClymont MP, Shadow Pensions Minister, said: “I welcome the ILC-UK report. The urgent focus on the need to improve the value for money pensioners get when they turn their pension pot into an annual income is justified. For many people the current system just doesn't deliver value for money at the point of retirement".

Clive Bolton, Managing Director of Aviva's At Retirement business commented “Aviva wants to explore ways to help consumers get the best possible income in retirement. One of the unintended consequences of the Retail Distribution Review may be to limit access to advice at retirement, particularly for consumers with moderate savings who may not wish to pay a fee for full independent advice. By continuing to improve access to the Open Market Option and help retirees shop around for the right annuity we can make a very real difference to consumers’ income in retirement.”

Steve Groves, Chief Executive at Partnership “We are facing an annuity apartheid where there is a risk that only the wealthy will shop around for the best retirement income. We have been campaigning to ensure that Government, consumer groups and the industry talk to find solutions to help the majority (78% of annuities sold in the UK in in 2011 were for fund sizes under £40,000) get access to better retirement income, in the face of a potential advice gap with the introduction of the RDR. An annuity is for many of us, a once in a lifetime decision. For those with health or lifestyle conditions the difference between the best and worst rates can be up to 40%. At the same time, too few exercise or fully understand the benefits of exercising the Open Market Option and only 27% of people purchased an enhanced annuity while up to 50% could be eligible”.


ENDS

1) A full list of voting results is available in “Advice for All”. 123 experts attended the Retirement Income Summit and voted on a variety of options.


Notes

  • The report, Advice for All, will be available from 10.00 on 7th November on the ILC-UK website at http://www.ilcuk.org.uk/index.php/publications/publication_details/advice_for_all
  • In March 2012 the ILC-UK published a report entitled, The Retail Distribution Review and Small Pension Pots, which explored the impact the RDR would have on access to advice for those with small pension pots.
  • The ILC-UK recommended the Government and Financial Services Authority (FSA) should investigate the opportunities to mitigate the implications of RDR on financial advice for those with small pension pots, particularly for the 40% of people at retirement who would benefit from increased retirement income as they were eligible for an enhanced annuity for health and lifestyle reasons, and shopping around. 
  • It also urged the Government and FSA to provide a clear distinction between the provision of information and advice, and make clear to what extent providers are able to guide customers without it being deemed advice.
  • The report urged the government and FSA to review other topics, such as joining up the public policy agenda on financial advice and enabling saving. There was genuine concern that lack of cohesion and policy fragmentation created by silos between the FSA (leading on RDR), HM Treasury (the policy lead on financial advice) and DWP (leading on retirement outcomes for pensioners) will result in the poorest and least well-off pensioners receiving sub-optimal retirement outcomes.
  • Alongside the report, the ILC-UK published an open letter to Mark Hoban MP (Financial Secretary to the Treasury), Steve Webb MP (Minister for Pensions DWP), and Lord Adair Turner (Chairman of the FSA), calling for the Government and FSA to host a ‘retirement income summit’ to ensure the protection of the poorest pensioners. The letter was signed by senior Politicians across all parties, trade associations, providers, financial advisers and representative bodies.


Contact:

David Sinclair at ILC-UK on 02073400440 or 07531164886
Jim Boyd at Partnership on 020 7618 2730
Tom Wilson at Aviva on 07800 692053

Government should support the creation of new financial services products to better incentivise saving

The Government must develop a financial citizenship approach to long term saving argues the International Longevity Centre – UK (ILC-UK). A new think-piece, ‘Financial Citizenship: Rethinking the state’s role in enabling individuals to save’ supported by the Friends Provident Foundation, argues that the Government’s approach to long term savings has focused on responsibilities, but not rights.

The ILC-UK argue that the UK has a chronic under-saving problem, one which has been exacerbated by the financial crisis and economic downturn. The Think Tank states that there is an urgent need for policy-makers to address this problem.

Baroness Sally Greengross, Chief Executive of ILC-UK said
“We have a long term savings crisis in the UK. Far too few of us are saving enough for our long term needs. There is an important role for Government, the private sector and individuals.
We should move towards ‘matching’ contributions from the government, in place of tax relief, not least because incentives of this form are easier to target. Alongside this, the government could enable accounts allowing more liquid forms of long term saving for young people only, to help nurture a savings habit while recognising the particular circumstances of this life-stage.“

Dr Craig Berry, co-author of the report said
“At a basic level, citizenship implies that, in return for recognising our duties such as obeying the law and paying taxes, we have certain entitlements. We need a new approach to long term saving, one which takes on the principles of citizenship. A ‘financial citizenship’ framework would outline the respective responsibilities of individuals and the state regarding saving. While the current set of Government policies in place are not necessarily inconsistent with financial citizenship, nor are they adequate to support the vital need for more long term saving.”

Andrew Thompson, Grants Manager at the Friends Provident Foundation added
“The Foundation believes that building some savings can be a way of helping combat poverty and developing future personal autonomy - particularly for low-income groups - but is aware that UK society as a whole has moved away from savings as a source of wealth.
Our Trustees were therefore pleased to be able to support ILC-UK to conduct an exploration of what rights and responsibilities should exist in our ‘financialised’ society and the potential roles of the individual, the state and the private sector in moving us in a new direction on saving. We welcome the publication of their report, which raises some very important real-life issues, suggests some interesting solutions, and sets out what the implications for public policy would be. We very much look forward to following the debate that we hope will ensue.”

In the report, ILC-UK set out a series of principles of financial citizenship:

  • Duties must be matched by entitlements, which are not contingent upon private sector provision.
  • The financial system must be ‘democratised’.
  • Policies designed to support citizens to engage with the financial system should involve both universal and progressive (or means-tested) support.
  • Universal support should be designed in accordance with the life-stage implications for recipients.
  • Policies based on insights from behavioural economics are consistent with financial citizenship.
  • Financial citizens have a right to financial education.

ILC-UK urge the Government to consider supporting the creation of The Lifetime Bonus Savings Account (LBSA) developed by Tony Dolphin. Dolphin argues that the LBSA, in offering matching contributions for consistent saving targeted on low-to-middle income earners, represents a use of public money far more consistent with financial citizenship than existing spending to encourage saving.

Ends

About 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.

Notes:

  • 'Financial Citizenship: Rethinking the state’s role in enabling individuals to save’ has been supported by the Friends Provident Foundation
  • The think piece will be launched at an event chaired by Baroness Greengross on the afternoon of 24th April. Speakers at the event include:- Danielle Walker Palmour, Friends Provident Foundation and David Budworth of The Times
  • Advance copies of the report are available from David Sinclair at ILC-UK.

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.

Speaking at an ILC-UK meeting this week, Universities and Science Minister, The Rt. Hon. David Willetts MP urged the sector to consider how they can play a role in drawing different generations together.

David Willetts MP said "Universities support a mix of ages of students; but there should be more discussion in the sector about what role Universities can play in strengthening intergenerational relations."

The Minister continued: "The social contract is a contract across generations. We need to avoid creating an artificial generational war. It is not helpful if we build up a dangerous mentality which suggests that older and younger people are a threat to each other. We all just need to think a little bit more about the generations above and below us."

Baroness Greengross added "Isolation is a huge issue facing parts of the older population. Universities could play an important role in fostering greater contact and understanding between generations. Age is irrelevant to learning and encouraging older people into the sector will help support different generations to come together."

David Willetts MP congratulated ILC-UK on its important contribution to the evidence base on intergenerational fairness.

 

Ignorance of pensions is preventing extended working lives, ILC-UK survey reveals

It is too often assumed that retirement is a one-off event, rather than a process. Yet there is increasing evidence that we are moving towards a process of ‘gradual retirement’, a concept associated with a wide range of opportunities that may be available to older workers, including downshifting within their current employment, moving into new forms of flexible and part-time work, and self-employment.

Crucially, a process of gradual retirement is far more likely to result in later retirements. However, it is clear that many barriers to gradual retirement remain. A survey commissioned by the International Longevity Centre-UK (ILC-UK), and supported by Aviva, reveals that:

  1. 40 per cent of people would consider delaying their retirement if they could defer the state pension in return for higher payments later – yet 59 per cent are unaware that this option is already available.
     
  2. 42 per cent of people would consider delaying their retirement if they could combine income from an occupational pension and their current job – yet 66 per cent are unaware that this option is already available to many employees.
     
  3. 46 per cent of people would consider delaying their retirement if their employer offered greater support for reducing their working hours, or flexible working arrangements.
     
  4. A lower proportion of people, 36 per cent, would consider delaying their retirement if the state pension age is increased further than already planned. However, this proportion rises to 53 per cent among part-time workers, underlining the importance of ‘gradual retirement’.
     
  5. 55 per cent of people would support a system whereby individuals could access part of their state pension early, in return for a lower pension when they retire in full.
     
  6. A large majority of people – 67 per cent – do not support the idea that people above state pension age, yet still in employment, should continue to pay National Insurance contributions.

The results are presented and evaluated in full in ILC-UK’s new report Gradual Retirement and Pensions Policy, which is also published with the support of Aviva. The report recommends that the government should:

  1. Make the positive case for extending working lives much more strongly. At present, many people feel that raising the state pension age is simply about deficit reduction. Many older people recognise the benefits of staying in work for longer, but nevertheless perceive the government’s current strategy as a threat to their hard-earned entitlements.
     
  2. Consider the introduction of a ‘graduated state pension’. ILC-UK’s survey reveals strong support for a system whereby individuals wanting to downshift could access part of their state pension – even if they would therefore receive lower pension payments when they retire in full.
     
  3. Better promote aspects of the pensions system that encourage longer working lives. This applies, in particular, to state pension deferral. It seems many people would stay in work if they could defer their state pension, but are unaware that this option already exists.

Baroness Sally Greengross, Chief-Executive at ILC-UK said “We know that financial circumstances play a huge part in retirement decisions, and so the pensions system is clearly having an impact on the path to retirement that is chosen by individuals. But retirement should be seen as a process, not an event. We must do whatever we can to increase the options available to workers entering later life, so they are able to continue contributing to the economy in a sustainable way.”

Clive Bolton, ‘At Retirement’ Director at Aviva said: The government’s move to abolish the default retirement age means that fewer people will be forced to give up work.   As a result, we expect to see people working until later in life and having a wider array of retirement choices.  However, the availability of employment and the flexibility offered will rely on the economic climate of the time, so some people might find it harder than others to keep working in later life.

“Our own Real Retirement Report recently showed that most people see the final ten years before they retire as the main opportunity to build up their pension pots, yet 40 per cent of over-55s experience a significant career disruption over this period. As a result we are seeing the rise of downshifting whereby people continue to be economically active in retirement and gain the financial and social benefits of employment. It is therefore crucial that retirees are supported in choosing how and when they finish their working lives .”

Contact:
Dr Craig Berry (report author) at ILC-UK on 02073400440. Or email craigberry@ilcuk.org.uk

END

Notes to Editor:

  1. Gradual Retirement and Pensions Policy will be available on the ILC-UK website on 22 November 2011. Advanced copies are available for the media.

  2. The production of Gradual Retirement and Pensions Policy has been supported by Aviva.

  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).

  4. Dr Craig Berry is a Senior Researcher at ILC-UK and the author of The Future of Retirement (2010), Resuscitating Retirement Saving: How to Help Today’s Young People Plan for Later Life (2011) and Financial Citizenship: The State’s Role in Enabling Individuals to Save (forthcoming). He also lectures on economic policy at the University of Warwick. He worked previously as a Policy Advisor on Older People and State Pensions at HM Treasury, and completed his PhD at the University of Sheffield in 2008.

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

“Over the last year we have seen an astonishing increase in the proportion of older workers. We have seen an almost 15% rise in the employment of workers aged over 65 over the past twelve months. 885,000 workers now work past the age of 65.

The growth in the number of older workers is good for the economy. Research published in 2009 [1] found that continuing patterns of early retirement could result in higher taxes and falling standards of living.

But whilst progress is being made, far too many people continue to retire too early. We need much more investment in preventative healthcare for all ages to ensure that ill health doesn’t force people out of the workforce earlier than it should. We also need employees and employers to move towards more flexible working and gradual retirement. “

Ends

Contact: David Sinclair, ILC-UK 02073400440

NOTES

1. Les Mayhew (2009) Increasing longevity and the economic value of healthy ageing and working longer, Cass Business School

Labour Market Statistics, published on 13th April, are available at: http://www.statistics.gov.uk/pdfdir/lmsuk0411.pdf

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.

ILC-UK published a report in 2010 (Berry 2010) which set out why people retire when they do and examined how this may change in the future. The Future of Retirement, by Dr Craig Berry, is available on the ILC-UK website at: http://www.ilcuk.org.uk/files/pdf_pdf_134.pdf


“The International Longevity Centre-UK welcomes this announcement. In the context of an ageing society, working longer is good news for the economy and older people.

However, the decision to end the Default Retirement Age will not automatically lead to longer working lives for all. Last month the ILC-UK published a report (1) which set out why people retire early. A combination of poor health, caring responsibilities and a lack of appropriate skills are amongst the reasons for leaving the workforce early.

So if Government is to make the most of the economic potential of older workers, it must do more to explore why people retire when they do. It must also consider how it can best incentivise and support us to work longer in sustainable ways. The introduction of policies to encourage flexible working and ‘gradual retirement’ have to form part of this picture”


(1)The Future of Retirement
ILC published “The future of retirement” last month.
The report found 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;
  • Flexible working
  • Simplifying the pensions system and improving the provision of advice; and
  • The support offered to older people with caring responsibilities.


The report is available here.

TOP STORIES

New report from independent think tank finds just seven health innovations could save the NHS £18.5 billion, and the social care sector £6.3 billion between 2015 – 2030.

The International Longevity Centre - UK hosts an annual full day conference to bring together representatives from Government, business, academia and civil society to discuss the Future of Ageing.

New research suggests there were only 11 constituencies in England and Wales where a high turnout among young voters would have changed the result in the last General Election.

For immediate release: Thursday 18th May 2017

International Longevity Centre – UK and Cass Business School respond to Conservative manifesto

Over the past few years, the International Longevity Centre – UK (ILC-UK) and Cass Business School have worked together to propose a number of radical solutions to the care funding crisis.

ILC-UK Chief Executive Baroness Greengross has been presented a special Lifetime Achievement award by HRH The Prince of Wales, on behalf of the British Geriatrics Society.

The latest information on ILC-UK events, research and analysis.

CATEGORIES: