Department for Work & Pensions 

Aon wants long term care and pensions under one umbrella

Aon wants long term care and pensions under one umbrella

Key figures at insurance and reinsurance brokerage Aon have called for long term care and pensions to be housed under one ministerial roof to ensure joined up thinking on the two issues.

Debbie Falvey, defined contribution proposition leader, and Tony Britton, head of defined contribution delegated consulting services at Aon, both put forward the case for the government to consider this.

Ms Falvey stated it was "absolutely necessary" for long term care and pensions to be considered under one umbrella.

She told FTAdviser: "It is logical to think about it. If I’m an individual and I’m trying to think about my future needs, in terms of an income stream that is going to last me until I am unhealthy and I need some support I don’t think of it in separate departments, I just think of it as a problem.

"The issue at the moment is that there isn’t [...] an overview of how you try to deal with that."

Ms Falvey added, however, there are lots of challenges of how this is dealt with in terms of product design and marketing.

"Long term care is one of the most difficult things to deliver because nobody ever wants to think about themselves needing it."

Mr Britton noted a lot of research done around the pension freedoms showed people underestimated how long they were going to live for.

He said: "If you tie that in with exhausting the pension pots joined together, there is some real concern there, because now people can exhaust their pension pots whereas before they were forbidden from doing so."

Ms Falvey added the social care legislation almost encourages people to exhaust their pension pots.

"If you have a certain amount of savings you are not going to get any support, so these are the things where one thing plays badly against another."

She also said the lifetime allowance is a related issue in terms of its restrictions, questioning why there are limits on what people in defined contribution can save when there is a future problem of people being unable to fund themselves with long term care. 

However, despite these calls from figures at Aon, Tish Hanifan, founder and joint chair of the Society of Later Life Advisers, said this was not a viable option and she was unconvinced this would make a difference. 

She said the new pension freedoms mean there are more choices for the consumer to make, and consequently there are also potentially more poor choices that will have a negative impact on their later life.

She said: "Good pension advisers have started to highlight the reality of what their client’s lifestyle will be like if they don’t take into account the cost of funding their care needs in later life.

"Of course how much this will cost will vary greatly as no one knows whether or not they will have high care needs.

Comments