Ms Kaye, the managing director of consultancy Gaaps Actuarial, said that to meet the growing needs of an ageing generation, pensions and long-term care provision must sit more closely together.
She said: “Successive governments are still getting it wrong as they should be looking to identify more effective ideas of how the two can be balanced better. Three questions to consider are: what really defines an adequate pension; how is one’s health viewed as you get older; and what is the true function of a pension fund?”
Ms Kay added: “I believe pension schemes should be investing much more in care homes and retirement villages for our pensioners.
“This would result in greater savings being made to the economy, for the pensioner, and to the state.” Her argument was that this would help pensioners to live in more affordable homes that met their various needs, and help to reduce the burden on the NHS.
Brian Tabor, chartered financial planner for St Albans-based Carematters, said he applauded the good intentions of Gaaps Actuarial, but said “they are perhaps somewhat naive about how pension funds operate”.
He said: “Care homes and retirement villages have been created on an entirely commercial basis (like any other business) for some years. The duty of pension trustees – and their investment advisers – is to invest in areas commensurate with the needs of the members of the pension scheme.
“If care homes, or care home group companies were a sensible investment medium, then I would have expected such investment would already be taking place. There is of course some natural overlap between the eventual pensioners’ who will be taking benefits from the pension scheme in question, and Care Homes/Retirement villages but we must remember that only a modest proportion of later life clients make use of these arrangements or have these care needs.”
However, he agreed that a more flexible approach by government in relation to how pension funds can be used would be a “productive furrow to plough”.
Mr Tabor added: “For example, if I am drawing down an income from my pension arrangement, I am limited by legislation as to how much I can draw down and of course the income is taxed. If I go into care perhaps the ‘tap’ can be opened and the income taxed less severely.
“The subsequent increase in income into the care environment should result in less needing to be provided by local government.”
